support@licbazar.com

Email Us

 Life Insurance VS Term Insurance

Life Insurance VS Term Insurance

Life insurance and Term insurance are both types of insurance products that provide financial protection to individuals and their families, but they differ in terms of their purpose, structure, and benefits. Here’s a comparison between life insurance and term insurance:

LIFE INSURANCE 5

What is Life Insurance?

Life insurance is an agreement between an individual and an insurance company, where the insurer is going to get a sum assured amount , which is known as the death benefit, to the beneficiaries upon the insured person’s demise. This coverage acts as a financial cushion for your loved ones, providing reassurance and support during a challenging time. It may differ a little bit according to the policy which you are choosing.

1. Purpose

Life insurance is a broader category of insurance that includes various types of policies designed to provide financial protection and savings components.

2. Types

 Life insurance includes different types such as

3. Structure

 Life insurance policies usually combine insurance coverage with an investment or savings component. A portion of the premium paid goes towards providing a death benefit, and another portion is invested, accumulating cash value over time.

4. Cash Value

Many life insurance policies have a cash value component that grows over time. Policyholders can often borrow against this cash value or even surrender the policy for a lump sum amount if they choose to discontinue the policy.

5. Premiums

Premiums for life insurance policies tend to be higher than those for term insurance because of the investment or savings component.

6. Benefits

In addition to providing a death benefit, life insurance policies also offer a savings or investment component that can provide returns over time.

 

What is Term Insurance?

 A term insurance plan is a financial product which provides a specified amount for a specified period. In this the policyholder has to pay a premium for this cover but will not have to make any further payments during the term. Term insurance is a more affordable plan which can be purchased for a fixed period. In addition to that, most term insurance plans have an assured minimum sum. This means that the insurer promises you to pay at least this amount even if no claim was made or a covered event occurred during the term of coverage.

1. Purpose

Term insurance is a specific type of life insurance that provides pure protection without an investment component. It is designed to offer financial coverage for a specified term.

2. Structure

Term insurance is straightforward. You pay a premium for a specific term (such as 10, 20, or 30 years), and if you pass away during that term, the policy pays out a death benefit to your beneficiaries.

3. Cash Value

Term insurance policies typically do not have a cash value component. Once the term ends, if the policyholder is still alive, there is no payout or accumulation of funds.

4. Premiums

Premiums for term insurance are generally lower compared to other types of life insurance because they only provide a death benefit and do not include an investment or savings element.

5. Benefits

Term insurance provides a straightforward and cost-effective way to ensure that your loved ones are financially protected in case of your untimely demise. It offers a high coverage amount for a relatively low premium.

Conclusion

    Term insurance and Life Insurance are essential types of financial plans which should be taken by citizens of any country to have a peaceful life. That is, they mainly serve to make our lives safer and more secure. The key difference between term and life insurance is that the term insurance offers coverage for a particular period while the life insurance provides coverage over your lifetime. So no matter whichever insurance plan you go for, ensure it fits your requirements.

Leave a Reply

Your email address will not be published. Required fields are marked *