Most people remain in dilemma regarding term insurance plans and life insurance plans as to which plan is better to take. If you too are not able to choose a better plan for yourself among these two plans, then you can understand the difference between these two plans-
Before understanding the difference between a term insurance plan and life insurance plan, it is important to know the meaning of both these plans-
What is a term insurance plan?
A term insurance plan is a life insurance plan. In this plan, cover is available for a fixed period. If any major misfortune happens to the person taking the plan during the term of the plan, then the nominee among the family members gets the money.
This is a fixed and fixed amount. Premium is paid every year in a term insurance plan. In term insurance plans, premiums are paid on a monthly, quarterly, half-yearly, or yearly basis.
After the end of the plan period, no returns of any kind are available in this plan.
What is a life insurance plan?
Unlike a term insurance plan, a life insurance plan is considered a good investment plan. In this plan, you get the benefit of investment along with life cover.
If the person taking the insurance dies during the term of the plan, then the death benefit, along with the interest on the invested amount, is given to the nominee among the family members.
On completion of the insurance term, interest is paid along with the invested amount as maturity.
Life Insurance VS Term Insurance
In both plans, the insured person gets a death benefit in case of an accident during the insurance period. However, the difference between term insurance plans and life insurance plans is seen in terms of returns.
Life insurance plans provide returns on premiums, whereas term insurance does not provide returns on premiums.
Maturity Benefit: On completion of maturity in a life insurance plan, a lump sum amount is received along with interest on the premium deposited. On the other hand, the maturity benefit is not available in term insurance.
Premium amount: Life cover is available in term insurance. This is the reason why the premium amount is less in this plan. At the same time, the premium amount in life insurance is higher.
Loan facility: There is no loan facility available in term insurance. On the other hand, a loan facility can be availed along with a life insurance plan if the premium is deposited for several years.
Which plan is better
According to experts, both plans have different benefits. In such a situation, it depends on the need of the person as to which plan he should choose.
If you want a plan for a short period then term insurance will be cheaper. At the same time, if you want coverage for life lifetime, then a life insurance plan with an expensive premium is right.
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