Term Insurance Vs Traditional Life Insurance: The period of the Corona epidemic (COVID-19) has highlighted the importance of an insurance policy. Nowadays, people understand that life has no guarantees. In such situations, having an insurance plan to protect your family is essential.

There are different life insurance options available in the market. If you are planning to buy an insurance policy, it’s important to understand the difference between term insurance and traditional life insurance. Let’s explore the advantages and disadvantages of both these policies.

Death Benefit

The biggest difference between term insurance and traditional life insurance is the death benefit. In term insurance, the policyholder only gets the death benefit if they pass away during the policy term. In contrast, traditional life insurance provides both death and maturity benefits.

The death benefit in term insurance is generally higher than the maturity benefit in life insurance.

Many people buy life insurance to get both benefits. However, you can also consider a term insurance plan for a larger death benefit at a lower premium.

Premium Amount

Term insurance is quite affordable and offers large coverage at a low premium rate. On the other hand, the premium for traditional life insurance is typically higher than that of term insurance.

Term insurance is beneficial for those who need financial security for their family but do not have a stable or high income.

Coverage vs Savings

In a term insurance plan, the policyholder’s family receives the death benefit if they pass away. However, term insurance does not offer survival benefits or maturity returns like traditional life insurance.

If you only need coverage against death and cannot afford a high premium, term insurance is a good option. If you want to build an investment corpus alongside coverage, traditional life insurance is a better choice.

Closing the Policy in the Middle of the Term

Surrendering a term insurance policy is easier than surrendering traditional life insurance. In term insurance, if the policyholder stops paying premiums, the benefits stop, and the policy ends.

In contrast, with traditional life insurance, the policyholder only receives the maturity benefit if they complete the full policy term.

Policy Tenure

In term insurance, coverage is provided for a fixed period, such as 5, 10, 15, or 30 years, depending on the policyholder’s needs. On the other hand, traditional life insurance has a flexible tenure, allowing the policyholder to extend the policy until the age of 100.