Difference Between Term Life Insurance and Traditional Life Insurance | PayBima

If you’re confused between term life insurance and regular life insurance, the two most common types of life insurance, read this article to learn the steps to make the right decision.

Term insurance and term insurance are two types of insurance that people use to protect the lives of their loved ones. Therefore, no one can tell about life and what will happen in life. The appearance of an unpleasant event can occur at any time in life and cause serious financial and emotional problems. That is why the head of the family wants to have life insurance to support the family in the event of an unfortunate death.

Life insurance is a great way to help deal with financial risks by insuring you and your family during an emergency. Not only this, long term insurance it also helps under section 80C for tax deduction up to Rs. 1.5 lakh.

Now, term and life insurance are the two most common types of life insurance. On the other hand, term plans are protection policies that provide a death benefit to the policyholder. On the other hand, traditional life insurance allows for a maturity benefit and a death benefit. However, term insurance is the cheapest and most affordable of all types of life insurance.

4 Things to Consider Before Choosing Between Term Insurance and Traditional Life Insurance

Here is a list of things to consider before making the decision between traditional life insurance or term life insurance.

  1. Benefit of Death – The death benefit that is paid to the policyholder in case of accidental death of the policyholder is the main reason for the difference between life insurance and term insurance. During the insurance period, the death benefit is received when the insured dies during the policy, after that period, the benefit is not paid. In traditional life insurance, on the other hand, the owner is entitled to both maturity and death benefits, thus allowing for double benefits. However, you may also notice that compared to regular life insurance, the amount of death benefit provided under term life insurance is much higher.
  2. Flexibility of Surrender Policy – Another thing to consider is related to the commitment of the process. If it is a term insurance policy, the policyholder can easily issue a term plan without any problem. However, this may not be easy if you have a life insurance plan. Also, your term plan insurance may allow you to convert your term insurance plan into a premium plan at a higher cost. In traditional life insurance if the policyholder does not pay the premium, he loses all the benefits under the policy. Also, if they surrender the policy, they lose the maturity benefit under the life insurance policy.
  3. Premium Fees – When you talk about term insurance, it is a low cost life insurance that allows good returns at a low price. On the other hand, the best life insurance plan may require the policyholder to pay more if they want to receive more benefits.
  4. Authority – The need for long-term insurance is provided for up to several years depending on your annual income, financial activities and other factors. The maximum term life insurance policy is around 80 years. In contrast, in the case of traditional life insurance, you can enjoy coverage from 5 to 100 years of age.

Also Read: Ways To Increase Your Coverage In Term Insurance

The end

If you think about the benefits of non-traditional life insurance, both have their own unique benefits. However, one common benefit among all these plans is related to income tax, which is available under section 80C and 10D of the IT Act, 1961.

In terms of premium payments, they can be paid monthly and quarterly as well as semi-annually and annually. Additional coverage can also be opted for by adding riders to your plan including critical illness riders, high cost riders and more at an additional cost.

As we all know that life insurance is a very important investment that is made to keep your family financially protected. Therefore, it is important to carefully consider the above factors when choosing a policy. Therefore, keep in mind the parameters mentioned above to make the right decision when buying life insurance.

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