Life Insurance and Term Insurance: Provide financial security for your family

Life Given the multiple circumstances, it is necessary that we take care of our family’s economic situation. Life insurance is an important tool that helps your family financially.

What is Life Insurance?

Life insurance is a contract in which the insurance company provides a fixed amount of money to the candidate after the death of the insured. Life insurance is not only limited to providing protection, but is also an investment tool. In a life insurance policy, the policyholder also receives a fixed maturity amount at the end of the policy term. Therefore, it is a means of security as well as investment. Let us know about life insurance.

Main benefits of life insurance (life insurance)

1. Financial Protection: If the policyholder dies during the policy term, the candidate receives the sum assured, which helps meet his/her living and other financial needs.

2. Investment and Savings Means: Life insurance not only provides insurance protection but is also a means of savings and investment. The policyholder receives the maturity amount at the end of the policy term.

3. Tax benefits: Tax exemption can be availed on the premium of the life insurance policy. Under Section 80C, the insured gets tax benefits and under Section 10(10D), the sum assured is tax-free.

4. Financial Stability: Life insurance provides you with financial stability, since it is a long-term investment plan. Through this you can save for your children’s education, marriage and retirement.

What is term insurance?

Term insurance is a type of life insurance that primarily provides financial protection in the event of the accidental death of the insured. This is an insurance plan in which the insured sum is paid only in the event of death. There is no maturity benefit or investment benefit in this, so its premium is lower than that of life insurance.

Main benefits of term insurance

1. Low premium: The premium for term insurance is much lower than other life insurance plans, making it easier to purchase.

2. Large sum insured: The benefit of a large sum insured with a low premium ensures that your family receives adequate financial support in your absence.

3. Simplicity: In a term insurance policy, the insured can choose the insurance period as per his or her needs. The insurance term can be 10, 20 or 30 years.

4. Riders Option: Along with term insurance, one can also get the option of riders for accidental death and critical illness benefit, making the policy even more effective.

5. Tax Benefits: Term insurance policies also get tax exemption under Section 80C and tax benefits on sum assured under Section 10 (10D).

Main differences between life insurance and term insurance

1. Insurance and Investment: Life insurance is a means of protection as well as investment, while term insurance only provides insurance protection.
2. Premium: The premium of a life insurance policy is higher than that of term insurance because it also has investment benefits. Term insurance has lower premiums due to the pure insurance protection it provides.
3. Total Benefit: In a life insurance policy, one receives the maturity amount at the end of the policy term, while in a term insurance, one does not receive any amount at the end of the policy term, if the insured survives.
4. Sum Assured: Term insurance provides a higher sum assured as compared to life insurance because it does not generate any investment profit.

Who should buy term insurance?

1. Young People: Term insurance is a good option for those who are at the beginning of their career and want more insurance protection with a lower premium.
2. Family Responsibility: People whose family depends on your income should take out term insurance so that the family does not have to face financial difficulties after your sudden death.
3. Loan holders: If you have taken out a home loan or any other type of loan, term insurance can help your family repay the loan in your absence.

Life insurance or term insurance: which one to choose?

Both life insurance and term insurance have their own benefits. If you want the benefits of investment along with protection, then life insurance may be the right option for you. At the same time, if you want more protection with a lower premium and no investment is required, then term insurance is a better option for you.

Both life insurance and term insurance are important means of providing financial security for your family. Life insurance is a combination of protection and investment, while term insurance provides pure insurance protection. Depending on your needs and financial situation, you will be able to make the right decision and secure the future of your family.