- Date : 08/07/2021
- Read: 4 mins
- Read in हिंदी: जीवन बीमा से टर्म बीमा में अंतर कैसे है?
Although the primary objective of term insurance and life insurance is to provide financial coverage to the policyholder, they differ in many ways.

When you draw up a financial plan, it is crucial to include an insurance policy. Given the increasing relevance of insurance today, the market is flush with a variety of insurance products. It is essential to choose the right insurance policy if you wish to lead a stress-free life without financial woes, and to secure the future of your loved ones.
Before zeroing in on an insurance policy, however, do a bit of research and consider some factors such as the amount of coverage required, time period, tenure, age, and number of dependents. It is very important to understand the different types of insurance plans and what they offer.
While there are quite a few types of life insurance plans available in the market, term insurance is one such variant and is considered to be the most purest form of life insurance. As the name suggests, term insurance plans are life insurance plans purchased for a specified time period. Let us look at the differences between term insurance and life insurance plans that will help you make an informed decision.
Death benefit: A term insurance plan offers death benefit only in case of the demise of the policyholder within the term period. On the other hand, a life insurance policy provides both death and maturity benefits to the insured. However, ensure you read through the plan carefully, as the benefits differ from each policy to another. Life insurance plans cover the risk of premature death, and also pay a benefit if the insured survives until the end of the policy tenure. The death benefit provided by a term insurance policy is usually higher than the maturity benefit that you would get from a life insurance policy.
Premium: You can avail of term insurance plans with a high sum assured by paying lower premiums, which makes them very economical. Term insurance plans are the cheapest type of life insurance plans. This is because they cover only the risk of premature death. Since other life insurance plans provide wider coverage and pay out a maturity benefit, they command higher premium payments.
Related: Easy ways to buy a term life insurance policy
Paid-up and surrender value: Term plans do not provide paid-up or surrender value. If you stop paying the premium, your policy gets terminated and you don’t get any amount in return against the premiums already paid. However, under a life insurance plan, if you discontinue premiums, you are still entitled to receive some benefits. If your policy is paid up (that is, you discontinued premium payments after a specified minimum number of years), your policy would still continue, but with a reduced coverage. If you want to terminate your policy, you can surrender it and get a surrender value.
Risk covered vs savings: Term plans do not offer survival benefits, but only covers the insured by providing a death benefit to the family in case of their demise. Primarily, one can consider a term insurance plan if they only want protection against death at a minimal cost. A life insurance policy comes with an investment feature and is ideal if you are looking to create an investment corpus along with life cover.
Related: Saral Jeevan Bima: A standard term life insurance policy from Jan 1, 2021
Variants: With the goal of providing financial security, term insurance plans come in four variants depending on the coverage provided. These are level term insurance, increasing term insurance, decreasing term insurance, and return of premium term plans. On the other hand, you can choose a life insurance policy depending upon the goal you want to fulfil. For example, endowment plans allow you to create wealth through guaranteed returns while money back plans provide you with liquidity. Child plans offer financial security to your child in your absence while unit-linked plans help you earn market linked returns with the option to invest in equity, debt or both.
Flexibility: In spite of being easy to surrender, term insurance is not as flexible as life insurance, which offers paid up and surrender value. Under a life insurance plan, you can avail policy loans too. Moreover, with ULIPs, you can also withdraw partially, switch, or pay additional premiums. Here is how buying term insurance online helps in achieving goals.
Related: How to choose the right term for your Term Plan
Before you invest in the most ideal plan for your coverage needs, it is important to assess the basic differences between the types of life insurance plans and how to pick a plan that is most relevant to your objectives or goals. FAQs about life insurance coverage during pandemic times.