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Is life insurance better than term insurance?

Is life insurance better than term insurance?

Is life insurance better than term insurance

Life insurance plans provide financial security to the policyholder’s family in the case of sudden demise of the policyholder. Term insurance plans, on the one hand, are a type of life insurance. While term insurance policies provide life cover for a particular term--ranging from 10 years to 30 years, or more--life insurance policies generally provide coverage for your whole lifetime.

Both term insurance and life insurance plans have their own advantages, and it can not be said with absolute certainty that either of them is the best. If you are looking for the best life insurance policy, then you have to consider your financial requirements and life goals. You must consider different variables like your present age, earning capacity, number of dependent family members, tenure of the policy, existing health conditions and amount of coverage before selecting the best life insurance policy. Here is a look at the advantages of both the plans.

Advantages of term insurance plans: The advantages are as follows:

Cheap premium payment: The premium payment for a term insurance plan is cheaper as compared to life insurance plans. This ensures that you can provide financial security to family-members in the case of an unfortunate eventuality by paying affordable premiums. So even if you do not have a regular source of income, you can stiff afford the premiums for a term policy.

Simple to understand: Term policies are very easy to understand. You just have to pay the requisite premium, and the policy continues. Unlike ULIPs, you do not have to understand the market to invest in various funds.

Advantages of life insurance plans: Life insurance plans have the following benefits

Maturity benefit and saving component: You can receive maturity or survival benefit along with bonus, if any, for surviving the term of the policy. Life insurance plans like endowment plans and money back plans have an in-built saving mechanism, thus allowing you to create wealth. However, certain term insurance plans, such as Canara HSBC Oriental Bank of Commerce’s iSelect Star Term Plan, now also provide maturity benefits to the policyholder.

Provides returns from market instruments: In the case of certain life insurance policies like ULIPs (Unit Linked Insurance Plans), a part of the premium payment is invested in various market funds, depending on your risk appetite and investment horizon, which then provides returns just like an investment plan.

Similarities between both plans: Both term insurance and life insurance plans have many similarities. You can avail tax savings under Section 80C and Section 10D of the Income Tax Act for both the plans. With digitalisation, you can easily avail both the policies online, without the need of making physical visits to the insurance office, or going through cumbersome paperwork. Many insurance companies also provide term insurance plans with return of premiums, where the premium paid, after certain deductions is refunded to the policyholder.

Conclusion

Thus, both term plans and life insurance plans have their own unique advantages. You can select a term insurance plan if you want a pure life protection plan for your loved ones, in the case of any unfortunate eventuality. But, if you want to have an investment corpus along with a life cover, you can consider zeroing in on a whole life insurance policy. Market experts also suggest having a pure life protection plan with a higher sum assured along with investing in a whole life insurance plans. Ultimately, the choice depends on your individual requirements.

If you’d like to go in for a life insurance policy, you can consider,the Invest 4G unit linked life insurance plan from Canara HSBC Oriental Bank of Commerce life insurance, which provides multiple choices to invest your savings along with the benefit of insurance cover. Here, you can select from seven different funds and four portfolio strategies to invest your hard-earned money. The Invest 4 G online plan comes with a wide array of benefits like return of mortality charge on maturity benefit under Life Option, flexibility of switching funds to take advantage of market movements and the option of partial withdrawals to meet unplanned contingencies or emergency situations in your family.

However, if term insurance seems more up your ally, you can go in for Canara HSBC Oriental Bank of Commerce’s iSelect Star Term Plan, which comes with a whole host of benefits such as three different coverage options (level, increasing, decreasing), optional built-in covers (for eg: accidental death benefit, child support benefit) and three different payout options (lumpsum, monthly income or part lump sum/part monthly income).

Speak to an insurance specialist now!

Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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