Before choosing a life insurance policy, it is essential to understand the differences between term insurance and other life insurance options. Each type of insurance serves a different financial purpose, and selecting the right one depends on individual financial goals.
Comparison of term insurance and other life insurance policies:
Feature
|
Term Insurance
|
Endowment Policy
|
ULIP (Unit Linked Insurance Plan)
|
Whole Life Insurance
|
Premium cost
|
Low
|
High
|
Moderate to high
|
High
|
Maturity benefit
|
No
|
Yes
|
Yes (market-linked)
|
Yes
|
Coverage amount
|
High
|
Moderate
|
Depends on fund performance
|
High
|
Investment component
|
No
|
Yes (savings)
|
Yes (market-linked)
|
Yes (long-term savings)
|
Risk factor
|
No risk
|
Low risk
|
Market risk
|
No risk
|
Tax benefits
|
Yes
|
Yes
|
Yes
|
Yes
|
Most suited for
|
Pure protection
|
Savings & insurance
|
Investment & insurance
|
Lifelong cover
|
The primary advantage of term insurance is that it offers high coverage at a low premium, making it an ideal choice for individuals looking for financial protection. Other life insurance policies, such as ULIPs and endowment plans, provide a savings or investment component but come with higher premiums.