Questions iCommunity


Community User Posted on 01:02pm 26-Feb-2017

What is the difference between term insurance and life insurance?

  • Community User Term insurance is pure insurance where you don t get any money back if nothing happens to you during the tenure (unless you take a term insurance with money return option). Life insurance as it is generally used, is usually a mixture of investment and insurance, so usually in life insurance if you get some defined amount at maturity (in case of traditional life insurance policy) or market linked returns (in case of market linked policy) and there is also a sum assured which is given to your nominee if something happens to you

    05:56pm 27-Feb-2017

  • Community User Life Insurance is a common term which indicates a bunch of financial products that provide insurance for your life (provide financial benefits to your dependents incase of your death). Term Insurance is one such product under the umbrella of Life Insurance products. In Term Insurance you will pay the insurance premium every year (yearly once or twice or multiple times based on the premium amount for each installment) for pre-determined number of years (called the policy period) to the insurer. If you die within the policy period then the insurer pays you the insurance amount which would be typically much more than the premium amount you paid. On the other hand if you dont die within the policy period then you will not be paid anything (not even the premium amount you paid would be returned). There are other life insurance products which will return part or full premium amount (plus other benefits like interest or amount earned by putting the money in equity, etc) if die or don t die during the policy period. Those products may look beneficial (since they return back your money + they provide insurance + assure additional income/amount earned through interest or equity) compared to Term Insurance but infact Term Insurance is one of the cheapest insurance product because the premium you pay would be far less in Term Insurance compared to any other Life Insurance products.

    07:02pm 27-Feb-2017

  • Community User Term insurance has been traditionally on the life of an insured person, now some variants with Health cover for critical illnesses are available. As explained by MAYPUNE, there is no guaranteed return for the premium paid, meaning we buy the life insurance risk only. If the dreaded thing happens the family gets to benefit and no further premia due need to be paid. So no loan may be available on pledging the term insurance policy.
    Life Insurance as a vanilla policy has never been sold in good numbers in the past so insurance companies started selling them as a bundled product like Money Back or Unit Linked Insurance Policy or Endowment Policy etc., where there are Sum Assured, Guaranteed additions and Bonuses etc for accidental deaths, natural deaths, suffering loss of limbs etc based on riders bought.

    06:01am 02-Apr-2017