Term Insurance vs Life Insurance: Which is Better?
Understand the key differences between term insurance and traditional life insurance to make the right choice for your family's financial security.
Understanding Life Insurance Types
When it comes to life insurance, the two main categories are term insurance and traditional life insurance (endowment/ULIP). Each serves different purposes and has distinct features.
What is Term Insurance?
Term insurance is a pure protection plan that provides life cover for a specific period. It offers high coverage at low premiums but has no investment component.
What is Traditional Life Insurance?
Traditional life insurance combines insurance with investment. It includes endowment plans, money-back policies, and ULIPs that provide both protection and returns.
Key Differences
| Feature | Term Insurance | Traditional Life Insurance |
|---|---|---|
| Premium | Low | High |
| Coverage | High | Lower |
| Investment | No | Yes |
| Returns | None | Guaranteed/Market-linked |
Which Should You Choose?
For pure protection needs, term insurance is ideal due to its affordability and high coverage. For those seeking both protection and investment, traditional plans might be suitable, though separating insurance and investment is often recommended.