The main difference between term insurance and life insurance is that term insurance is a type of life insurance that provides coverage for a specific period, while life insurance is a broader category that can include coverage for a lifetime and often combines insurance with investment or savings components. Term insurance offers pure protection at a lower cost, whereas other life insurance plans, like whole life or endowment plans, provide long term coverage and may have higher premiums due to the added savings/investment benefits.
Term Plans
Let’s take a look at the top 5 difference between term insurance and life insurance with the help of a table:
| Parameters | Term Insurance | Life Insurance |
| Purpose | Pure protection against untimely death | Offers combined benefits of insurance with savings cover |
| Premium | Low premium rates | Premiums are higher than term plans |
| Death Benefit | Payable for all policies | Payable for all policies |
| Maturity Benefit | Generally, not payable | Payable under most of the policies |
| Coverage Duration | Benefit is payable only on death during the policy term | Benefit is payable on death and survival of the policy term |
| Benefit Component | Offers pure risk protection | Offers risk protection along with wealth creation benefits |
Note: You should understand what is term insurance first, and then buy a term plan to protect your loved ones.
Here are the detailed additional differences between term insurance and life insurance:
| Parameters | Term Life Insurance | Life Insurance |
| Sum Assured | Offers large sum assured like 1 crore, 2 crore, etc at budget-friendly premiums | Offers lower sum assured at comparatively higher premiums |
| Policy Tenure | The tenure ranges from 5 -35 years | The tenure ranges from 5-40 years |
| Flexibility | Not that flexible | Flexible |
| Loan Benefit | Loan benefit is not available | Loan benefit is available in most life insurance policies |
| Surrender value/Paid-up value | No Surrender value or attained paid-up value | In case of discontinuation of premium after a certain number of years, the plan attains a paid-up value, and if the policy is surrendered after that, then a surrender value is payable |
| Best for | Those who want high coverage at low premium rates for a specific period such as new families | Those who want lifelong coverage with a savings component and are can pay higher premiums. |
Before we look at term insurance vs life insurance, let us understand the difference between term insurance and life insurance and their meaning:
Term insurance is a type of life insurance policy that offers pure risk protection. It provides a death benefit to your family in case of your unfortunate demise and can also cover critical illness or disability, depending on the riders added to the plan. Compared to life insurance, term plans are more affordable and offer a higher life cover for a longer tenure. If you want a payout on policy maturity, you can choose a Term Return of Premium (TROP) plan.
Coverage: Term insurance offers coverage for a fixed term (e.g., 5, 10, or 30 years).
Premium Cost: Premium costs are typically lower than life insurance plans.
Benefits: These plans pay a death benefit to the nominee if you suffer an untimely death during the policy term. There is no maturity benefit in regular term plans if you outlive the policy tenure.
Cash value: There is no accumulation of cash value in these plans.
Best for: Providing affordable coverage for a specific need, like paying off the remaining mortgage or raising children.
Life insurance plans offer death, maturity, and survival benefits along with long-term financial security. Besides protecting your family, they also help in wealth creation through bonuses or market-linked returns, making them suitable for future goals and retirement planning. While premiums are usually higher than term insurance, they combine protection with savings or investment benefits.
Coverage: Life insurance offers coverage for your entire life as long as premiums are paid.
Premiums Cost: Premiums are generally higher than term life insurance.
Benefits: Life insurance pays a death benefit and may include a cash value component that grows over time.
Cash value: A portion of the premium goes into a savings/investment account that you can borrow against or withdraw from.
Best for: Those seeking lifelong protection along with a savings or investment component.
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Now that we have understood the difference between term and life insurance, here are some simple questions to help you decide whether you should opt for a term plan or a different type of life insurance plan:
What is your main reason for buying life insurance?
If your main goal is to financially protect your family in case of death, illness, or disability, a term plan is ideal because it offers high coverage at an affordable premium. When comparing life insurance and term life insurance, term plans focus on protection, while other life plans also support savings and retirement goals.
Are you looking for affordable premiums and high coverage?
Term life insurance is the best option if you need large life cover at an affordable premium. When you compare life vs term insurance, term life insurance is the best option if you need maximum cover. Whole life insurance is the best option if you need life cover over your whole lifetime.
Do you already have an investment portfolio?
If you already have a diversified investment portfolio, a term insurance plan works well as pure life cover. In term insurance vs life insurance, term plans complement your existing investments by offering protection without overlapping with your wealth-building strategy.
Insurance companies in India are mainly divided into life insurance companies and non-life insurance companies. Non-life insurers further include health insurance, general insurance, and standalone health insurance providers that offer coverage for medical expenses, vehicles, travel, property, and more.
Term insurance provides financial support to the nominee if the policyholder passes away during the policy term, while health insurance covers medical and hospitalisation expenses caused by illnesses, accidents, or treatments.
Life insurance offers financial protection linked to the policyholder’s life and may also provide savings or investment benefits. Non-life insurance, on the other hand, covers risks related to health, vehicles, travel, home, and other assets for a specific period.
A term plan is a type of life insurance that offers pure life cover for a fixed period without maturity benefits in most cases. Life insurance is a broader category that includes term plans, endowment plans, ULIPs, money-back policies, and other plans that may combine protection with savings or investment features.
When evaluating term plan vs ULIP, it helps to look at how both plans differ in terms of coverage, premium usage, risk level, and overall financial objective. The difference between term insurance and ULIP is highlighted below clearly.
| Feature | Term Insurance | ULIP (Unit Linked Insurance Plan) |
| Purpose | Term insurance is designed purely to provide financial protection for your family. | A ULIP combines life insurance with an investment component. |
| How the Premium Is Used | The entire premium goes toward providing life cover. | The premium is divided between life insurance and market-linked investments. |
| Life Cover | Term plans generally offer higher coverage for the same premium. | The life cover is usually lower because part of the premium is invested. |
| Returns | Most term plans do not offer maturity benefits since the focus is protection. | Returns may be available depending on how the invested funds perform in the market. |
| Risk Factor | Term insurance does not carry market risk. | ULIP returns are dependent on market performance, so there is some investment risk involved. |
Now that we have understood the difference between term insurance vs life insurance, let us take a look at the similarities between life insurance and term insurance:
| Basis of Similarity | Life Insurance | Term Insurance |
| Financial Protection | Provides financial security to the nominee in case of the policyholder’s unfortunate demise. | Also offers financial support to the family if the policyholder passes away during the policy term. |
| Life Cover Benefit | Offers life coverage for the life assured as per the chosen policy terms. | Term insurance provides life cover for a specific duration selected by the policyholder. |
| Tax Benefits | Eligible premiums and benefits may qualify for tax benefits under prevailing tax laws. | Term insurance plans also offer similar tax-saving benefits on premiums and payouts. |
| Nominee Benefits | The nominee receives the policy benefit according to the policy conditions. | The nominee receives the death benefit if the life assured suffers an untimely death during the term. |
| Financial Planning Tool | Helps individuals plan long-term financial security for their family and future goals. | Acts as an important financial safety net for dependents and liabilities. |
When comparing the difference between term insurance and life insurance, both types of plans have their benefits and relevance. Term insurance plans are must-have plan for everyone as they provide financial protection against premature death. By knowing the difference between term insurance and life insurance plans, one can choose the most suitable plan for themselves and their loved ones.
In simple words, term insurance vs life insurance can easily be understood as the term plan offers coverage for a specific period and the life insurance offers coverage for whole life.
Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.
| Type of Benefit | Term Insurance | Life Insurance |
| Coverage | Provide death benefit and return of premiums as per the T&Cs | Provide death benefit and maturity benefit as per the T&Cs |
| Tenure | 5 years to 35/40 years | 5 years to whole life |
| Sum Assured | Larger sum assured | Lower sum assured |
| Premium | Low premium rates | Comparatively higher than term plans |
| Death Benefit | Payable if the policyholder passes away within the policy term | Payable if the policyholder outlives or dies within the policy term |
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Varun has spent years in the insurance space, but what drives him isn't policies or premiums — it's the conversations he's had with real people. A young father in Pune wondering if his salary is enough. A newly married couple in Jaipur putting off "the insurance talk" for later. A mother in Chennai who never knew her husband was underinsured until it was too late. These stories stay with him. As Head of Term Insurance at Policybazaar, Varun knows the numbers well — 52.4% of Indians are aware of term insurance, yet only 9.6% own it. And 87% of families don't realise they're leaving their loved ones with far less protection than they actually need. But behind every statistic, he sees a family that just needed someone to sit with them, explain it simply, and help them take that one step. That's exactly what Policybazaar's term insurance is built to do. In his words, "Most people aren't avoiding protection — they're just waiting for someone to make it easy. That's what we're here for."
˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.
Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.
+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.
+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.
+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. ₹361/month is the starting price for a ₹1 crore loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10
+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.
+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.
Women
+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.
Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.
1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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