Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products
  • 26th Aug 2021 |
  • 482

​Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products?

With the burgeoning need for insurance protection and the growing awareness among the people, plenty of innovative insurance products are available in the market today. However, to get the most out of your insurance policy, choosing the right type of insurance cover is mandatory.

While choosing the best insurance policy, you must consider factors like the number of dependents you have, age, the coverage amount required, tenure of protection, etc. So, it is vital to do a bit of research before making the final choice. While most people prefer buying a term insurance policy, others purchase a traditional life insurance policy

If you are unsure if you should buy a term plan or a traditional policy, let us compare the term insurance feature with traditional life insurance policies to know if purchasing a term plan is a smarter choice.

Death benefits payout

Term insurance has very straightforward death benefit payout terms. In the event of your demise during the policy period, your family receives the sum assured. The amount is usually much higher than the benefits offered by other traditional life insurance policies. However, if you outlive the policy tenure, you don’t get maturity or survival benefit.

In the case of traditional policies, the beneficiary may get the death benefit and the accrued interest on the investments. However, the total payout amount is generally small, and it may not be enough to take care of the family’s future expenses, particularly if you have liabilities or debts.

Savings and Coverage offered

In terms of risk coverage, it is better to buy a term insurance plan. Since the term plan only provides coverage against death and there is no maturity benefit, you get a higher coverage at a lower premium.

On the other hand, the traditional policies provide you with death coverage and allow you to invest. A part of the premium you pay goes into investment, and the rest is used to provide death coverage. However, experts recommend that such policies are neither a good investment nor good insurance.

Flexibility

A term insurance policy gives you higher flexibility than the traditional life insurance policies in terms of surrendering the plan. If you want to surrender your term plan, you need to stop the premium payment, and the policy will automatically terminate.

Also, a term policy is highly flexible when it comes to renewability. You can easily renew the plan and convert it to any other endowment policy by paying the adjusted premium. However, the traditional policies are not so flexible. You cannot convert an endowment plan into a term plan.

Premium amount

One of the significant reasons why many people buy a term plan online is that it has the most affordable premium amongst all the life insurance policies available in the market. Since a term plan is a pure protection plan, the entire premium is allocated towards providing life cover, and therefore the premium is the lowest.

In traditional life insurance policies, a part of the premium is invested in various funds, and therefore the premiums are higher. So, if you are looking for an affordable life cover, a term policy is always a smarter choice.

Final Word

Now that you are aware of the various benefits of term insurance over other traditional policies, it is better to buy a term plan and secure your family future. It gives you high coverage at an affordable premium

Kotak e-Term Plan

Download Brochure

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Insuring Protection Against Death With Death Insurance Rider

Should You Buy a Term Plan After 40?

Buying A Term Insurance Plan? Take These Factors into Account

How To Calculate The Amount Of Term Life Insurance You Need?

Gift Your Father A Term Insurance Plan This Father's Day

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

6 Reasons That Make Term Insurance a Must Buy

What All Documents Required For Term Insurance In India?

Term Life Insurance Plan for Smokers vs Non-Smokers

All About Term Insurance Inbuilt Coverage

Best Investment Plans for Children - Secure Your Child's Future

Top 3 Reasons Why You Should Buy A Term Plan Now

All you need to Know about Term Insurance Plans for Housewives

Is Group Term Life Insurance Provided By Employer Sufficient?

Insuring yourself against Ill Health with a Critical Illness Rider

How to Identify Term Insurance According to Your Needs?

4 Reasons Why You Need Critical Illness Cover

6 Types of Death not covered in Term Insurance Plan

Can Term Insurance Plans Be Purchased As A Gift?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Is a Term Insurance Policy Portable?

Is There Any Tax Benefit on Term Insurance?

Can I Buy Term Insurance for a COVID-19 Patient?

8 Types of Death not covered in Term Insurance Plan

What Are Insurance Riders and How to Choose Them in a Term Plan?

Planning For Children's Future

Busting Myths and Facts About Term Insurance Policies

How Does A Term Life Insurance Work in India?

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

What Is a Renewable Term Insurance Policy?

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

5 Benefits of Early Retirement Planning

What is Insurance Premium - A Detailed Guide

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

Make Your Online Term Plan Your Family's Monthly Pay Cheque

10-Year Term Life Insurance Policy - Explained in Detail

Is It Good To Buy A Term Insurance Plan In 2022?

Why Term Insurance Is Important in times of COVID-19?

10 Ways to Get Your Kids Involved in Your Healthy Lifestyle

Term Plans are Definitely Cheaper than You Think!

Why Premium Amount for Term Insurance is So Low?

Tax Benefits of Term Insurance in India

Is Term Life Insurance Plan an Investment or Expense?

How Not To Get Your Term Insurance Claim Rejected

Cost of Term Insurance Likely to Increase Soon

Do Beneficiaries Pay Taxes on Term Insurance?

Why Should You Not Take A Term Plan Without Medical Test in India?

How Much Cover Should I Take In A Term Plan?

Term Insurance with Critical Illness

8 Things To Do After Buying Term Insurance

4 Things To Expect From Your Term Insurance Plan in India

Understanding Term Insurance Riders

What is Critical Illness Policy

4 Methods to Calculate How Much Term Insurance You Need

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

Does Your Term Insurance Plan Cover Death Due to COVID-19?

Is ₹1 Crore Term Insurance Good Enough Cover?

Why is it important to buy term insurance plan?

Reasons You Need Term Insurance Plan as a Self-Employed Person

Should You Have Multiple Term Life Insurance Policies?

Term Insurance: Smokers vs Non-Smokers

Can Senior Citizens Avail Term Insurance?

Can I Make Changes to My Term Insurance Policy Post Purchase?

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

What Types of Deaths Are Covered in a Term Insurance Plan?

Planning For Son or Daughter's Wedding

Different Types of Premium in Term Insurance

Online vs Offline Term Insurance: Which Is The Better Option To Buy

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

Choosing Riders for Insurance Plans

Term Insurance: What Happens When You Don’t Pay Your Premiums?

What Should Be The Duration Of Your Term Plan in India?

What Should You opt for - Limited or Premium Pay?

Which Death Type Does Your Term Plan Not Cover?

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

How To Change The Nominee in Term Insurance?

Difference Between Term Insurance vs Life Insurance

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

Term Insurance Calculator - Everythng You Need To Know

Advantages & Disadvantages of Term Insurance in India

Term Insurance Age Limit – Term Plan for All Age Groups

Importance of Term Insurance at Every Stage of Your Life

9 Ways to Help Family Members in Financial Trouble

Why Spending Time with Friends is Essential for Your Mental Health?

Term Insurance – Why You Must Include In Your Financial Planning?

Can I Extend the Tenure of My Term Insurance Plan?

While Buying Term Insurance Compare Features, Not Just Premiums

How To Choose the Right Term Insurance Plan?

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

Increasing Term Insurance and Riders

Eligibility Criteria for Buying Term Insurance in India

Why Should You Buy Term Insurance in 2022?

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

Advantages of Buying Term Insurance in Your 50s

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

How to Surrender Term Life Insurance When You Have No Liabilities?

Why 1 Cr Term Plan Is Necessary For Family?

How to Buy 1 Crore Life Insurance Policy Without Medical Test

Tips to Choose the Right Term Period for Term Insurance Plan

Why Buy Term Insurance Plan With a High Cover?

5 Things To Consider While Buying Term Insurance Plan

Ensure Protection Against Death, Disease & Disability With Life Insurance

Why Term Insurance Is Better Than ULIP?

What are incremental term insurance plans?

Why Term Plan Should Be The First Step To Securing Your Future?

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

What Are the Best Term Insurance Plans for Planning Retirement?

Comparing Term Plans – What Should You Look Out For

5 Term Insurance Benefits for Single Women

Term Insurance With Riders In India

Endowment Plans vs Term Plans: Understanding the difference

Calculating Term Insurance Premium

What is Term Insurance - A Complete Guide

What are the Documents Required for Term Insurance Plan?

Why should single women purchase term life insurance?

Why does every working woman need life insurance?

Term Insurance Plans and Policies for Smokers

Why Should New Parents Buy Term Life Insurance?

9 Most Frequently Asked Questions on Term Insurance

Is term Insurance Needed for People With No Dependents?

What is a short term insurance policy?

Steps on How to Buy Term Insurance Online

Make Your Online Term Plan Your Familys Monthly Payout

Is Life Insurance Investment Worthy Enough

How to Ensure That Your Term Insurance Claims Are Never Rejected?

Insuring Against Disability With Disability Insurance Rider

Why Should You Add a Rider to a Term Insurance Plan?

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

Term Plan with Spouse Cover

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

Can You Increase Your Term Insurance Cover?

Why Buy Term Insurance Even at Rising Rates?

Can I Get Term Insurance on Behalf of My Spouse?

Term Insurance Basics You Should Know

Side Effects of Covid-19 Booster Doses

8 Factors to consider before choosing a Critical Illness Insurance

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

How Does Term Life Insurance Work? Learn the Benefits

Insuring Against Accidents with an Accidental Death Insurance Rider

How Much Term Life Insurance Cover Do I Need in India?

5 Reasons to Buy Term Insurance When You are in Your 30s

Key Differences Between Term Insurance, ULIPs, And Health Insurance

What Happens if you Hide Facts in your Term Insurance?

Individual Life Insurance vs. Group Term Life Insurance

Why Married People Should Buy Term Insurance Under MWP Act?

Do You Need Term Insurance Cover After Retirement?

10 Ways to Mentally Refresh After a Stressful Day

Insurance Policy for Housewife In India

Know How to Invest at Every Age for Larger Returns

Protection for your family

Do I Need to Give a Medical Test for Term Insurance in India?

Different Types of Protection Plans

How To Choose the Right Sum Assured Under a Term Plan?

कोविड -19 बूस्टर खुराक के दुष्प्रभाव

How Much Term Insurance Do I Need

Everything About Claim Settlement Ratio for Term Insurance

How to Compare Term Insurance Online

What Is the Correct Age to Buy Term Insurance?

Does Term Insurance Cover Accidental Death?

8 Benefits of Term Insurance You Should Know