With numerous life insurance products available in the market, it often becomes difficult to choose the best plan. You may make a choice based on individual needs and requirements. Out of the numerous insurance plans, one of the most preferred options is a term insurance policy. You may further increase your coverage by opting for a comprehensive plan.

Understanding term plans

A term insurance plan, as the name suggests, offers a certain level of coverage for a fixed term. Such a plan is also known as a pure life cover, as it offers coverage in case of an unfortunate death. Your beneficiary is entitled to receive a predetermined sum assured, which may be used to meet their lifestyle needs and other financial obligations. It is important to note that term plans do not offer any maturity benefit, indicating that they do not provide any returns once the term is over.

Understanding comprehensive insurance plans

A comprehensive insurance policy offers enhanced benefit over and above a life cover. It provides additional coverage through a variety of rider options available. Most life insurance providers offer a plethora of rider options such as critical illness rider, accidental death benefit rider, and permanent disability benefit rider, among others.

Term insurance plans vs. comprehensive insurance plans: making the right choice

Both term and comprehensive policies come with their individual set of features and benefits. Make a careful analysis of both the options before deciding on the best type of plan.

  1. Scope of coverage

As stated earlier, term plans offer financial protection to your loved ones in case of your unfortunate death. You get peace of mind knowing that your family’s financial needs will be taken care of when you are not around. Comprehensive plans, on the other hand, offer extra coverage over term plans. It protects you against critical illness, disability, or accident, as per the stipulations of your policy in addition to securing the future of your loved ones.

  1. Claim stage

For a term plan, a claim may be made just once. In an event of death of the life insured, the beneficiary may make a single claim. The insurance provider then assesses the claim and makes the settlement. You may, however, make two claims in case of a comprehensive cover. One claim may be made upon diagnosis of the critical illness or upon an occurrence of an accident. The second claim may be made on the death of the life assured.

  1. Frequency of claim payment

Generally, term insurance plans offer a lump sum payment to the beneficiary. Benefit of a comprehensive insurance plan, on the other hand, may be provided either through regular installments or a lump sum amount.

  1. Financial objective

One of the primary term insurance benefits is reducing the financial burden on your dependents in case of an unfortunate death. The death benefit also acts as income replacement in case you are the sole breadwinner of the family. The amount received in a comprehensive plan, however, may be used for numerous purposes. It may be used to cover medical expensesin case of disability, accident, or critical illness. It also acts as an income replacement and helps provide financial security in case of death.

Compare the features and benefits of both term insurance plansand comprehensive plans and make a choice based on your needs. It is recommended to purchase a comprehensive cover as such an option offers higher coverage at an affordable rate. You may be assured of meeting financial obligations in case an untoward event occurs.