Term Insurance vs Life Insurance – What’s the Difference & Which One Should You Buy?

Term Insurance vs Life Insurance – What’s the Difference & Which One Should You Buy?

In India, many people buy insurance without fully understanding what they’re getting. Two of the most common types are term insurance and life insurance (endowment/ULIP) — but they are very different.

Let’s break it down and see which one is better for you in 2025.

What is Term Insurance?

• Pure risk cover
• High sum assured (₹50L – ₹1Cr) at low premium
• No maturity benefit (only paid if the policyholder dies)
• Ideal for: Sole earners, parents, anyone who wants to protect their family

Example: A 30-year-old can get ₹1 crore cover for just ₹800/month.

What is Traditional Life Insurance?

• Combination of insurance + savings/investment
• Lower sum assured, higher premium
• Includes maturity value, bonuses, etc.
• Types: Endowment, ULIP, Whole life

Example: You pay ₹5,000/month, and after 20 years get maturity + bonuses.

Term vs Life Insurance – Comparison Table

Feature	Term Insurance	Life Insurance (Endowment)
Premium	Low	High
Sum Assured	High	Low
Maturity Benefit	No	Yes
Purpose	Protection	Savings + Protection
Tax Benefit	Yes (80C, 10(10D))	Yes

Which One Should You Buy in 2025?

• If you want pure protection at the lowest cost → Go for term insurance.
• If you also want returns/maturity → Then traditional life plans may suit you.
• You can buy both — term for protection + mutual fund/SIP for wealth.

Conclusion

Buying the right insurance is a financial responsibility. Don’t fall for flashy plans — understand your goals first. In most cases, term insurance + smart investing gives the best results.