What is the difference between term and life insurance?

Though both are life insurance products, there are some significant departures between term and life insurance policies. Let’s take a look at these differences.

The main purpose of any person’s existence is to create a stable life for himself and his loved ones. To this end, he gets an education, a good job and tries to grow his wealth by picking up extra shifts at work and making timely investments. For any responsible family person, his loved one’s comforts and the realisation of their dreams are the biggest priorities and to this end, he works hard all day to create a peaceful and worry-free life.

A major step in this direction is also taken with life insurance. Taking insurance helps protect our loved ones from future financial setbacks in our absence. However, those taking insurance are often faced with the prospect of taking term insurance over whole life insurance policies. This decision is influenced partly by the affordable premiums entailed in term insurance, as also the higher sum assured. But life insurance policies also have their own benefits – so which one should you choose?

We help you decide. Take a look at this chart below:

Parameter	Term insurance	Whole life insurance
Tenure of the insurance policy	A fixed term of time (say 10, 15, 20 years)	Valid for life time of the policy holder
Benefits offered	Death benefit only	Maturity benefits
Returns	No returns offered	Low returns offered
Affordability of the plan	Very affordable, with low premium payments	Expensive, with high premium payments
Good investment?	Not an investment policy	Yes, especially when timed with major life events
Market-linked?	No	Yes, especially with ULIPs
Bonus potential	NIL	Good, especially with claim-free policies
Tax benefits?	The premiums are not taxed	Premiums may be taxed
Surrender value	NIL. Policy is terminated when premiums are not paid	There may be a surrender value based on when the policy is surrendered
Revision option	NIL	Yes

Does this explain the essential differences between term insurance and whole life insurance? We hope the above comparison helps you decide whether you need to take term insurance or whole life insurance. Whatever you decide, it is a step in the right direction – after all, isn’t it your job to protect your loved ones, even in your absence?

Equity funds: The right path to a safe financial future

Equity funds are varied and reliable investment options for the investor who is confident about his financial goals and how to achieve them.

If making investments was easy, everybody would be an investor! However, the investment universe is not as unfriendly or mysterious as an inexperienced person would assume it to be. When dealt with intelligently and with an eye on market trends, an investor can actually realise his financial goals beyond his wildest expectations.

But choosing the right investment instrument is important. Many investors look to invest in shares and equities, and this is a sensible choice. Investing such that the portfolio is a mix of shares of large and small companies in both established and new sectors of business can help create diversity and get excellent returns over the long run. In this context, it is important to mention that investing in equity funds can get investors good returns safely and reliably.

Though no market-linked investments are devoid of risk, diversified equity funds provide long term capital growth by investing in the highest performing sectors and industries. Thus, long term capital growth is assured by capitalising on key moments in the market cycle. Often, the best equity funds invest in the markets without bias but with a keen eye on established and lucrative industries, as also upcoming sectors that are likely to see a major boom.

Thus, equity funds provide ample opportunity for investors to create wealth over a long period of time. It also helps the investor hold on to a large bouquet of securities for the future.

If you are a novice investor that is unsure or unable to read the market trends correctly, you can enlist the help of a fund manager who can advise you on building your portfolio. The fund manager will invest your money on your behalf and track the fund’s progress to ensure that your investment goals are met.

There are excellent options in equity funds in the country today. While making your choice, it is prudent to go with a fund that invests in IPOs and emerging sectors that have the potential for future growth. Also, it is possible to purchase equity funds online and track the fund NAV on a daily basis. Besides this, your fund manager can monitor the markets’ daily working and appraise you about your fund’s performance regularly. If you are about to invest in the markets this year, you can choose frontline equity funds and diversified equity funds for the best returns.