Term Insurance vs Traditional Insurance – Which One Should You Buy?

Insurance plays a crucial role in our lives. In fact, life insurance has become a very important investment that everyone who is earning is purchasing. A recent report shows 7.7% growth of India’s insurance market. However, situations like the Covid-19 pandemic have shown us time and again that life insurance should be considered as an essential thing and not treated as a choice.

Over the years, life insurance policies have only improved. Now it not only offers life coverage and financial security to your loved ones. These Life insurance policies can now be used as a tool to grow your wealth, achieve the goals of both your family and yourself, secure your retirement, etc.

Apart from constantly evolving, these policies come at a very affordable rate as well. Thus, the new term insurance policies make it easier for more people to secure their families financially.

There are multiple options available in the insurance market, each with its own USP. You should know about these policies so that you do not get confused and can make an informed decision when you decide to buy.

Also Read - Term Insurance Vs Endowment Plan

Both traditional and term insurance plans involve payment of a death benefit to the policyholder’s family at the time of an unfortunate demise. But there are differences as well. Let’s take a look at them.

When to Buy a Term Insurance Policy?

Term insurance is the most affordable type of life insurance available on the market. The term insurance plan offers coverage for your life for a specific duration, known as the term of the policy. This is done in exchange for regular payments to the insurance companies (premiums).

A term insurance policy will provide your family with an agreed-upon sum assured if you die during the term period. No matter what investments you have made, you should have a term plan for yourself.

There is no perfect age at which you should decide to purchase a term plan. Currently, the term plan age eligibility is only 18 years old. It is also advised that you buy a term insurance plan as soon as you start earning.

This is because the premiums are lower at a young age. Buying term insurance at an early age will give you peace of mind and will also help lower the burden on your parents if you have taken a loan.

This will also help you develop the habit of saving from a young age. This helps in building discipline.

Also Read- Term Insurance Calculator

Why Do You Need a Traditional Insurance Plan?

Though term insurance is a very good option to ensure that your family stays financially secure even after your death, it is available at an affordable price.

Financial security, though one of the biggest, may not be your only concern. There are other goals to achieve as well. For this, you may need to buy traditional insurance.

Traditional life insurance, apart from providing financial cover, can also be offered to achieve the following goals.

• Wealth Preservation: Traditional life insurance policies can help you preserve as well as create wealth. These plans require you to pay premiums regularly or all at once, as per your needs. These plans offer you a maturity or survival benefit as well. This is built from the amount you constantly invest in your plan. Thus, it helps preserve your money.
• Safe Investment: Traditional investment policies have an investment component as well. Thus, it not only offers to cover your risk but also invests your money. Your money is invested in safe income securities such as government bonds and other fixed-income securities.
• To Achieve Goals: Life insurance policies, such as money back policies or ULIPs, are designed in such a way that they help you achieve your long-term goals. The money you invest helps you build a solid corpus. With this corpus, you can help achieve major financial goals such as buying a house, a car, ensuring a good education for a child, etc.

Plans by Canara HSBC Life Insurance

We hope that now you are clear about both these plans and whether these are suitable or not. Canara HSBC Life Insurance offers both term and traditional plans to suit your needs.

• Term Insurance Plans: These are simple plans that offer life coverage for a fixed period in exchange for premiums.
  1. iSelect Smart360 Term Plan: The iSelect Smart360 Term Plan offers life cover up to age 99 and allows return of all premiums if no claim is made during the term (“Return of Premium” option). You may choose lump sum or monthly income payouts, or a mix, with options for increasing income over time. A "Block your premium" option lets you lock premium rates and increase coverage by up to 100 per cent over five years without medical underwriting. It includes in‑built terminal illness cover and optional riders such as accidental death, total permanent disability, child care benefit, and waiver of premium.
• Traditional Life Insurance Plans: Life insurance plans, traditionally, do not include a savings component, but some insurance providers can offer guaranteed benefits.
  1. iSelect Guaranteed Future Plus: The iSelect Guaranteed Future Plus plan by Canara HSBC Life Insurance is a non‑linked non‑participating savings life cover that brings together protection and guaranteed returns. It offers a guaranteed sum assured on maturity and guaranteed additions that accrue during the last five policy years to boost payout value. You can choose options such as Endowment, Regular Income, Early Income, or Life Long Income, aligned to your life stage and financial objectives.
     
     Premium payment terms are flexible, and you can choose limited pay periods of 5, 7, 10, or 12 years, while the benefit extends till maturity based on the chosen term (10 to 20 years). Death benefit ensures your family receives the sum assured plus accrued additions, and the optional Accidental Death Benefit adds extra protection. You may also opt for Payor Premium Protection Cover, which waives future premiums on the event of critical illness or death of the premium payer.
     
     The plan allows a policy loan up to 80% of the surrender value, providing liquidity if needed. Additionally, premiums qualify under Section 80C, and death or maturity payouts are tax-exempt under Section 10(10D), subject to conditions.
     
     Know more about the Guaranteed Savings Plan.
• Promise4Growth Plus: Traditional ULIP often blends insurance and investment. However, Promise4Growth Plus is engineered to offer a powerful balance of both. It offers three variants tailored to life stage needs:
  1. Promise4Wealth Plus allows you to build fund value with life cover during the policy term. On an unfortunate death, the nominee receives the higher of the sum assured (adjusted for withdrawals), fund value on claim, or 105 per cent of the total premiums paid.
  2. Promise4Care Plus adds a Premium Funding Benefit, so if the policyholder passes away before the term ends, future premiums are funded by the insurer, ensuring continued savings contributions till maturity.
  3. Promise4Life Plus provides life cover till age 100, making it ideal for leaving a financial legacy. The death benefit is similar to other variants, the highest of the fund value, sum assured, or 105 per cent of paid premiums.

Throughout the policy, only fund management charges and risk charges apply—no premium allocation or administrative charges. Mortality charges deducted during the term are added back to the fund value at maturity as “Return of Mortality Charges.”

Policyholders can choose from a diverse bouquet of 9 fund options and multiple portfolio management strategies. Loyalty additions and wealth boosters are added periodically from year 5 onwards to enhance fund value.

Flexibility extends to premium paying term and policy term with both limited and regular pay options and tax benefits under section 80C and 10(10D) as per the Income Tax Act.

Conclusion

Choosing between term insurance and traditional life insurance depends on your life goals and financial mindset. If your priority is affordable life cover that ensures your family's financial protection in your absence, term insurance is the best fit. On the other hand, if you are also looking for long-term savings, wealth creation, or retirement support along with protection, traditional insurance plans offer a better advantage.

Both plans serve unique purposes and can even complement each other. Starting young helps keep premiums low while ensuring broader coverage. Whatever your decision, the goal should be to secure your family’s future with a reliable plan.

At Canara HSBC Life Insurance, we offer a diverse range of both term and traditional insurance policies tailored to your needs. Whether you want pure protection, wealth accumulation, or both, their flexible solutions make it easy to build a financially secure future. 

Make an informed choice today and give your loved ones the peace of mind they deserve.