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How is a Pension Plan different from a Term Plan?

Term insurance coverage allows your nominees to receive the guaranteed death benefit in the event of your untimely demise. However, in the case of a pension plan, once the policy matures, you or your nominees are entitled to receive the corpus that you have built over time.

The significant difference that lies between a pension plan and a term insurance coverage is the very nature of these plans. While a term plan is a pure life insurance plan offering life cover, on the other hand, a pension plan is a combination of insurance plus investment. Put simply; a pension plan allows you to save for future, i.e. your retirement. Term insurance offers no such saving or investing option.

Additionally, a term plan offers coverage at meagre premium rates; however, for the same amount of coverage, a pension plan will charge higher.