Life Insurance vs. Life and Savings Insurance

Insurance is an important part of any financial plan. An insurance policy helps you bypass dangers/hazardous situations and emergencies if they occur, and life insurance policies are one of the most popular insurance policies out there.

What is insurance?

It is essentially a contract between you (the insured) and the insurance company of your choice (the insurer) whereby the insured pays a monthly or yearly premium and in exchange the insurer is obligated to pay out the insurance amount if the insurance policy terms are met. The policy may cover the insured, their family, or their property according to its type.

Life insurance comes in two types:

1. Life insurance: this type of insurance policy is valid for a pre-agreed upon duration between the insured and insurer. The premium is usually not huge as the insurance policy is paid out in one case only – death. If the insured passes away while the policy is active his/her beneficiaries receive the insurance amount but if the policy lapses before the insured’s death the insurance company does not have to pay.
2. Life and savings insurance policy: similar to a life insurance policy but the life and savings insurance policy can be active for much longer (as much as 20-30 years). The premium is higher than a life insurance policy’s since the life & savings insurance policy acts more like a certificate of deposit or a savings account than a regular insurance policy. In other words if the insured passes away while the policy is active their beneficiaries receive the insurance amount but if the insured is still alive when the policy duration ends then the insured receives the full amount of the insurance policy. 

Check our blog to find out more about insurance types: Difference between Property Insurance and Life Insurance