Difference between a regular term and a smart term plan


Term insurance has seen a drastic change throughout the years. A term policy, which once offered only death benefits, has evolved into a whole insurance product. Today, you can receive death benefits and survival benefits under term insurance. Therefore, let’s first understand what the meaning of these two different insurance policies is in detail:

What is a regular term plan?

A regular term plan is nothing but a traditional term insurance policy. It can offer death benefits to your family members in your absence for their financial security. The primary objective of the traditional term plan can be to solely ensure the financial well-being of your family members.

What is a smart term plan?

Many insurance companies have recently availed smart term life insurance for you. A smart term plan can be a protection plan that not only looks after your needs as well as your family’s goals. Since it is a whole term policy, you can receive death benefits as well as survival benefits. While you can protect your family in your absence with the death benefits, you can lead a peaceful retirement period with survival benefits.

Although regular and smart term policy is a part of term life insurance, they are different from one another in various aspects. Before you purchase a term policy, let’s understand the key differences between a regular and smart term plan to make informed decisions in the future:

  1. Cover

The term coverage can be an essential part of your policy. Although both these policies aim to offer financial protection, the provision of cover can differ from one another. While a regular term plan provides a sum assured amount to your family after your demise, a smart term plan can offer the sum assured to you on survival and to your loved ones in your absence. Moreover, you can increase the term cover after crossing milestones, such as getting married, planning to have kids, and so on under a smart term plan.

  1. Variants

Variants have been introduced recently under many term insurance plans. A smart term policy can offer different types of variants, such as a whole-life cover, child education covers, joint cover, etc. to suit your evolving needs. However, the variant feature might not be available under a regular term policy.

  1. Premium

Irrespective of the type of term insurance, the premium should be paid regularly to ensure the consistent provision of a life cover. Although a regular term policy can be affordable, many of you might not purchase it since it only provides death benefits. According to a survey, only 5% of the people in India purchase regular term policies. Under smart term insurance, your entire premium amount can be returned to you on the maturity date when you survive the policy.

  1. Payout options

A regular term policy and smart term insurance can allow you to pay your premium based on your convenience. Under regular term insurance, you can pay the premium based on the type of policy you select, which can be as follows:

  • Single premium payment policy

Paying a lump-sum amount can be essential under a single premium payment policy.

  • Regular premium payment policy

As the name suggests, you should pay the premium amount your insurer on a regular basis.

On the other hand, a smart term policy can provide you with different payout options that are mentioned below to make the premium payment:

  • Quarterly
  • Monthly
  • Half-yearly
  • Annually

In a nutshell, the difference between a regular term plan and smart term plan can be significant. Hence, you should first analyse your financial requirements and then move on to purchase the right type of term policy for you and your family. Moreover, compare different term options available in the market or choose an online term plan.