Term Life vs Income Protection Insurance Comparison | Compare Premiums for the Same Coverage
Enter your current age, insurance period, and desired coverage amount to compare premiums between level term life insurance and income protection (decreasing term) insurance for free.
When preparing the same "amount you want covered in case of the worst," premiums differ between term life insurance (coverage stays level throughout the policy period) and income protection insurance (the remaining payout decreases as the policy period passes). If you are not yet sure how much coverage you need, first try the Necessary Life Insurance Coverage Calculator, then come back here to compare premiums between the two insurance types.
How Term Life and Income Protection Insurance Differ
| Coverage amount for term life insurance | Stays level throughout the policy period |
|---|---|
| Coverage amount for income protection insurance | Decreases as the policy period passes (paid out as a fixed monthly amount, like an annuity) |
| This tool's estimation model | Premiums are estimated as roughly proportional to the average remaining coverage over the policy period. Since income protection insurance has about half the average coverage of term life, its premium tends to be lower — a tendency this model reproduces. |
Actual premiums vary by insurer, product design, gender, and health condition (rate class), so treat this as a simplified estimate to grasp the relative difference between the two insurance types.
Simulate Premiums from Age, Policy Period, and Necessary Coverage
Tips
- Income protection insurance tends to have a lower premium for the same coverage amount because the coverage decreases over time. It tends to suit households whose necessary coverage also decreases over time.
- Term life insurance keeps the coverage level regardless of when death occurs, making it suitable for situations requiring a lump sum, such as paying off a remaining mortgage balance.
- If you don't know your necessary coverage amount, first estimate it with the Necessary Life Insurance Coverage Calculator, then come back here to compare premiums.
- Setting a shorter policy period tends to lower the average age and the premium, but setting it shorter than the period you actually need coverage for leaves you uninsured after the policy ends.
Frequently Asked Questions
Side Note — Why Is Income Protection Insurance Cheaper Than Term Life?
Income protection insurance is a relatively new type of death benefit that appeared in the Japanese insurance market in the late 1990s. Term life insurance, which had long been the mainstream product, was valued for its simplicity — "the same coverage amount throughout the policy period" — but in most real households, the coverage actually needed gradually decreases as children grow up. Income protection insurance aligns the shape of the policy with this reality of decreasing need, allowing the premium to be lower for the same initial coverage amount.
The mechanism behind the lower premium is simple. The risk an insurer bears is proportional to the average amount it might have to pay out. Term life insurance carries the risk of paying the full amount all the way to the last day of the policy period, while income protection insurance sees the remaining total payout shrink as years pass, so the insurer's average risk is smaller than with term life. This difference in average risk shows up directly as a difference in premium.
That said, income protection insurance has a caveat. If death occurs early in the policy, the payout is comparable to term life, but the closer it occurs to the end of the policy period, the smaller the total payout becomes. The fact that "even though the coverage amount looks the same, the amount actually received depends on timing" is a point that is easy to overlook when comparing insurance products.