Term Insurance or Endowment Plan: Which Has the Better Benefits?

Have you been recommended to invest in a life insurance policy? Are you confused between various choices? If you are trying to find the perfect plan between a term insurance plan and an endowment policy, know that you are not alone. Many life insurance policy buyers often find it difficult to make a choice between the two. Let us shed light on both, term insurance and endowment insurance so that you have an idea of what to go with.

Term insurance plans are renowned for offering financial security for a period. In the event of the policyholder’s death, the nominee receives a death benefit equal to the sum insured at the start of the policy agreement. In the case of an endowment plan, the policyholder gets a protection cum investment plan that comes across as a safety net for the family while being the investment asset. That said, let us focus on the two types based on various other aspects.

Term Insurance or Endowment Plan: Which Has the Better Benefits?

If making a choice between term insurance and endowment policy has left you confused, read along the below mentioned points to have a clear understanding and make your choice easy.

Must Read: Term Insurance V/S Investment Plan

• While term insurance provides a high sum assured at affordable premium charges, endowment plans, in general, come with marginally higher premiums.
• While term insurance is a pure protection plan that focuses on giving a death mitigation plan strategy offering a life cover, an endowment plan is the combination of investment and protection. Very clearly, a term plan does not come with saving benefits. In simple words, in a term plan, the recipients get the assured death benefit only if their dear one does, while in an endowment policy, you get a whole corpus saved for the long run at the end of the policy term.
• A term insurance plan gives a sum assured if the policyholder dies in the mentioned time frame. There is no maturity advantage if they survive. On the contrary, in an endowment plan, you get a regular life cover under which you get a death benefit as well as maturity benefit in case of survival of policy term.
• A term protection plan does not come with maturity benefits. In the case of opting for a premium return policy, the insurance company is responsible for reimbursing the charges if the policyholder survives. The sum then becomes the maturity benefit. As far as an endowment plan is concerned, it gives maturity benefits toward the end of the policy period.
• Term plans come with a guaranteed sum that helps a policyholder’s family handle their finances in the event of the death of the former. The amount received is higher thereby covering the family's financial responsibilities. Endowment plans come with death benefits too, but the sum insured may not be enough to cover the family’s financial requirements.

Making a choice between the two is simple. All you need to do is keep all the specific aspects regarding you, your family, financial needs, lifestyle, inflation and others in mind. People with a term protection plan set up and in need of investment options, you can go with endowment plans. Remember, if your loved ones are dependent on you, a term protection plan would be a must. On the contrary, if they are financially sound and hope to remain so, even in your absence and a term plan won’t do much good to them, it is advised to opt for an endowment plan.

Also Read: Mistakes People Make While Buying Term Plan

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.