Which Is Better Term Insurance Or Endowment Plan?

It is always advised to purchase an insurance policy as soon as you start making a living for yourself and your family, but before making a purchase you must know about the type of coverage and the type of life insurance policy you require. Term Insurance and Endowment Policy are two types of life insurance policies. Term insurance plans are known as pure protection plans and endowment plans are also known as insurance cum savings plans. 

Term insurance is known as protection plans because these plans provide financial protection to the life assured and the family of the life assured in difficult circumstances such as the untimely demise of the life assured within the policy tenure. In case the life assured passes away within the policy tenure, a death benefit shall be provided to the nominee. 

Endowment plans provide a death benefit in case of an untimely demise of the life assured within the policy term, this plan also provides maturity benefits in case the life assured survives the entire policy tenure. Endowment plans invest your money in market-linked funds such as equity or debt funds. Endowment plans are participating life insurance plans. 

Also Read: Step by step guide for Purchasing The Right Endowment Plan

Which Is Better Term Insurance Or Endowment Plan?

Below mentioned is the difference between Term Insurance and Endowment Plan, that will help you understand which plan best suits your requirements:

• Coverage Provided: Both term insurance and endowment plan provide life cover that is, a death benefit in case of an untimely demise of the life assured during the policy tenure. Endowment plans also provide a savings opportunity by investing life assured money in market-linked funds such as equity or debts funds. 

• Benefits Available: As mentioned above both of the insurance plans provide a death benefit in case of unforeseen demise of the life assured within the policy period. Endowment plans also provide a maturity benefit in case the life assured survives the entire policy tenure. Some term insurance policies also offer maturity benefits. 

• Cost: Term insurance plans are widely known for providing comprehensive protection at an affordable cost. Endowment plans are relatively more expensive than term insurance plans because of the guaranteed returns component. 

• Payout: Under endowment plans, death benefit and maturity benefits are provided as a lump sum. Under term insurance plan multiple payout options such as lump sum, regular instalments or part lump sum part regular instalments. 

To Conclude

Term insurance plans and endowment plans have distinct differences between them, it is the choice of a life assured to understand which type of plan best suits your requirements.

Must Read: Some Salient Features Of An Endowment Plans

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.