Should I Buy A Term Plan Or An Endowment Policy?
Updated On Feb 17, 2022
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The endowment plan is a common type of life insurance policy in India. In that it provides both insurance and investment benefits, it is similar to a unit-linked insurance plan. However, there are key features of an endowment plan that set it apart from a term plan. When you purchase an endowment plan, you can deposit money aside on a regular basis for a defined period of time. You can receive a lump-sum payment when the insurance matures at the end of the time. It is only payable if the insured survives the policy term. The insurance coverage kicks in if the policyholder dies during the policy period. In this case, the nominee will receive the sum insured plus any relevant bonus as a death benefit. Endowment plans come in a variety of shapes and sizes to meet a variety of financial demands.
Term insurance covers you for a certain period of time and offers the lowest premiums of any insurance plan. For your insurance coverage, you can select a term length of up to 35 years. Payments are fixed and will not change throughout the period. Your dependents will get the benefit amount specified in your term life insurance policy if you die unexpectedly. Riders such as a kid, premium waiver, and accidental death can be added to make term life insurance more personal. An endowment policy is a type of insurance and investment that looks somewhat like this: A portion of the policyholder's life is guaranteed. The sum assured refers to the amount of life insurance coverage.
Endowment Plan Vs. Term Insurance
Here are some examples of endowment and term insurance comparisons:
Term insurance protects against risk without requiring new investments. As a result, term insurance premiums are low, and the assured must pay them at regular intervals. On the other hand, the maturity benefits of an endowment plan tend to raise premium prices. It also comes with an add-on that hikes prices even more. Term insurance plans are less expensive than endowment policies.
2. Amount Assured
If an assured event occurs or the term plan ends, the sum assured is a predetermined amount that the assurer guarantees to pay to the policyholder or his or her nominee. The sum assured amount can be determined at the time of purchase of term insurance products. The sum assured on the term insurance plan is higher than the total assured on the endowment plan. This means that in order to acquire a bigger sum insured, a policyholder must pay a high premium in an endowment plan.
3. Maturity Benefits And Death Benefits
The policyholder receives the agreed-upon sum assured amount plus an additional bonus if the life assured survives until the endowment plan's expiration date. Term plans offer maturity benefits, but beneficiaries only receive death benefits. On the other hand, endowment plans offer both a death and a maturity benefit.
4. Insurance vs. Investment
One of the most important distinctions between a term and an endowment plan is the nature of the plan. Endowment plans combine insurance with investing to help you to save for your long-term goals. A term plan is a combination of insurance and investment that allows you to save for your future objectives. A term plan is a pure life protection plan with no such add-ons coverage, whereas term plans are a combination of insurance and investment that allows you to save for your future goals. Term insurance, on the other hand, does not provide any prospects for long-term savings. If you get a term insurance policy, for example, the death benefits will go to your beneficiaries if you die. In an endowment plan, you can get the entire corpus you paid overtime at the end of the policy.
Financial security is a primary consideration when it comes to your family. A term insurance policy provides you with enough money to help his or her family in the long run as the family's primary income. Endowment policies are more costly and difficult to get than term insurance policies. Which insurance plan is best for you will be determined by your financial needs and long-term aspirations. Choose your plan wisely for a brighter future.
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.