Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin

Term Insurance V/S Endowment Policy: Which is better?

Updated On Aug 07, 2021

In case you are looking forward to availing a life insurance plan, it is significant to know the difference between a term insurance plan and an endowment plan. Select an insurance plan that meets your financial requirements at the end of the day after knowing the major differences between both of them.

Meaning of a Term Insurance Plan

A term insurance plan is a kind of financial protection instrument that provides safety cover for a particular number of years. If during the policy duration, the policyholder dies , then the family members of the policyholder are entitled to receive death benefit in the form of a lump sum amount that is pre-decided.

Meaning of an Endowment Plan

An endowment plan dissimilar to a term insurance is both an insurance as well as an investment instrument that provides dual benefits including life coverage as well as growing the invested money. The life cover provided is referred to as the sum assured of the endowment plan.

Term Insurance Plan V/S Endowment Plan

Here is the table showing the major differences between a term insurance plan and an endowment plan:

Basis

Term Insurance Plan

Endowment Plan

Type

It is a pure risk cover tool for dealing with the uncertainties of life.

It is an insurance plan that offers both investment as well as insurance cover.

Ideal For

This is an ideal insurance plan for everyone to have to financially secure themselves as well as their families.

It is a must have financial tool for individuals who want to avail protection as well as grow their money over time.

Maturity Benefit

There is no maturity benefit available here.

The maturity benefit is offered here, which can be availed at the end of the plan duration.

Sum Assured

A sum assured offered as the death benefit is generally 20 times the yearly income of the policyholder.

A sum assured offered here as a maturity benefit is not huge but adequate to be used as an ideal investment option.

Benefits Offered

Here only death benefit is offered.

Here both death and maturity benefits are offered.

 Term Insurance or Endowment Plan- Which is Better Option?

The insurance plans have a definite goal i.e to keep your family financially secure at the time of emergency. Therefore, it shouldn't be your sole source of saving and investing the money. Based on the financial objectives of a policyholder, a term insurance plan and endowment plan needs to be benefited by the customer. Both the plans offer several advantages, however, an ideal insurance plan for you depends upon your individual needs. For instance, in case your family is dependent upon you, then you must consider buying a term protection plan. However, in case your family is financially sound and would remain so even after your death, then buying a term plan wouldn't make any difference to them, you should in such a case consider buying an endowment plan.

At the time of choosing a life insurance plan for you, ensure to analyze your and your family’s needs and make thorough comparisons of the plans before deciding to buy a particular insurance plan in order to make a smart decision.

Also read

Why Is The 20s The Best Time to Buy An Endowment Plan?

What Riders Should Be Added Under 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.

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 66 Lacs+ happy customers