4 min read
Updated on Jul 13, 2022
Have you been wondering about which is better Endowment Policy or Term Insurance Policy? People opt for an endowment policy on various grounds and the same goes for a term insurance policy. Note the differences carefully before taking a decision.
Should you go for an endowment plan or end up with term insurance instead? Term insurance is simple and comparatively affordable, offering safety for a certain duration with the lowest premiums in the market. You can choose tenures going up to 35 years with fixed payments that do not fluctuate over the years. The dependents get the benefit in case of sudden death of the policy holder.
You can also add other riders like premium waiver, accidental death insurance and others to the policy alongside. Endowment insurance is a common type of life insurance plan where you get both investment and insurance features. It is quite similar to a unit-linked insurance plan or ULIP. In this plan, you will keep paying money regularly for a specific period. You will get a lump sum amount upon the maturation of the policy at the closure of the period. It is paid only if the person insured survives the tenure of the policy.
You should choose only after thoroughly comparing the two kinds of plans for yourself. Here is a guide:
An endowment policy may well be the right choice if you are seeking the right combination of investments and insurance. Of course, one thing is clear from the outset- insurance coverage is a must without any compromises. Hence, with an endowment plan, you will get this coverage and of course, you will get the benefits of building up your future savings through the investment component of your policy.
This will give you a dual benefit and you will get back the whole sum you paid and maturity benefits upon the expiry of the policy. Term insurance is a basic form that ensures death benefits for the dependents of a policy holder in case of his or her untimely demise. There are no other add-ons or benefits. It is a pure form of insurance coverage. You should consult your advisor or a financial expert for taking the right decision in this regard. Make sure that you check out the pros and cons of both types before coming to a decision. Insurance coverage under an endowment plan may be insufficient for the family. This problem may on the other hand, be solved by a term insurance plan which offers enough money to serve as the primary income of the family. Simultaneously, they are cheaper than endowment policies with lower premiums. Hence, take the decision carefully. A mixture of the two type is often recommended by industry experts.
Also Read: Endowment Or ULIPs-Features and Benefits
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