Difference Between Endowment And Term Insurance Plans
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You can only select the best life insurance policy if you know the benefits and its features. Most of the time we want something and end up buying something which we never wanted. So to omit that mistake, it is good to know the difference between the two most common types of life insurance - Term Plans and Endowment Plans.
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Comparison: Term Plans V/S Endowment Plans
Here are the major distinctions between Term Plans and Endowment Plans:
1. Coverage
A term life insurance plan is a basic life insurance policy, that guarantees to pay the sum assured if the policyholder dies during the policy duration. Whereas an endowment plan is a savings cum life insurance plan which provides you with an investment corpus after a certain number of years along with the benefits of a life cover.
2. Purchase Goal
Term life insurance is only meant to offer financial support to the nominees in the event of your death. The sum will act as a revenue supplement to handle your household costs and unpaid EMIs. It is necessary to obtain a term insurance package if you have dependent family members or if you are the primary earning member in the family.
The aim of the endowment plan is to help you accumulate a significant amount for future expenses along with reaping the benefits of a life cover. It provides you with substantial returns on your savings along with helping you leave a significant amount for your family in your absence.
3. Payout Options
Under a term insurance plan, the benefit is generally paid as a lump sum. Whereas, under an endowment plan, you often get a choice to receive the investment benefit as a lump sum or by way of regular instalments along with the lump sum death or maturity benefit.
Also Read:- Mistakes You Can Avoid While Purchasing an Endowment Plan
All About Endowment Life Insurance Plans
Takeaway
As you can see from the above, there are several differences between a term plan and an endowment plan. Thus, you should choose the plan which best meets your requirements and financial goals.
