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Term Insurance vs Endowment Policy

If you are interested in availing a life insurance policy, it is best that you know the difference between a term insurance policy and a endowment policy. Choose what suits your financial needs at the end of the day once you know the difference.
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In today's fast-paced world, there is no certainty with regards to what an individual might have to face in future. Various financial tools in the market take care of this aspect by offering investment and saving avenues to customers so that even in the face of adverse events, financial adversity does not become a challenge.

What is Term Insurance?

Term insurance is a financial protection tool that offers protection cover for a specific number of years. During this term, if the policyholder dies, then his family is entitled to receiving a death benefit in terms of a pre-determined lump-sum amount.

What is an Endowment Policy?

An endowment policy, unlike term insurance is an insurance cum investment instrument that offers both protection in times of crisis and simultaneous growth of money invested. The life cover offered is known as the sum assured of the endowment policy.

Difference Between Term Insurance and Endowment Policy

Term Insurance

Endowment Policy

A pure risk cover instrument for uncertainties of life

A combination product of both insurance plus investment

An absolute must financial tool for everyone

An investment tool for customers who wish to grow their money while availing protection too

A necessary offering for those who have dependents

A product that can be chosen as per preference of customer

No maturity benefit is associated with term insurance plans

Maturity benefit is associated with endowment policy. This benefit is paid at the end of the policy period

Sum assured as death benefit is mostly 20 times the annual income of the policyholder

Sum assured as maturity benefit is not great but sufficient to be used as good investment option

Only death benefit is offered by term insurance

Death and maturity benefit both are associated with endowment plans

Which One is Better, Term Insurance or Endowment Plan?

The need for insurance should not be mixed with the goal to invest and grow your money. Hence, insurance instruments and endowment plans should be availed by an individual depending upon his/her financial goals. Financial experts are of the view that insurance should not be mixed with any other financial goal. Hence, pure insurance products like term insurance have an edge over endowment plans.

Endowment plans invest your money in the stock market and various other instruments and hence their returns are tied to the movement of the market. This means that there are no guaranteed returns for endowment plans and as such there may be times when an endowment plan offers returns way below than expectations. Also, the premiums for endowment plans are mostly higher than those which are paid towards term insurance. Experts suggest not to mix insurance and investment so that returns reaped are effectively more.

Endowment plans invest your money in other instruments and hence charge a higher premium that goes towards insurance as well as investment. These plans also deduct mortality and other charges and return only the amount that remains, to the policyholder, on maturity. Often, the return offered by endowment plans is very low as compared to the premiums paid towards the same.

It is advisable to go for a pure insurance plan in case the primary need is to avail protection. Similarly, for those who already have a term insurance plan in place and are looking for investment avenues, endowment plan could be a good option. Since, pure term plans come at really low premiums, buying the same for protection purposes is the best strategy.

Term Insurance vs Endowment Policy Reviews

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  • LIC Life Insurance
    "Average"
    0.5 3.0/5 "Satisfactory"
    I have chosen 2 policies, long term and money back. LIC is good but they will provide the information only If I request them. Paying monthly 2500 rupees through ECS. I did not see any benefits and have no access for online. Every 5 years once they are giving bonus on the money back plan.
    Was this review helpful? 0
    , hosur
    Reviewed on Jan 14, 2019
  • LIC Life Insurance
    "Good policy"
    0.5 4.5/5 "Excellent!"
    I have taken 4 policies with LIC from long back. Its a mixed of endowment, money back and life insurance policy for family. I am satisfied with the benefits. If there is any problem I can manage the account online. I pay the premium by cash or cheque, its hardly around 1300 or 1400 rupees every quarterly and also monthly premium has been done.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 14, 2019
  • LIC Life Insurance
    "Good Investment"
    0.5 5.0/5 "Blown Away!"
    Agents are professional in LIC, and they have flexi in the payment options. I have Jeevan anand policy it has the term period of 15 years, I need to pay the premium for whole year after 24 years I get the return value also they provide life coverage.
    Was this review helpful? 0
    , dandeli
    Reviewed on Jan 10, 2019
  • LIC Life Insurance
    "Benefits part should be increased"
    0.5 2.0/5 "Expected more"
    I have term insurance with LIC, they give the life coverage to the nominees, they have option to add multiple nominees. I have taken it for 20 lakhs hence I need to pay the premium around Rs. 7000 per annum, the draw back with this policy they wont provide paritial amount to the holder.
    Was this review helpful? 0
    , thrissur
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Its Good"
    0.5 4.0/5 "Great!"
    I have taken some policy with LIC, I could not recall the name of the life insurance. But it has the term of 15 years, I need to pay only for 10 years, I get the coverage for whole year. They are providing tax benefits with the life insurance premium and it has life coverage.
    Was this review helpful? 1
    , bangalore
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Not satisfied"
    0.5 2.0/5 "Expected more"
    I have my life insured with LIC from last 15 years and it is a long term policy. I pay my premium once on 6 months through direct payment and i am convenient with the payment options. I am not happy with the returns and tenure period for this policy is for 25 years.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 09, 2019
  • LIC Life Insurance
    "Benefits part should be increased"
    0.5 4.0/5 "Great!"
    I don't like the LIC, my father have done hence I am paying the money. Because the money is locked for long term, if I go for the withdrawal I will be getting 60% of money alone, better we can invest in other insurer. The its long term policy its not much beneficial too.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 08, 2019
  • ICICI Prudential Life Insurance
    "Good for nominees"
    0.5 3.5/5 "Pretty good"
    I have one more term plan with ICICI prudential , I took the life insurance for the tenure of 7 years, monthly I need to Rs. 1565, policy coverage is around Rs. 20 lakhs, they give critical cover, premium terminal on disability. The agent gave me the clear information
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 08, 2019
  • Aviva Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have taken life insurance policy with AVIVA LIFE from last 7 years and it is a long term policy. I have to pay premium for 15 years and ie through ECS and i am convenient with the payment options. Tenure period for this policy is 20 years and i am happy with the returns.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 08, 2019
  • Tata AIA Life Insurance
    "Good"
    0.5 5.0/5 "Blown Away!"
    I have a term plan from TATA AIA and it was taken recently before 3 months. The premium is reasonable and have taken the plan for 46 years and it will be regular payment If I am not survive then family will be getting the benefits. The sum assured is 32K. I got the insurance paper.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 08, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have purchased a life insurance policy with LIFE INSURANCE CORPORATION OF INDIA. All the tenure period got over hence i have closed the policy 6 months back. I have taken a endowment plan. I have taken 4 policies with them. 25 years back, i purchased the policy. I have received the good sum assured amount.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Jan 07, 2019
  • LIC Life Insurance
    "Its Good"
    0.5 4.0/5 "Great!"
    The LIC is providing good benefits for long term investment on the life insurance, I have different policies everything has life cover and financial security for the unforeseen events. I am not sure about the online statement about the premium.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 04, 2019
  • LIC Life Insurance
    "Good policy for tax benefits"
    0.5 5.0/5 "Blown Away!"
    I believe the premium is economical for the long term policy with premium, now a days they have good online technology to pay the premium. I don't remember policy name, they do have life coverage and tax life benefits. Its reputed and trusted one.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 04, 2019
  • Aegon Life Life Insurance
    "Good Guidance in their office"
    0.5 5.0/5 "Blown Away!"
    I went to their regional office and i have purchased my term insurance. I have selected the Aegon company because their claim ratio is really good and they have explained the term and conditions properly. I'm satisfied with the coverage value.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 03, 2019
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I have my life insured with LIC from last 10 years and it is a long term policy. I pay my premium once in 6 months by cash and i am convenient with the payment options. Tenure period is 20 years for this policy and i am happy with the returns of this policy.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 03, 2019
  • Max Life Insurance
    "Okay Policy"
    0.5 4.0/5 "Great!"
    I have purchased a term insurance policy from MAX LIFE. I have selected the MAX company because they have higher rating on their claim ratio. I'm really happy about the sum assured amount. Total tenure period is fine. In 2015, i have purchased this policy. I'm really satisfied with the services.
    Was this review helpful? 1
    , new delhi
    Reviewed on Jan 03, 2019
  • Max Life Insurance
    "Excellent service"
    0.5 5.0/5 "Blown Away!"
    I have been using my Term insurance with Max life insurance, there service is good, there agent had clearly explain me about the policy, and benefit coverage , and there premium amount they have charged me was nominal, the premium amount is for half yearly basis, i use to pay through off line mode
    Was this review helpful? 1
    , surat
    Reviewed on Dec 30, 2018
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    I am having a life insurance policy with LIC from last 3 years and it is a long term policy. I am happy with the returns and benefits of this policy. I pay my premium once in 3 months through direct payment. Tenure period for this policy is for 20 years.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Dec 29, 2018
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    My life is insured with LIC from last 7-8 years and it is a long term policy. I am happy with the returns and benefits of this policy. I pay my premium once in 6 months by cash and i am convenient with the payment options. Tenure period for this policy is for 20 years.
    Was this review helpful? 0
    , chennai
    Reviewed on Dec 29, 2018
  • LIC Life Insurance
    "Good Policy"
    0.5 4.0/5 "Great!"
    My life is insured with LIC from last 1 year and i have taken long term policy. The maturity period for this policy is 15 years. I make my premium payments once in 3 months through direct payment. I am happy with the returns and benefits of this policy.
    Was this review helpful? 0
    , hyderabad
    Reviewed on Dec 29, 2018
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