Difference between Term Plan and Endowment Policy

Term insurance provides financial coverage for a fixed span of years. As per this policy, if the policyholder passes away, their nominee will get the insured amount. On the other hand, when it comes to an endowment policy, it acts both as life insurance and investment.

Having an endowment policy means wealth building while ensuring the protection of your family in case of your unfortunate demise. Therefore, while the goal of both policies is insurance cover, they differ in various aspects. Read on to know more about endowment plan vs. term plan.

Among various life insurance plans, a term insurance policy is highly popular. It offers life coverage to an insured person for a period as per the ‘term’ chosen by policyholder.  The sum assured will be predetermined by the policyholder while opting for a term insurance.

If the insured person passes away during the period of an insurance plan, the entire insurance money will be compensated to the nominee. However, term insurance plans provide coverage only in the event of the demise of the insured person. That means if the policyholder survives till the term of the insurance policy, there will be no insurance payout.

Another well-known insurance policy available in India is the Endowment Plan. It differs significantly from a term plan. If the policyholder passes away, the insurance company will compensate the assured sum to their nominee. In addition, having this insurance plan will help you save on a regular basis and enable you to get a substantial amount on the maturity of the policy.

In other words, if you survive the term of the endowment policy, you will get the sum assured as a guaranteed maturity benefit. This means the insurance money will be given back to you in either situation. There are various endowment plans available to fulfil your needs and build a financial barrier to protect yourself for the future.