Difference between Term Plan and Endowment Policy

What Is Term Insurance?

What Is an Endowment Policy?

What Are the Differences Between Term Insurance and Endowment Policy?

Here are 5 key points of difference between the two:


Term Insurance

Endowment Policy


As per a term life insurance plan, the insurance company pays a particular sum to the policyholder if they die during the term of the plan.

An endowment plan provides both life coverage and savings options. Here the nominee will get the sum assured if the policyholder dies.


Term insurance only offers risk coverage, and no returns are involved in it. Thus it is comparatively cheaper than an endowment plan.

An endowment plan offers maturity benefits and loyalty additions. Together, these features make this policy more expensive than term insurance.

Sum Assured

Since term insurance only offers risk coverage, its sum assured is relatively higher than an endowment plan.

In case of an endowment plan, you will get a comparatively lesser sum assured since this plan fulfils the necessity for saving and death coverage.

Purpose of Cover

The objective of term life insurance is to provide financial support to the nominees in case of the policyholder’s unfortunate demise.

The purpose of an endowment plan is to assist you to meet your future goals.

Pay-out Options

When it comes to term insurance, there are various pay-out options. For example, the person nominated can get the entire sum assured at a time.

In case of an endowment plan, the pay-out is offered as a lump sum on the demise of the policyholder in continuation of the term..

In a nutshell, an endowment policy is the right choice for those who aim to build wealth and ensure the safety of their dependents in case of their death. However, term policy offers the entire sum insured to the nominee but does not pay anything if the policyholder survives. Now that you understand the details of endowment policy vs. term plan, you can choose one that will fit your needs.

FAQs About Difference between Term Plan and Endowment Policy

Can NRIs purchase term insurance in India?

Yes, NRIs (Non-Resident Indians) qualifying as Indian citizens can opt for term insurance in India.

Do term insurance plans provide coverage for the “Act of God”?

Policyholder’s death due to an Act of God or natural disasters like earthquakes, storms, floods, etc., will be covered only if it is mentioned in the term insurance policy.

What is the maximum and minimum age to apply for endowment plans?

The maximum age to apply for an endowment policy insurance coverage is between 55 and 60 years, while the minimum age to opt for this policy is 7-years.

What is the age limit to obtain a term insurance policy?

In order to avail a term life insurance policy, the applicant should be between 18 years and 65 years of age.