Term Insurance &

Endowment
Insurance

Submitted by Diya Miraj

Term Insurance
• Term life insurance provides financial protection
for a set period (the term).
• If you die during the term, your beneficiaries get a
death benefit payout.
• Term life is typically cheaper than other life
insurance options.
• It doesn't have a cash value component (like whole
life insurance).
• You can choose terms to fit your needs, like 10, 20,
or 30 years.
Endowment
Insurance
• Combines life insurance with a savings plan.
• You pay premiums for a set period.
• If you die during the term, your beneficiary gets a
death benefit.
• If you survive the term, you get a lump sum
payout.
• Offers guaranteed returns (though may be lower
than other options).
• Can be used for long-term savings goals like
retirement or education.
 Types Single premium endowment

Participating Endowment Plan

Whole Life Endowments

Non-Participating Endowment
Anticipated endowment plans
Plan

Child plans
 Difference Between Term Plan and Endowment Plan
Term insurance plan
Type of investment Life insurance
Sole or co-income earners looking to support a family
Suitable for
in their absence caused by death.
Premium allocation The premiums paid go towards providing life
insurance protection in the form of a death benefit to
the family of the policyholder.
There are no returns yielded in a term insurance plan
Returns yielded
because it is a pure protection plan. There is a death
benefit that the policyholder’s chosen family/
nominees receive.
Endowment plan
Insurance + wealth creation
Investors looking to save and grow their wealth along with
protecting their family with life insurance
A percentage of premiums gets invested into paying the
policyholder a maturity amount at the end of the
endowment plan. The remaining goes into providing life
insurance protection.
The returns yielded depend on the interest rate of the
endowment plan. The policyholder receives it as a lump
sum or in periodic instalments.
 Difference Between Term Plan and Endowment Plan

Term insurance plan Endowment plan

A maturity benefit is a sum received by the Endowment plans do have a maturity benefit which
Maturity benefits
policyholder at the end of an investment plan the policyholder receives once the term of the
tenure. There are no maturity benefits in a term plan endowment plan is over.
because the only coverage promised is a death
benefit. However, term plans have a return of
premium option, where you get back all the
premiums paid by you at the end of the term plan.

The tenure of a term insurance plan ranges even up

to 30 to 40 years. The tenure of an endowment plan can go up to 20 to
25 years. The longer you keep an endowment plan,
Tenure
the higher returns you can accumulate.
 Difference Between Term Plan and Endowment Plan
Term insurance plan
The premium rates of a term plan are lower because it
has only a single function of providing life insurance
Premium price protection.
A term insurance plan is ideal for investors whose
main goal is to protect their loved ones in their
Ideal for which
permanent absence.
investors
Term insurance has tax benefits per the Income Tax
Act, 1961. U/s 10(10)D, the death benefit under a term
Tax benefits
plan is exempt from tax deductions. U/s 80C, you can
claim tax refunds from the premiums paid towards the
term plan up to ₹1,50,000 in a year.
Endowment plan
The premium rates of endowment plans are higher than term
plans. Because endowment plans offer the twin benefits of life
insurance and goal-oriented investment, policyholders have to
pay more premiums.
An endowment plan is ideal for investors who want to achieve
two goals at the same time – savings + wealth creation and life
insurance protection.
Endowment plans also have similar tax benefits. The returns/
maturity pay-out received at the expiry of the endowment plan
is exempt from tax deduction u/s 10(10D) of the Act. U/s 80C,
you can claim tax refunds from the premiums paid towards the
plan up to ₹1,50,000 in a year.
How to Choose Between Term Insurance & Endowment
Plan?

A Financial Objective

B Current & Future Expenses

Affordability
C
Thank You
 FAQ
O. Do I Get Maturity as well as Death Benefit with an Endowment Plan?

Q. How Much Life Cover Should you Choose with Term Insurance?

Q. Can the Duration of Life Cover be Changed with Term Insurance? .

Q. Are There any Riders Available with an Endowment Plan?