Term Life Insurance Vs Endowment Insurance which one to choose?

Term Life Insurance Vs Endowment Insurance which one to choose?

Life insurance policies come in different variants and term insurance and endowment insurance are two such variants. Both these policies are quite different from one another and yet, many times, you might feel confused as to which policy to choose. Let’s, therefore, understand what these plans are and their pros and cons to find out which policy would be suitable for you.

What is term insurance?

Term insurance is a type of plan which covers the risk of premature death. If the insured dies within the policy tenure, the sum assured is paid by the plan. Term plans, usually, have no maturity benefit as they aim to provide risk coverage only.

What is endowment insurance?

Endowment insurance plans are savings oriented life insurance plans. These plans cover the risk of premature death but also create a guaranteed savings corpus over the policy duration. In case of death of the insured, a guaranteed death benefit is paid. On the other hand, if the insured survives the policy duration, a maturity benefit would be paid. Thus, endowment plans pay either a death benefit or a maturity benefit.

Merits and demerits of term insurance plans

Merits

• Term insurance plans are the cheapest plans available in the market which allow you financial security against premature death

• You can opt for a high sum assured under the best term life insurance plans and ensure that your family is financially protected in your absence

• The best term insurance in India also allows you to opt for lifelong coverage so that you are financially secured lifelong

• You get tax benefits on the premiums paid for the best term life insurance plans under Section 80C. Moreover, the benefit received from the policy is also completely tax-free in your hands

Demerits

• Term plans do not promise any investment return. That is why if you are looking for investment opportunities, this plan might not be suitable for you

• Usually, there is only a death benefit payable under the plan. If the plan matures, you might get nothing

Merits and demerits of endowment plans

Merits

• The plan pays either a death benefit or a maturity benefit ensuring that you would get a benefit under either of the scenarios

• The benefits payable are guaranteed making endowment plans suitable for risk-averse investors who want guaranteed returns

• If the plan offers bonus, you can earn an enhanced corpus on death or maturity

Demerits

• Though endowment plans allow life insurance coverage, they are mainly investment-oriented in nature. Thus, under endowment plans, you might not get the desired financial security

• Endowment plans are dearer than term insurance plans

Which one should you choose?

A term insurance plan is a must in your financial portfolio to avail financial security against the risk of premature death. So, you should invest in a plan offering the best term insurance in India. Choose a high sum assured which would be optimal enough to provide a sufficient financial corpus to your family in your absence. Once you have secured your financial risk under the best term insurance in India, you can invest in endowment plans for added security as well as to create a financial corpus.

To find the best term life insurance plans, visit etmoney.com. The website of etmoney.com is tied-up with leading insurance companies that offer the best term plans. You would be able to find the most comprehensive coverage benefits at the most competitive premiums on etmoney.com. So, invest in a term insurance plan and give your family the gift of financial security.

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