Endowment vs Other Insurance

When choosing life insurance, it often comes down to one big question: Do you want pure protection or a plan that also helps you save? That’s where the choice between an endowment plan vs term insurance comes in. While both offer life cover, they work in very different ways and serve different financial needs. If you're looking for clarity on which plan fits your goals better, you're in the right place. Whether you want affordable family protection or a savings fund with insurance, both options serve different needs. This blog breaks down how each plan works, what they offer, and how to choose the right one for your future.

When choosing life insurance, it often comes down to one big question: Do...

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What is an Endowment Plan?

An endowment plan is a life insurance policy that gives you both life cover and a savings benefit. If something happens to you during the policy term, your nominee receives the sum assured. But if you survive the term, you get a maturity payout that includes the sum assured and possible bonuses declared by the insurer.

How It Works

You pay premiums regularly for a chosen policy term.
The insurer provides life cover for that duration.
If you survive the term, you receive the sum assured along with any declared bonuses.
If you pass away during the term, your nominee receives the sum assured and bonuses, if applicable.

Difference Between Endowment Plan vs Term Insurance

Let’s take a look at a side-by-side comparison to understand the difference between an endowment plan vs a term insurance plan:

Endowment Plan	Term Insurance

Offers both life cover and maturity benefit	Offers only life cover with no payout on survival
Higher premiums due to the savings component	Lower premiums for higher life cover
Suitable for long-term savings goals	Suitable for pure protection needs
Returns are guaranteed or depend on bonuses (in participating plans)	No returns or investment component
Can be used as a financial planning tool	Focused purely on the family’s financial protection

Real-Life Scenarios

Example 1

Ramesh buys an endowment policy with a sum assured of ₹10 lakhs for 20 years. If he passes away during the policy term, his nominee will get ₹10 lakhs plus bonuses. If he survives, he gets the maturity amount, a combination of the sum assured and accumulated bonuses, which he plans to use for his daughter’s college education

Example 2

Meena, a working mother, buys a term plan of ₹1 crore for 25 years at a low premium. The policy gives her peace of mind knowing that her family will be financially secure if something happens to her. However, if she survives the term, there is no payout. She manages her savings separately through mutual funds.

Endowment Plan: Advantages vs Disadvantages

It is important to understand the advantages and disadvantages of an endowment life insurance policy before selecting a plan.

Offers life cover along with savings

Provides a maturity payout if you survive the term

Suitable for long-term goals like education or home purchase

May offer bonuses declared by the insurer

Eligible for tax benefits under Sections 80C and 10(10D)

Premiums are higher compared to term insurance

Returns may be lower than market-linked plans

Less flexibility in how funds are used or invested

Surrendering early can reduce overall benefits

Limited liquidity; funds are generally locked until maturity

Term Insurance: Advantages vs Disadvantages

Similarly, when choosing a term insurance policy, it is important to weigh the advantages and disadvantages.

Affordable premiums for large life cover

Simple to understand and easy to buy

Ideal for family protection and income replacement

Allows flexibility to add riders for extra protection

Tax benefits under Sections 80C and 10(10D)

No payout if you survive the term

Does not offer any maturity or savings benefits

No investment component

Returns nothing unless a claim is made

Seen as a no-return plan by some

Which One Should You Choose?

It depends on your financial goals:

Choose term insurance if your main goal is affordable life cover to protect your family financially. Explore ACKO’s unique term insurance plan - the ACKO Life Flexi Term Plan. It offers flexible features and is designed to help you secure your loved ones’ future with a sum assured of your choice. [Click here to learn more →]
Choose an endowment plan if you want to combine insurance with disciplined savings for future milestones.

Many people even choose both: term insurance for high protection and an endowment plan for future savings.

Conclusion

Choosing between a term plan and an endowment plan really depends on what you want your insurance to do for you. If you're looking for affordable and pure protection, term insurance is the smarter choice. But if you'd rather have something that combines life cover with savings, an endowment plan can give you that balance.

Frequently Asked Questions (FAQs)

What is the main difference between an endowment plan and term insurance?

Term insurance offers pure life cover, while an endowment plan provides both life cover and a maturity payout if you survive the policy term.

Which is more affordable: endowment or term insurance?

Term insurance is more affordable as it only provides life cover. Endowment plans have higher premiums because they also offer savings benefits.

Is an endowment plan a good investment?

An endowment plan can be a good option if you are looking for a low-risk way to save for long-term goals while also getting life cover.

Do endowment plans offer better returns?

Endowment plans offer stable but limited returns. They are better for those who prefer predictable outcomes over high-risk, high-return options.

Can I get tax benefits with a term insurance plan and an endowment plan?

Yes. Premiums for both types of policies are eligible for tax deductions under Section 80C, and the maturity or death benefit is generally tax-free under Section 10(10D), subject to conditions.

Is it allowed to have both term insurance and an endowment plan?

Yes, many people choose both. Term insurance ensures high protection for your family, while an endowment plan helps you save for specific future goals.

Written by Neviya Laishram

1.7K Linkedin Followers

Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.

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