Endowment or Term Plan, What Should I Buy

Endowment plan and term insurance, both are the life insurance plans that offer different benefits, designed accordingly to take care of the needs of different individuals. However, insurance products are not usually known to most of the people and purchasing a wrong plan may lead to facing the unnecessary burden without the desired benefit. Here, for most of the people, the question arises- which plan should I buy? To get the answer, let’s compare both the plans.

Plan benefits

Both are the life insurance plans; thus, offer guaranteed death benefits when the event of the unfortunate demise occurs. But when it comes to maturity benefits, you always need to understand that term plans do not offer maturity or survival benefits. The endowment policy provides the maximum of sum assured or the corpus accrued till the date of the event. If you wish to get maturity benefits from term plans, you can opt for Term Return of Premium Plans that come at comparatively higher premiums than regular term plans.

Premiums

Since regular term plans do not offer any cash value benefit or the maturity benefit, the premiums towards these plans are considerably low. The endowment plan premiums are higher than that of term plans. If you are looking for a life insurance plan but unable to bear a higher premium, term insurance is the suitable option for you.

Flexibility

Endowment plans offer you maturity benefits with investment provisions. Furthermore, this provides flexibility in terms of partial withdrawals during the policy tenure. The financial emergencies don’t hit notifying you prior to the event. Here, partial withdrawals help you a lot in managing the financial crisis. You need to understand that once the partial withdrawal is made, the corpus which you are entitled to get also reduces respectively. On the other hand, term plans do not have investment provision; thus, you have no any flexibility in terms of withdrawals. The premium payment modes and the pay-out options can be chosen as per your convenience in both the life insurance products.

Life Coverage

Till now we’ve seen that endowment plans have some other benefits such as investment and maturity benefits, but when it comes to term plans, it is the best. Term plans offer substantial amount as death benefits at lowest premiums.

To conclude, both the life insurance plans can be availed for a different purpose. If you are at the early stages of your life, the need for money is more, and you cannot afford to spend much on the premiums beyond the requirement. Here, the priority is your life and financial safety of your family. Thus, term insurance is apt for the youngsters whereas financially settled individuals can avail endowment plans.

Endowment or Term Plan, What Should I Buy
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