Both are life insurance policies, but they are built for different purposes. Understanding that difference makes the choice much easier.
Term insurance: pure protection
A term plan pays the sum assured only if the life insured dies during the policy term. There is typically no maturity benefit. Because of this, premiums are low relative to the cover, which makes term plans the most cost-efficient way to provide a large amount of protection for dependants.
Endowment and money-back: protection with savings
These plans pay a benefit on death or on maturity, and money-back plans pay part of the sum assured at intervals. Premiums are considerably higher for the same cover because part of the premium goes towards the savings component.
Questions to ask yourself
- How much would my family need if my income stopped?
- Can I commit to this premium for the entire policy term?
- What happens if I stop paying after a few years (surrender value)?
- Have I disclosed all health and lifestyle information?
Our team has serviced LIC and other life policies since 1992. Learn about our life insurance services.
