Distinguish between Endowment and Term Life Policy

Distinguish between Endowment and Term Life Policy

Distinguish between Endowment and Term Life Policy

Term insurance plans only provide protection for the term specified in the policy document. An endowment policy is a life insurance contract designed to pay a lump sum after a specified term or on the death of the insured.

Difference between endowment life policy and term life policy as follows –

Endowment Policy –

  • Endowment Plan is a participating non-linked plan which offers an attractive combination of protection and maturity benefit.
  • This policy is for a fixed period of time.
  • The rate of premium is high in this policy.
  • The premium is payable regularly till the maturity of the policy.
  • The benefit of this policy is if the policyholder survives after the completion of policy tenure, he receives assured amount plus additional benefits like a bonus from the insurance company.
  • Considered primarily to provide a living benefit along with life insurance protection.

Term Insurance policy –

  • Term Insurance is a protection and traditional plan which provides financial protection to the insured’s family in case of unfortunate demise with very low investment.
  • Term insurance is for a short period of year’s ranging from 3 months to 7 years.
  • It has one of the lowest premiums among insurance plans.
  • The premium uses usually payable throughout the term of the polity.
  • Term insurance policies – are always without profit.
  • Sum assured is payable only in the event of the death of the life assured occurring during the period.