Understanding Term Life Insurance vs. Endowment Plans

Overview

Frequently Asked Questions

Term life insurance is a pure protection policy that provides a high life cover (sum assured) to your family if you pass away during the policy term, with no maturity benefits if you survive.
Endowment plans invest a portion of your premium to pay you a guaranteed maturity amount, meaning they must charge much higher premiums for very low life coverage.
Optional add-on covers you can buy with your basic term plan, such as Critical Illness rider, Accidental Death Benefit, or Waiver of Premium riders.
A general standard is to buy a sum assured that is at least 10 to 15 times your annual income plus any active debts like home loans.
No, the death claim payout received by the nominee is fully tax-free under Section 10(10D) of the Income Tax Act.
A term plan where you pay all premiums in a short period (e.g. 5 or 10 years) but enjoy life cover for the entire policy tenure (e.g. 30 years).
The policy will lapse or convert to a 'paid-up' policy with a reduced sum assured, and you will lose a major portion of your investments as surrender charges.
Most term insurance policies do not cover suicide claims within the first 12 months of purchasing or reviving the policy.
Only if you buy a 'Term Return of Premium' (TROP) policy. However, these cards charge double the standard premium, making them less financially viable than standard term plans.
Yes, for high sum assured limits (above ₹50 Lakhs), insurers require standard blood tests, ECG, and medical checks to assess health risks before issuing policies.

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