Term Insurance Vs Endowment Policy

If one is looking out for a life insurance policy, it is best to know the difference between term insurance and endowment policy. These 2 financial tools may appear the same but in reality, they are completely different terms.
As a person searching for a suitable life insurance policy, it is necessary to know the difference between term insurance and endowment policy.

Read more
Get ₹1 Cr. Life Cover at just
Term Insurance plans
Online discount
upto 10%#
Claim Support
Policybazaar is
Certified platinum Partner for
Claim Settled

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

Get ₹1 Cr. Life Cover at just
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
We are rated
58.9 million
Registered Consumers
26.4 million

In this article, we will focus on the difference between term insurance and endowment policy, but first, let us briefly understand these 2 terms separately for better understanding.

What Is Term Insurance?

Term insurance is the purest form of insurance that you can buy for yourself and secure the future of your family after your untimely demise. It is a life insurance policy that provides financial coverage to the nominee in the policy if the life insured dies untimely.

Among all the life insurance policies, Term insurance offers the highest coverage with minimal premiums. Some companies also cover the partial or permanent disability of the insured. Term insurance is the only plan that comes under pure risk.

What Is Endowment Policy?

Unlike term insurance, an endowment policy is an insurance plus investment instrument. It offers both, protection in the time of crisis and growth of money invested in the policy. If survived during the entire policy tenure, you get the sum assured amount at the time of maturity.

An endowment policy is widely popular, mainly because of the dual benefits it offers.

Now, as you have an idea of both term insurance and endowment policy, let us look into the difference between the two.

Term Insurance Vs Endowment Policy

The following table will help you gain perspective when it comes to the difference between term insurance and endowment policy.


Term insurance

Endowment policy

Type of Plan

Term insurance is a sole risk coverage plan. It protects the financial future of your family and loved ones in case of your untimely demise.

Endowment plans are a mixture of both insurance and investment.


Covers uncertainties of life

Combines insurance + investment

Ideal for?

An absolute must financial tool for everyone

An investment tool for customers who wish to grow their money along with availing protection

Premiums charged

Term insurance is the most affordable life insurance product available in the market.
You can avail of term insurance with a high sum assured at nominal premiums.

Endowments plans tend to have slightly higher premiums compared to term insurance plans in India.

Maturity benefit

No maturity benefit is associated with term insurance

There is maturity benefit available. This benefit is paid at the end of the policy period

Rider benefits

Coverage can be enhanced of your term insurance plan with rider benefits such as critical illness cover, accidental death benefits, the return of premium benefit, etc.

Just like term insurance plans, coverage can be enhanced of your endowment plan with rider benefits such as such as critical illness cover, accidental death benefit cover, waiver of premium cover, etc.

Tax benefit

Available u/s 80C and 10D

Available u/s 80C and 10D

Death benefit

Only the death benefit is offered by term insurance

Death and maturity benefits both are associated with endowment plans

Sum assured

Sum assured as the death benefit is mostly 15-20 times the annual income of the policyholder

Sum assured as maturity benefit is not great but sufficient to be used as a good investment option


Term insurance does not offer any liquidity.

Endowment plans allow partial withdrawal of the sum assured amount in case of financial emergencies.


It is recommended not to mix insurance and investment. Mainly, the choice between the two comes down to your family needs and whether or not you are the soul-earning member of the family.

If you are the only earning member, term insurance promises better results for your family after your untimely demise. On the other hand, if there are other earning members in the family, an endowment policy will help you invest more and take a little risk.

Both term insurance and endowment policy have their pros and cons. It is up to you and your family’s needs that will help you make an ultimate decision.

Different types of Plans

Term insurance articles

Recent Articles
Popular Articles
Best Term Life Insurance in USA

01 Feb 2023

A term life insurance in USA can secure your family against the
Read more
Tata AIA Term Insurance Login

26 Dec 2022

Tata AIA term insurance login portal offers the company’s
Read more
Why NRIs in UAE Should Buy Term Insurance Plans from India?

08 Dec 2022

Term life insurance plan secures the financial future of your
Read more
Best Term Life Insurance Plans in Singapore

07 Dec 2022

An NRI living in Singapore can easily buy the best term life
Read more
Bima Sugam

29 Nov 2022

Bima Sugam is an online marketplace that will offer its services
Read more
LIC Term Insurance 1 Crore
LIC of India offers various plans to help you secure the financial future of your loved ones. In order to make
Read more
What Medical Tests are Required for Term Insurance?
Term insurance offers a sum assured to the beneficiary of the policyholder upon their death that can help them
Read more
Term Insurance: Tax Benefits under Section 80D
Term Insurance provides financial security and protection to your family in case of your unexpected death within
Read more
2 Crore Term Insurance Plan
The pandemic has surely generated a global panic and emphasised the importance of financial planning that would
Read more
Types of Deaths Covered and Not Covered by Term Insurance
A term insurance plan is the best way to ensure the financial well-being of your family members in case of any
Read more

View Plans
Download the Policybazaar app
to manage all your insurance needs.