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Insurance

Term insurance vs endowment plans

Term cover buys protection. Endowment plans bundle a small cover with a low-return savings product. Mixing the two rarely helps either goal.

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Written by adminPublished Reading time 4 minute read

The purpose of life insurance is to replace income your family depends on. That is a protection product, and it should be judged on cover and cost, not on returns.

What the same premium buys

An illustrative split of one annual premium.

Term cover High Pure protection
Endowment cover Low Bundled with savings
Endowment returns Modest Often below index funds

For the same outlay, term insurance usually provides several times the cover, leaving the difference to invest separately.

How to decide

First work out the cover your family needs, then buy the cheapest term plan that provides it. Invest the difference on its own terms, where you can see the cost and the return clearly.

Frequently asked questions

Is term insurance wasted if I outlive the policy?

No. You paid for protection you did not need to claim. The alternative is paying more for the same cover bundled with weak returns.

How much cover is enough?

A common starting point is ten to fifteen times annual income, adjusted for outstanding loans and dependants.

Sources

  1. Placeholder insurance education page Example Authority, 2025

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