Life Insurance Policy - Term Plan comparison with Endowment Plan

 

Term Plan of Life Insurance	Endowment Plan of Life Insurance
1.       Beneficiary will receive the guaranteed Death Benefit only in case of your untimely Death i.e. Death Benefit	In addition You will the entire corpus that you have built over time once the policy tenure is over i.e. Death Benefit and Maturity Benefit
2.       Tax Saving	Tax Saving
3.       Pure Life Insurance Policy	Combination of Investment and Insurance; allows you to save for future.
4.       Lower Brokerage to Agents	Higher Brokerage to Agents (Ultimate Bearer is Insured)
5.       Low Premium Rate e.g. For Cover of Rs. 1 crore a 30 year old needs to pay Rs. 8500 annually for 30 yrs	High Premium Rate e.g. Rs. 1 lakh annually for 30 yrs to be paid for same amount
6.       More Affordable	Expensive
7.       You can choose sum assured fro Rs. 10 lakhs to Rs. 20 crores. Generally you are allowed to buy cover up to 20 times your annual income	Big Amount of Money as annual premium is required for higher Sum Assured. e.g. Rs. 20000 p.a. for 30 years will get you Rs. 16 lakhs sum assured only
8.       If Insurer needs Higher Sum Assured at low premium, then Term Plan is better and surplus amount can be invested in other investment option which can give higher returns	If Insurer also wants to save for future (without headache of investing in other options), then Endowment plan is better.
9.       No Liquidity	Endowment Plans offer liquidity to insurer.
10.   Sum Assured in term plans will sustain your family financially for longer period of time	Death benefit in endowment plan will help overcome the immediate financial hardship but it may not be enough for longer period of time.
11.   Sum Assured of Rs. 1 Crore Term of 35 years (From age 30 to 65) Premium of Rs. 10000 p.a. Annual Surplus of Rs. 45000 if invested in Mutual funds @ 12% Return will become Rs. 2.18 Crores. Death benefit of Rs. 1 crore during the whole tenure.	Sum Assured of Rs. 20 lakhs Term of 35 years (From age 30 to 65) Premium of Rs. 55000 p.a. Will get you Rs. 1 Crore (Approx.) at maturity. Bonus of Rs. 80 lakhs will accrue year by year. Death Benefit is Rs. 20 lakhs plus accrued bonus.

So think before buying Insurance. Clear your purpose of purchasing insurance. Whether I buying further insurance for investment or Adequate Sum Assured.