Insurance guide
Term vs Endowment: which life insurance should you buy?
Life insurance has one job: replace your income if you die while others depend on you. A term plan does exactly that, cheaply. An endowment bundles insurance with savings — and that bundle is where most Indians overpay.
Side by side
| Feature | Term plan | Endowment |
|---|---|---|
| Cover for ₹50k/year | ~₹1 crore | ~₹8–12 lakh |
| Maturity payout | None | Yes (low return) |
| Return on savings | — | ~4–6% |
| Cost | Very low | High |
| Best for | Protecting dependents | Forced, safe saving |
A worked example: ₹50,000/year
Put it all into an endowment and you might get ~₹10 lakh cover plus a maturity value that works out to roughly 5% a year. Instead, buy ₹1 crore of term cover for about ₹12,000 and invest the remaining ₹38,000/year in a SIP. At 12% over 25 years that SIP alone could grow past ₹50 lakh — with ten times the life cover along the way.
The simple rule
Keep insurance and investment separate. Buy term cover of 10–15× your annual income, then invest the difference in a low-cost SIP. You get more protection and more wealth.
Frequently asked
Illustrative figures; premiums and returns vary by age, insurer and market. Estimates for planning, not insurance or investment advice.