Distinguish between Endowment and Term Life Policy
Term insurance plans only provide protection for the term specified in the policy document. An endowment policy is a life insurance contract designed to pay a lump sum after a specified term or on the death of the insured.
Difference between endowment life policy and term life policy as follows –
Endowment Policy –
- Endowment Plan is a participating non-linked plan which offers an attractive combination of protection and maturity benefit.
- This policy is for a fixed period of time.
- The rate of premium is high in this policy.
- The premium is payable regularly till the maturity of the policy.
- The benefit of this policy is if the policyholder survives after the completion of policy tenure, he receives assured amount plus additional benefits like a bonus from the insurance company.
- Considered primarily to provide a living benefit along with life insurance protection.
Term Insurance policy –
- Term Insurance is a protection and traditional plan which provides financial protection to the insured’s family in case of unfortunate demise with very low investment.
- Term insurance is for a short period of year’s ranging from 3 months to 7 years.
- It has one of the lowest premiums among insurance plans.
- The premium uses usually payable throughout the term of the polity.
- Term insurance policies – are always without profit.
- Sum assured is payable only in the event of the death of the life assured occurring during the period.