Uncertainty about the future and declining life expectancy have had a substantial impact on the increased demand for insurance coverage. Itnot only assists in the planning of your financial goals and ambitions, but also acts as a savior for your loved ones in your absence. To ensure long-term safety and security, it is only prudent to invest in life insurance coverage.
It is hard when you have to choose the best out of all, and here, you have two options: term insurance and endowment plans. Understanding your loved ones’ financial needs is the first step toward protecting their future as it allows you to choose which investment or insurance product will provide you with the best results in a given situation. Let us look at the specific plans and the major differences between the two.
What is a Term Plan?
Term plan, is a simple insurance product that provides the insured with life insurance for a set period of time. Under this insurance type, if the insured dies within the policy period, their nominee is entitled to a death benefit. The sum assured payable is established at the time the term insurance is purchased.
Most individuals consider term insurance because it is one of the most affordable types of life insurance, with significantly lower premiums than other plans. ABSLI DigiShield Plan is one prime example of term insurance, it’s a low cost insurance plan with high coverage of over 1 crore life cover with very less premium of Rs. 477 per month. Thus term insurance proves to be very cost-effective for individual life coverage.
What are Endowment Plans?
Endowment plans (also known as savings plans) can be considered as a financial tool that allows the policyholder to save methodically along with providing consistent returns to help the policyholder meet their financial motives. They too come with a death benefit that will help your family to have a secure monetary sail even after your unfortunate death.
In this plan, you continue to pay throughout the policy term, and at the end of the term, you receive a maturity amount. Certain Endowment plans are money back plans in which a portion of the benefits are paid to you at regular intervals throughout the policy term.
It can be used as a good investment opportunity. It helps you in building a corpus that can be used for a large cash requirement at the end of the policy term, such as your child’s higher education, marriage, or home purchase.
ABSLI Assured Savings Plan is one such plan which offers life insurance and savings advantages to protect your family members from financial crisis in the event of any mishaps It also helps you in accumulating a lump sum corpus to fulfill all your life dreams.
Differences Between Term Plan & Endowment Plan
While comparing the two insurance products, we should keep in mind certain points where both products stand. The following factors will help you understand the factors that will help you calculate which product you need at that time and take an informed decision while choosing. These metrics are as follows:
- Life Cover
- Premium Cost
- Sum Assured
- Maturity Benefits
- Death Benefits
The table below will help you differentiate two insurance types in a detailed manner:
|Metrics||Term Insurance Plan||Endowment Plans|
|Life Cover||Term plan coverage can range from a few lakhs to 5 crore. It provides solely for the protection of the insured’s life. It is a pure life insurance policy that guarantees to pay a sum promised if the policyholder dies during the policy period. There is no maturity gain if he outlives the term.||Endowment Plans primarily work as a savings and investment tool. It’s basically a savings plan which provides life insurance. In addition, the policyholder receives a death benefit in the case of their death. If they survive the specified period, they will receive a maturity benefit.|
|Premium Cost||Cost of term plan premium is significantly less as compared to other insurance plans. You can get a 2 crore term life insurance at Rs. 1,100 per month.||Here you pay a premium till the policy tenure. Hence the premium amount you pay is invested at a certain amount at interest rate and gets the benefit as a savings component.|
|Sum Assured||Under this type of insurance, the sum assured concerning the death benefit, it is usually 20 times the life insured’s annual income.||Here, the sum assured compared to the term plan is not that exceptional, but is adequate to be utilized as a viable investment alternative.|
|Maturity Benefits||If you think that by investing in a term insurance you shall avail the maturity benefits, then you are living in a myth. Because they don’t come with maturity advantages. However, if the policyholder opts for a return of premium rider, they will be reimbursed for any premiums paid towards the conclusion of the policy period if you survive.||The policyholder will receive the maturity benefit towards the end of the plan.|
|Death Benefit||The policyholder has the option of availing death benefit.||Whereas, endowment plans provide both death and maturity benefits to the policyholder.|
Best Term Insurance Plan to buy in 2022
Aditya Birla Sun Life Insurance DigiShield Plan
The ABSLI DigiShield Plan is an all-inclusive plan that comes with 10 pocket-friendly options that is suitable for people from different walks of life, and it is why this plan is known as ‘Sabka Vala Term Plan’ because it caters to a multitude of audiences.
- Level Cover Option
- Increasing Cover Option
- Sum Assured Reduction Option
- Whole Life Option (Level Cover)
- Whole Life Option (Sum Assured Reduction Cover)
- Income Benefit
- Level Cover plus Income Benefit
- Low Cover Option
- Level Cover with Survival Benefit
- Return of Premium (ROP)
Some of the features and benefits of this term insurance plan are as follows:
Death Benefit: If the policyholder meets with untimely death, the death benefit will be received by the nominee(s)/legal heir(s) chosen according to the policyholder.
Maturity Benefit: Maturity benefits are paid by the insurer to the life insured once they complete the plan period. Under this policy, if the policyholder chooses Option 10 then they are eligible for maturity benefit. The ones who choose a plan from 1 to 9 can’t avail this benefit. Therefore, it is important to choose the right option before making any choice.
Accelerated Critical Illness: Under the ACI benefit, if the policyholder meets with any disease as mentioned under the ACI terms and conditions, then the benefit shall be paid on the initial diagnosis as mentioned under the benefit.
Enhanced Life Stage Protection: Under this benefit you will be able to add new entries in your life such as your wife and children. Because as responsibilities increase you need to have more money to cover your loved ones. Therefore, if you chose this benefit to enhance the sum assured without having to undergo a new medical examination.
To know more about this best possible term insurance in the market, click here – ABSLI DigiShield Plan.
Best Endowment Plan to Buy in 2022
Aditya Birla Sun Life Insurance Savings Plan
This endowment plan by the ABSLI will help the policyholder in achieving their life objectives by helping them in engaging in a steady savings plan that shall expand one’s savings over time.
Some of the features and benefits of this plan are as follows:
Death Payment: If the policyholder meets with untimely death when the policy is active then the beneficiary shall receive a pre-determined death benefit. And, once the death benefit is paid by the insurer the plan will be cancelled. However, if the policyholder dies due to an accident then, an Accidental Death Benefit will be paid to your nominee along with the death benefit.
Maturity Benefit: The maturity benefit shall be paid in a lump sum if the policyholder survives through the policy term.
Auto Cover Continuation: Under this benefit, if the policyholder misses the chance to pay the premium after paying the premiums for 2 continuous years then, the complete death benefit will follow for a period of two years (under auto cover continuation period) starting from the due date of the first unpaid payment.
To know more about this endowment plan, click – ABSLI Savings Plan
Like every coin has two sides, both the plans have their own purposes and plan for the users. It’s you as a responsible family member to take the decision, understand your pocket limit, future needs, possible emergencies, and then opt for the best from the reliable insurance company in the market.