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Term insurance or Endowment Insurance – Whats Better?

Many times I heard people saying, ”Insurance is important to leave enough money for my family so that they can lead a good lifestyle even after me” the feeling so pure & secure. Isn’t it?


Zindagi K saath bhi, Zindagi k baad bhi” but there are hundreds of various life insurance policies and a common man like me will get confused which one is better

This post is to address the confusion and help you understand the only life insurance policy you should have, that is TERM LIFE INSURANCE


What is actually term insurance?

Term insurance is the purest of life insurance which comes with financial security to your family in the form of risk protection with a fixed duration.

But with the evolving times, insurance companies are marketing investment plus insurance policies to attract the attention of public and collect more premiums for lesser risk coverage and lesser returns

In term insurance, you pay premium only for risk cover without any expectation of return of money like your car or bike insurance

Common man’s mindset has been brainwashed by LIC agents that you should get something in return for the premium paid towards life insurance policy. This logic proves to be very costly to policy holder and advantage to policy seller (agent)

The returns policyholder receives over the tenure of policy ranges between 3 to 6% in endowment policies like Jeevan Anand, Jeevan Saral, Jeevan Akshay, Jeevan Labh any more policies from other private insurance companies as well

You might think that “I am paying a premium in term insurance & if nothing happens to me, then all my money get wasted & if I get insurance as well as some return from my investment, then what would be good for me?

But my friend, this is a biggest financial TRAP

Lets understand how with an example

Say, For Example: Consider your age as 30 Years healthly person, You pay Rs 50,000 per year for Jeevan Anand for 10lacs risk cover benefit

which means, if something happens to you, your family would receive Rs 10lacs

but if nothing happens and you continue to pay premium for 20 years, that will be Rs 10 lacs

At the time of maturity, say you get 20lacs. which means your money has doubled in 20 years which translates to annualized return of 3.6%

Lets look at same example how you can benefit if you separate Insurance and Investment:

For 10lacs risk cover, the premium in Term Insurance would be around Rs 2000 per year

So Lets take out Rs 2000 from Rs 50,000 that you pay for Jeevan Anand premium. Rs 50,000 – Rs 2000 = Rs 48000

If you invest, Rs 4000 per month ( Rs 48,000 per year ) for the same 20 years, you would have between 30 to 40 on an average conservatively

Best If you look at last 20years top performing Mutal Funds, your value would have been more than 1 crore

yes thats 2 to 5 times more than what Insurance and Investment mixed products would have given you.

Hence, I would like to conclude that keeping Insurance and Investments separately provide you both the advantages of having high risk cover at very low premiums and at the same time get good returns and build wealthy corpus

What do you think? Do share your opinion in the comments below

Disclaimer: Insurance is a subject matter of solicitation and Mutual funds are subject to market flucations.

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