How is an endowment policy different from a term policy?
Both are life insurance policies that cover life risk, but they are both different in structure and costs
How is an endowment policy different from a term policy?
Meena Dutt, Kolkata
Both are life insurance policies that cover life risk. But they are both different in structure and costs. The term insurance policies are pure risk policies, which mean they cover only death of the insured. What this means is that these policies pay the dependents of the policyholder in case of death and pay nothing if the policyholder survives the policy tenure. However, endowment policies combine risk cover with an element of savings and investments. Therefore, in the case of an endowment plan, if the policyholder survives the policy term, he will get the sum insured and additional sum such as a bonus, depending on the policy benefits as stated in the policy document at the time of taking the policy.