Endowment plans bundle insurance and investment. Term plans give you pure protection. Why does every financial planner insist on a term plan instead of (or in addition to) an endowment?
What Each Plan Does
- Endowment (Jeevan Anand 915, Jeevan Labh 936, etc.): combines life cover with guaranteed savings. You get a maturity value after 20–25 years.
- Term (Tech-Term 954, Jeevan Amar 955, Saral Jeevan Bima 860): pure life cover for a fixed term. No maturity value; if you survive, the premiums are gone (but the cover was there if you'd died).
Why Term Insurance Wins for Pure Protection
Consider two 30-year-olds buying ₹1 crore cover for 30 years:
| Plan | Yearly Premium | Cover | Total Outgo (30 yrs) | Maturity |
|---|---|---|---|---|
| Jeevan Anand 915 | ~₹77,000 | ₹1.25 Cr (125% SA) | ~₹23,10,000 | ~₹24,00,000 |
| Tech-Term 954 | ~₹12,000 | ₹1 Cr | ~₹3,60,000 | ₹0 (no maturity) |
For the same cover, the term plan costs 6× less than the endowment. With the ₹65,000/year saved, you can start a SIP — which can easily outpace the endowment's maturity value over 30 years.
Why Endowment Plans Are Not "Bad"
Endowment plans have a place — they're just not the best place to put the bulk of your insurance or investment:
- ✅ Disciplined savers who would never otherwise invest
- ✅ Guaranteed tax-free returns in a tax-friendly wrapper (80C + 10(10D))
- ✅ Conservative investors who want zero market risk
- ✅ Forced savings for a specific dated goal (child's education in 2035)
The Right Combination (What Planners Recommend)
- Term plan for 12-15× annual income, till age 60 (₹6,000–₹15,000/year for ₹1 Cr cover)
- Endowment/PPF/FD for guaranteed, dated goals
- Equity SIP for long-term wealth building
Buy term and invest the rest. It's not a slogan — it's the mathematically optimal way to insure your life.