Term Plan or Endowment Plan: Which Should You Buy First?

A term plan buys the maximum cover per rupee and pays nothing if you survive. An endowment plan buys much less cover and returns a guaranteed lump sum. They are not competitors; they answer different questions.

The usual sequence: adequate term cover first, emergency fund next, then savings-style plans for the guaranteed portion of long-term goals.

Cover adequacy rule of thumb: ten to fifteen times annual income, plus outstanding loans, minus existing liquid assets.

Endowment returns look modest against equity because they are contractually certain and life-cover-backed. Judge them against fixed deposits, not against the Nifty.

Compare any two plans on identical inputs using our comparison tool before deciding — it removes most of the guesswork.