Term vs. savings life insurance: which is right for you?

Life insurance broadly comes in two flavours: pure protection (term) and protection-plus-savings (endowment/ULIP). They solve different problems, and mixing them up is a common — and expensive — mistake.

Term insurance: maximum protection

Term plans pay a large sum if you pass away during the policy term, and nothing if you outlive it. Because there’s no savings component, premiums are low — which means you can afford a genuinely large cover.

Savings plans: protection + a payout

Endowment and ULIP plans return money at maturity, but the cover per rupee of premium is far smaller, and returns are often modest. They suit specific goals, not maximum protection.

A rule of thumb

For most families, a large term plan plus separate investments (mutual funds, PPF, etc.) gives more cover and better returns than a bundled savings plan. But your goals and tax situation matter — talk it through before deciding.