The key difference
Term insurance is pure protection: a large lump sum for your family if you pass away during the term, at a low premium, with no payout if you survive (unless you choose return of premium). Traditional life insurance (endowment or money-back) combines a smaller cover with savings, so premiums are much higher.
| Term insurance | Endowment / money-back | |
|---|---|---|
| Purpose | Protect your family | Protection + savings |
| Cover for the same premium | Very high | Much lower |
| Maturity payout | None (pure term) | Yes, with bonuses |
| Best for | Every earning person with dependants | Conservative savers wanting guarantees |
How much life cover do you need?
A common rule is 10 to 15 times your annual income, plus any outstanding loans. A better method adds up your family's future expenses, goals (like children's education) and debts, then subtracts existing savings and cover.
Many advisors suggest 'buy term and invest the rest': take a high term cover for protection, and invest separately in mutual funds or other savings for growth.
Frequently asked questions
Not in a pure term plan, which is why it's so affordable. A 'return of premium' variant refunds premiums if you survive, at a higher cost.