Almost every family we meet in Chandigarh, Mohali and Panchkula asks the same question: “Should I take a term plan or a normal LIC policy?” The honest answer is that they do different jobs. Once you understand the difference, choosing becomes easy.
What is a term plan?
A term plan, such as LIC Yuva Term or New Tech-Term, is pure protection. If the insured person dies during the policy term, the nominee receives the sum assured. If the person survives, nothing is paid back. Because there is no savings part, the premium is very low – a large cover such as ₹1 crore can cost less per year than many endowment policies with a much smaller cover.
What is an endowment plan?
An endowment plan, such as New Jeevan Anand or Jeevan Labh, combines life cover with savings. You receive the maturity amount with bonuses (or guaranteed additions in non-participating plans) at the end of the term. Premiums are higher because a large part goes towards savings.
Side-by-side comparison
| Term plan | Endowment plan | |
|---|---|---|
| Main purpose | Protect family income | Savings + protection |
| Premium | Very low | Higher |
| Cover for same premium | Very high | Lower |
| Maturity benefit | None | Sum assured + bonuses/additions |
| Best for | Earning members, loan borrowers | Goal-based disciplined saving |
So which one should you buy?
For most families the answer is both, in the right order:
- First, protection. Every earning member with dependants or loans should have term cover of roughly 10–15 times yearly income plus loans. Use our cover calculator.
- Then, savings for specific goals. See what each plan pays with our free LIC calculators. Choose an endowment, child or income plan for goals where you want safety and discipline – children’s education (Amritbaal), a lump sum at a fixed date (Jeevan Labh) or yearly income later in life (Jeevan Umang).
A simple example
Consider a 32-year-old working in Mohali with a home loan and a young child. Taking only an endowment policy with a small sum assured would leave the family under-protected. A better structure is a term plan large enough to clear the loan and replace income, plus a child plan for education. The total premium often stays within the same budget the family was planning anyway.
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Apni details bhejiye – Vedpal Singh aapko call karke sahi plan batayenge.
This article is for general information. Plan features are subject to LIC’s latest brochures; tax benefits are as per prevailing laws.