An Endowment Plan is a type of life insurance policy that combines a death benefit with a savings or investment component, meaning it pays out a lumpsum either if the insured person passes away during the policy term, or at maturity if they survive the full term — unlike pure term insurance, which only pays out on death.
While this combination sounds appealing, endowment plans generally offer significantly lower returns compared to investing separately in mutual funds or other market-linked instruments, largely because a portion of your premium goes toward the cost of insurance itself. Most financial advisors suggest keeping insurance and investment separate — buying affordable term insurance for pure protection, and investing the difference separately in higher-return instruments — rather than bundling the two together through an endowment plan.