These two are often pitched side by side as competing options, but they're solving different problems, and comparing them directly usually leads to the wrong decision.
Term insurance is pure protection: you pay a premium, and if you pass away during the policy term, your family receives the sum assured. If you survive the term, you get nothing back — the entire premium was the cost of that protection, similar to how car insurance works.
An endowment plan bundles insurance with a forced savings component, paying out a maturity amount if you survive the term, in addition to a death benefit if you don't. This sounds appealing — "get your money back" — but the insurance cover per rupee of premium is typically far lower than term insurance, since a large chunk of your premium goes toward the investment portion rather than pure protection.
The math usually favours buying term insurance for the protection you need, and investing the difference (which can be substantial — often 5-10 times more premium for the same cover under an endowment plan) separately in mutual funds or PPF, where you have far more control and typically better long-term growth.
Frequently asked questions
What is a term insurance cover calculator?
It estimates how much life insurance cover you may need, using the Human Life Value (HLV) method — the present value of your future income — rather than a simple rule of thumb, to help protect your family's financial future if something happened to you.
What is Human Life Value (HLV)?
HLV is an estimate of the total economic value you'd contribute to your family over your remaining working years, calculated by discounting your future income (growing each year) back to today's value. It's meant to represent what your family would financially lose if you weren't there to earn.
Why does the calculator discount future income instead of just adding it up?
Because money in the future is worth less than money today (the time value of money) — a lumpsum payout received today needs to be smaller than the raw sum of future income, since that payout could itself be invested and grow over time.