A term plan pays only if the insured person dies during the policy term. Because there is no maturity payout, the premium is very low relative to the cover.
An endowment or money-back plan bundles insurance with savings. It returns money at maturity, but the cover is usually small and the internal rate of return is typically in the 4–6% range.
A simple comparison
For the same ₹30,000 annual outgo, a 30-year-old might get ₹1 crore of term cover for roughly ₹12,000 and invest the remaining ₹18,000 in mutual funds — or get around ₹6–8 lakh of cover from an endowment plan with a modest maturity value.
The rule of thumb: buy insurance for protection, invest for returns. Mixing the two rarely does either job well.
When endowment can make sense
Guaranteed-return plans can suit an ultra-conservative investor who will not tolerate market volatility at all, or someone who needs a disciplined long-term commitment with a fixed payout date. Even then, it should sit alongside adequate term cover, not replace it.