Term vs ULIP vs endowment vs government schemes
How the main kinds of life cover available in India differ in purpose, cost, tax and risk.
The table compares types of policy, not individual insurers or prices. The core question for each row is: how much life cover does each rupee of premium buy, and what do you get if you survive? Read the rows against your goal. If the goal is to replace your income for your family, the cover amount matters more than the maturity value. For the arithmetic behind these rows, see term vs ULIP vs endowment and buy term and invest the rest.
Select a column header to sort.
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Regular term plan | Pays the sum assured if you die during the term; nothing if you survive | Large cover at the lowest premium for people with dependants or loans | Cover ends at the end of the term; premiums are higher if you start late or use tobacco |
| Term with return of premium (TROP) | Term cover plus a refund of base premiums if you survive the term | People who will not buy term unless they get money back | Premium is much higher than a regular term plan; the refund has no interest, so its real value is low |
| Term with monthly income payout | Pays the claim as a lump sum, a monthly income, or a mix | Families who would struggle to manage a large lump sum | Fixed monthly amounts lose value to inflation; check whether the income increases |
| Endowment / money-back (non-linked) | Small sum assured plus a guaranteed or bonus-based maturity value | Very conservative savers who want forced saving | Low cover per rupee of premium; low implied returns; surrender in early years loses money |
| ULIP | Premium buys market-linked fund units after charges; life cover is usually 10 times the annual premium | Long-term investors comfortable with market risk who want insurance in the same product | Five-year lock-in; charges in early years; maturity is taxable if annual premiums exceed ₹2.5 lakh |
| Whole life plan | Cover typically up to age 99 or 100, often with a savings element | Estate planning or leaving a fixed sum regardless of when you die | High premium; most families only need large cover until their working years end |
| Employer group term cover | Cover provided by your employer as a multiple of salary or a fixed amount | A free or cheap top layer on top of your own term plan | Ends when you leave the job; amount and conditions are set by the employer's policy |
| PMJJBY | ₹2 lakh cover on death from any cause for a small yearly premium auto-debited from a bank or post office account | Basic cover for anyone aged 18–50, especially with no other policy | Cover is small; a lien period applies to new enrolments; cover needs annual renewal via auto-debit |
| PMSBY | ₹2 lakh for accidental death or total permanent disability, ₹1 lakh for partial permanent disability | Very cheap accident cover for ages 18–70 | Accident only: no cover for death from illness |
Premium levels, scheme amounts and tax thresholds can change. Check product details in the policy's sales brochure and policy wording, which every insurer must publish, and check scheme details on the Jan Suraksha portal (jansuraksha.gov.in). For the list of registered life insurers and consumer guidance, see IRDAI. For tax rules, see the Income Tax Department. Nothing on this page is a recommendation of a specific product; if your situation involves business ownership, large estates or non-resident status, consult a qualified adviser.