Endowment Plan vs Fixed Deposit (FD) - Where To Invest?

One of the biggest phases of creating an investment plan involves choosing the investment options for your portfolio. Here is where you need to compare different investment avenues and decide which ones you want to invest in.

Comparing two investment options is quite an exercise in diligence. You need to see how they stack up against each other in various areas such as risk, returns, features, benefits, taxation and more.

To help you understand how this works better, let’s take up two investment options - pure endowment plans and fixed deposits. Both these investment options come with their own benefits, and they are typically preferred by investors who are looking for safer investment avenues.

In order to see how the two compare, it is essential to first get the fundamentals sorted. So, let us take a closer look at what an endowment plan and what a fixed deposit is.

What is an Endowment Plan?

An endowment plan is a kind of life insurance policy that offers the dual advantage of a life cover as well as an element of savings. By purchasing a pure endowment plan, you can save diligently over the long term, during the policy duration. These savings add up with time, and grow into a sizable maturity benefit.

So, in case the insured person survives the policy term, the savings component is paid out as the maturity benefit at the end of the period. On the other hand, if the person passes away during the policy term, the death benefits guaranteed under the plan are paid out to the nominee assigned by the policyholder.

This is, in short, how an endowment policy works.

Pure Endowment Plans vs Fixed Deposits