What's the difference between endowment insurance plans and life/health standalone insurance plans?

The objective of endowment plans is to "endow". It is to match a guaranteed amount for a guaranteed event that will happen in a life stage. They usually fall into two common scenarios:

1. Retirement

2. Children's University Education

Life Insurance policies are meant to protect income upon an insured event. These can be broadly classified into 3 main categories:

1. Death

2. Disability

3. Critical Illness

Health Insurance Policies are meant to reimburse medical bills in an event of accident, illness or hospitalization. They insure against uncertainty in the cost of being treated in a medical facility.

There are no pros and cons with each type of insurance if you were to compare them side by side. Largely because all 3 serve very different purposes for very different problems.

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Hi anon,

Endowment insurance is basically intended for wealth accumulation. It is intended to mature at some stage in the policy, either at one go, or over a period of time. Thus, the intention is to grow your wealth in a safe manner, since there are guarantees to it, as well as non-guaranteed components. Non guaranteed components, when declared and added to the policy, become guaranteed. They are not meant for protection, thus any protection afforded by them is minimal.

Health insurance basically covers your hospital bills and associated costs of treatment. Without it, you are at risk of financial ruin from a large and unexpected hospital bill. The bills are covered by the insurer, restoring you to a neutral position.

Life insurance covers events, such as death, or TPD, or Critical illness. In this case, they are meant to pay you a sum of money, but only when the covered event occurs. If the event does not occur, and the policy expires, then nothing is paid. However, if it is a whole of life policy, then if the covered event occurs at some point in your life, you will get a payout.

Standalone life/health plans are meant for protection. Thus, their coverage is far higher than endowment. You will need to understand your coverage needs, how long you need to be covered for, and then you can decide which type of plan may suit you (there are many permutations, e.g. Whole Life CI, term CI, Multipay CI, etc)