Fixed Deposits Vs Endowment Policies: Where to invest?

Here’s what you should consider when comparing fixed deposits with endowment policies:

• Tax benefit
  - Endowment policies provide tax benefit on regular premiums paid and the lump sum amount that will be paid on maturity or death as per income tax laws.
  - Returns under fixed deposit are added to taxable income and tax is charged according to the income tax slab.
• Long-term guarantee
  - Endowment non-participating policies offer guaranteed returns throughout the policy term. 
  For example, if you have paid the premium for 7 years and the policy term is 10 years, then you will know how much you are going to receive at the end of the policy term. 
  - Fixed deposits provide guaranteed returns only for the amount that you invest in a particular year. If the interest rates are revised in the following year, then the revised interest rate will be applicable. Given this, the investor will not know what the long term returns are. 
• Life cover
  - Endowment policies offer life cover as well. If the insured dies during the policy period, the insurance provider guarantees a payout to the nominee.
  - Fixed deposits don’t offer life cover. 

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