Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Comparison of Products Across Categories

Which statement correctly compares a term insurance plan with an endowment plan for a young client whose primary need is high life cover at low cost?

Term insurance provides much higher life cover for the same premium because it is pure protection with no maturity benefit, whereas an endowment plan bundles savings with cover and so offers considerably less cover per rupee of premium.

  1. ATerm insurance gives much higher cover for the same premium because it has no maturity benefitCorrect
  2. BEndowment plans give higher cover than term plans for the same premium
  3. CTerm insurance pays a survival benefit on maturity
  4. DEndowment plans are pure protection products with no savings component

Explanation

Term insurance is pure protection with no maturity value, so premiums are low relative to cover. Endowment plans bundle savings with cover, so the same premium buys far less cover. Term plans pay only on death within the term, and endowments include a savings element.

Did you get it right without looking?

One question tells you little. A timed set on Comparison of Products Across Categories shows your real accuracy, how long you take and where you lose marks.

Practise Comparison of Products Across CategoriesFree diagnostic mock

More Comparison of Products Across Categories questions