Life insurance in Pakistan: term vs endowment, which to choose

For most families, term life insurance is the cheaper way to buy cover in Pakistan. Adamjee Life’s online term plan charges Rs 4,400 a year for Rs 10 lakh of cover. Jubilee Life’s endowment example charges Rs 57,950 a year for the same Rs 10 lakh. The endowment also pays back at maturity, but only if you keep paying for the full term. Prices are from the insurers’ own brochures, checked on 13 October 2026.

What is the difference between term and endowment life insurance?

A term plan pays your family a lump sum if you die during the cover period. If you survive, you get nothing back. An endowment plan pays the sum assured plus bonuses either on death or at the end of the term, so it is insurance and savings in one product.

Banks also sell a third kind: a unit-linked “savings plan”, where your premium buys units in the insurer’s investment funds and the value goes up or down with them.

How much does life insurance cost in Pakistan?

These are the prices the insurers publish, as of October 2026. Online term plans have one flat price per package; endowment premiums depend on your age, the term and the sum assured.

Both online term plans exclude death from a pre-existing condition and have a 30-day waiting period after you buy. EFU’s is a one-year cover that needs no medical test; its brochure is dated April 2024. If you already have a health condition, these packages may not pay for a death it causes, so read the exclusions and declare everything when you apply. Term plan complaints to the Ombudsman in 2025 often involved claims refused for medical non-disclosure.

Is an endowment policy worth it?

It can be, if you hold it to maturity. In Jubilee’s own illustration, a 36-year-old pays Rs 57,950 a year for 20 years, Rs 11.59 lakh in all. At 55 the policy pays Rs 37.5 lakh: the Rs 10 lakh sum assured, Rs 17.5 lakh of yearly bonuses and Rs 10 lakh of terminal bonus. Jubilee’s brochure calls the maturity benefit guaranteed and lists the bonus rates for each year.

The alternative is to buy term cover and invest the difference yourself. Rs 57,950 minus Adamjee’s Rs 4,400 leaves Rs 53,550 a year. To reach Rs 37.5 lakh in 20 years, that money would have to earn about 10.9% a year after tax (our calculation). Bear in mind the online term plans end at 60 and exclude pre-existing conditions, so the comparison is not exact.

The real cost of an endowment is leaving early:

• You can’t surrender for the first two policy years. Jubilee’s illustration shows a cash value of zero in year 1.
• After year 2 you get back Rs 66,201 of the Rs 1,15,400 paid in basic premium, about 57%.
• After year 5 you get back about 82%.
• The cash value first passes what you paid in year 9.

The terminal bonus, Rs 10 lakh of the Rs 37.5 lakh in the example, is not paid at all if you surrender. If you aren’t sure you can pay for the whole term, an endowment is the wrong product.

Are bank “savings plans” life insurance?

Yes. When a bank officer offers a savings plan with life cover, it can be a unit-linked life insurance policy, sold by the bank as the insurer’s agent (“bancassurance”). EFU’s Accelerated Savings Plan, sold through MCB Bank, shows how the charges work:

On top of that come Rs 60 a month in administration charges, a 5% bid/offer spread, 0.125% of the fund a month in management charges and a mortality charge. Surrender before two full years of premium and the surrender charge is 100%. The brochure says the product is not guaranteed or insured by the bank, and you carry the investment risk.

SECP said in December 2019 that bancassurance agents had sold policies as highly profitable investments without disclosing the front-end commission and other charges. It ordered one insurer to refund 19 policyholders in full. Its Corporate Insurance Agents Regulations 2020 added required disclosures, an after-sales confirmation call and minimum premium allocation rates.

The problem has not gone away. Bank-sold policies made up 3,273 of the 4,423 life insurance complaints the Federal Insurance Ombudsman (FIO) received in 2025, about 74%. Its annual report names “policy misrepresentation, incomplete disclosures, and delays in settlement”.

Which life insurance companies get the most complaints?

We don’t rank insurers. The FIO’s complaint counts for 2025 are one public yardstick, but they are not adjusted for company size, so a bigger insurer will usually have more.

The report says Jubilee Life accounted for over 42% of all complaints. In a speech reprinted in the same report, the Ombudsman said State Life “falls outside our mandate till now”. In a 6 May 2026 press release on its 2025 results, State Life reported a policyholder profit bonus of over Rs 181 billion and claims paid of over Rs 224 billion.

Family takaful, the Islamic version, is also sold as term plans and through banks. Of the FIO’s 195 takaful complaints in 2025, 49 were about term plans and 58 about bank-sold plans.

Can I cancel a life insurance policy and get my money back?

Yes, if you act fast. Every insurer we checked gives a 14-day free-look period: you cancel and get your premium back, less any medical examination cost. Jubilee, EFU and Adamjee count the 14 days from when you receive the policy documents. State Life counts from the policy’s commencement date, so check your own policy.

After that, you are into surrender. State Life, and Jubilee’s Super Endowment, only give a surrender value once the policy has run for two years. If a policy was mis-sold, complain to the insurer and then to the FIO.

Is a life insurance payout taxed?

Partly, since the Finance Act 2026. Section 7G taxes the gain (payout minus premiums paid) on a surrender, maturity or other payout from tax year 2026:

• 15% if paid within one year of the policy’s issue
• 10% if paid after one year but before four years
• No tax after four years, or on a death or disability claim

The insurer deducts it, and it is final tax. The Finance Bill had proposed seven years; the Act cut it to four. For your other income, see the income tax slabs for 2026-27.

How to choose

How do I make a claim or complain?

For a death claim, EFU asks for the claimant’s statement, the attending doctor’s report, the hospital death certificate and medical records, a NADRA or Union Council death certificate, and CNIC copies of the claimant and the deceased.

If the insurer refuses or delays, complain to the Federal Insurance Ombudsman on helpline 1082 (9 am to 5 pm) or online. It is free. In 2025 the FIO disposed of 4,759 complaints, about 95% within 60 days, and ordered Rs 1.58 billion in relief.

More guides: health insurance in Pakistan, pension funds, investment options in Pakistan, car insurance, Credit Cards & Insurance.