"Buy term, invest the rest" is common financial planning advice in India, but understanding exactly why requires looking at what you're actually paying for in each type of policy.
What you're really buying with each
Term insurance is pure protection — a payout only if you pass away during the policy term, with no maturity value if you outlive it. Endowment and other investment-linked insurance plans bundle a smaller amount of life cover together with a savings/investment component, meaning a portion of every premium goes toward building a maturity payout rather than pure protection.
Why this bundling costs more per rupee of cover
Because part of an endowment premium funds the investment component, the actual cost of the life insurance portion is often several times higher than an equivalent term plan would charge for the same cover amount. This is the crux of the "buy term, invest the rest" argument — separating the two lets you buy adequate protection cheaply and invest the difference wherever you choose, rather than paying an insurance company's often modest investment returns embedded inside a policy.
Where endowment plans still have a case
Endowment plans offer forced savings discipline and a guaranteed (though often modest) return, which appeals to people who know they wouldn't consistently invest the premium difference on their own. There's also a psychological appeal to a guaranteed maturity payout that some people value over market-linked uncertainty, even at a lower expected return.
The step most people skip: figuring out how much cover you need first
Before comparing term vs. endowment, work out your actual required cover amount — buying either type of policy without first sizing the cover correctly means the whole comparison is somewhat moot.