Financial Calculators
Term Plus Invest vs Endowment Calculator
Same cover. One path also builds a fund you can see.
Term + invest finishes ahead by
₹22,84,386
- Difference invested each year
- ₹85,000
- Total invested
- ₹12,75,000
- Investment fund at maturity
- ₹47,84,386
- Policy's maturity value
- ₹25,00,000
Same life cover in both paths. In one, the premium buys cover and a savings component with an opaque return; in the other, a term plan buys the cover and the difference is invested where you can see it. The Policy IRR calculator shows the return the traditional policy is actually offering.
These figures are for illustrative purposes only and are not investment advice. Please consult your investment adviser for investment related advice.
Separate the cover from the saving
A traditional endowment or money-back policy bundles life cover with a savings plan whose return is rarely stated. A term plan buys the same cover for a fraction of the premium and nothing else. Invest the difference every year and, at the endowment's maturity date, compare the fund you built with the maturity value the policy promised.
The comparison usually favours term plus invest by a wide margin, because traditional policies typically return 4-6% a year on the savings portion. The calculator lets you test it on your own policy's numbers.
Invest the premium difference
Difference = policy premium - term premium\nEach year: fund = (fund + difference during paying years) x (1 + r)\nAdvantage = fund at maturity - policy's maturity valueWorked example: a policy charging Rs 1,00,000 a year for 15 years and maturing in 20 with Rs 25,00,000 promised, against a Rs 15,000 term plan: the Rs 85,000 difference invested each year at 10% grows to Rs 47,84,386 at maturity, Rs 22,84,386 more than the policy pays.
Frequently asked questions
Is 10% a fair return for the difference?
For a diversified equity fund over 15-20 years it is within the historical range. Even at 7%, in a debt fund or PPF, term plus invest usually finishes ahead. Enter your own figure.
What about the tax benefits of the policy?
Term plan premiums qualify for 80C too, and PPF or ELSS for the invested difference give the same deduction with a clearer return. Maturity proceeds of both routes are tax-free or lightly taxed within rules.
I already have an endowment policy. Should I surrender it?
Not without checking the surrender value and how many years remain. Policies early in their term often pay back very little on surrender; converting to paid-up may be better. The Policy IRR calculator shows what the policy is actually returning from here.
Does a term plan pay anything if I survive?
No, and that is why it is cheap. The saving on premium, invested, is the survival benefit, and it is yours to use at any time rather than on the insurer's schedule.
Insure the life. Invest the money.
We size term cover properly and route the saving into a plan with a stated return.