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Insurance
Endowment Policy Calculator India
See the real return hidden inside an endowment, money-back, guaranteed-income or whole-life policy. The honest IRR after tax and inflation, whether it beats an index fund, and whether to keep or surrender one you already hold.
A policy that "guarantees" to turn ₹15 lakh of premiums into ₹30 lakh, doubling your money, is really paying about 5.3% a year. After 6% inflation that is a small loss, and the same premiums in an index fund would have grown to about ₹73.6 lakh.
About the endowment calculator
This calculator finds the real return, the IRR, hidden inside a traditional endowment, money-back, guaranteed-income or whole-life policy, for a plan you are weighing up or one you already hold, and compares it with a plain term-plus-index alternative. Below the tool is what the number means, why it lands near 5%, what inflation and tax do to it, and what to do instead.
| Where the money goes | Effective return | At year 20 |
|---|---|---|
| The endowment policy | 5.28% | ₹30 lakh |
| The same premiums in an index fund | 12% | ₹73.6 lakh |
The ₹30 lakh is guaranteed and the ₹73.6 lakh is an assumption, but the gap, about ₹43.6 lakh, is the price of bundling insurance with investment. Buy term for the cover, invest the rest. Change the inputs above and this table follows them.
Endowment by life stage
What return does an endowment policy actually give?
Usually about 4 to 6% a year. Take the calculator's default: ₹1 lakh a year for fifteen years, ₹15 lakh in all, for a guaranteed ₹30 lakh at year twenty. Doubling your money sounds excellent, but spread over twenty years it works out to an IRR of about 5.28%. Enter your own premium and maturity above to see your exact figure; most traditional plans land in the same band.
How does the calculator work out the real return?
It lays out every premium you pay and every rupee you get back, then finds the single annual rate that makes them balance. That rate is the IRR, the one honest number for a stream of payments spread across years. It also shows the return after 6% inflation, and checks whether the maturity clears the 10(10D) tax test, so you see the return net of the two things that most decide it.
Why is the return so much lower than the maturity suggests?
Because a traditional plan does two jobs at once and takes a cut on both. A large part of your premium buys a small amount of cover and pays the insurer's costs and commissions, and only what is left is invested, at cautious debt-like rates. Turning ₹15 lakh into ₹30 lakh feels like doubling, but over twenty years it is about 5.28%, not 100%. The table above shows where the rest of the growth went.
Is about 5% normal for these plans?
Yes, and that is the point. Endowment, money-back, guaranteed-income and whole-life plans nearly all land between 4 and 6%, because they share one structure: a small cover, high costs, and a cautious investment. The name on the brochure changes; the return does not. This calculator handles all four types so you can check the specific one you were shown.
Is my ₹30 lakh maturity really worth ₹30 lakh?
Not in the money you will spend. At 6% inflation, ₹30 lakh twenty years out buys about what ₹9.4 lakh buys today, against the ₹15 lakh of premiums you handed over. That is why the real return on most traditional plans sits close to zero or slightly below it.
| Item | Amount |
|---|---|
| Guaranteed maturity at year 20 | ₹30 lakh |
| Its value in today's money (6% inflation) | about ₹9.4 lakh |
| Total premiums you actually paid | ₹15 lakh |
In real terms you get back less than you put in. That is what a 5.28% return does against 6% inflation, a real return just below zero.
Is the maturity tax-free?
Only if it clears the 10(10D) test. For a policy bought after April 2023 the annual premium must be ₹5 lakh or less; for an older one the premium must be within 10% of the sum assured. Above either limit the maturity is taxable, and any death benefit stays tax-free regardless. The calculator flags which case your plan is in, alongside the return.
What should I do instead?
Separate the two jobs the policy bundles. Buy pure term cover for protection, which is cheap because it only insures, and invest the rest in an index fund for growth. On the same outgo the calculator usually shows you end up several lakh richer, with far more life cover along the way. Size the cover with the term calculator and the growth with a SIP.
I already have a policy. Should I surrender it?
Not automatically. Switch the tool to "a policy I already have" and it compares three moves: continue to maturity, surrender now and invest the proceeds, or make it paid-up and invest the future premiums. Use the surrender value your insurer actually quotes, since it is policy-specific. Whatever you decide, keep separate term and health cover in place before you change anything.
What if I need the money before the term ends?
Early exit is where these plans hurt most. Surrender values in the first few years are often below the premiums you have already paid, so the money is locked in far more tightly than a mutual fund, which you can redeem any day. "What happens if I need the money early" is the third of the three questions worth asking before you sign.
How much term cover do I actually need?
A common starting point is ten to fifteen times your annual income, adjusted for your loans and what your family already has. That is a protection question, separate from any investment, and the term cover calculator sizes it for your own numbers. Buying cover this way almost always costs a fraction of what the same cover costs bundled inside a traditional plan.
The agent showed me a much bigger number. Why?
Illustrations usually show a higher figure at an assumed 8% bonus rate, which is projected, not guaranteed. Judge the plan on its guaranteed maturity, the number the insurer commits to in writing, and put that into the calculator. If the person selling it cannot tell you the guaranteed figure and the real return after costs, that silence is itself an answer. This is how most mis-selling works.