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Term vs Endowment Calculator

Compare term insurance vs endowment plan with exact numbers. Reveals the endowment IRR agents never show you — and the wealth gap from not doing BTID (Buy Term, Invest the Difference).

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compare_arrows Term vs Endowment Comparison
Your Age
yrs
Life Cover Required
₹
Policy Tenure
yrs
Gender
Override Estimates (leave 0 to auto-calculate)
Endowment Premium/yr
₹
Term Premium/yr
₹
Maturity Amount
₹
Expected SIP Return Rate
% p.a.
Existing Policy — Surrender Analysis (Optional)
Years Already Paid
yrs
Current Surrender Value
₹
Endowment IRR — Actual Annual Return
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Endowment Premium
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Term Premium
—
Annual Saving (→ SIP)
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Monthly SIP Amount
—
Endowment Maturity
—
Term+SIP Corpus
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SIP Return Sensitivity — Term+SIP Corpus vs Endowment Maturity
SIP Return Term+SIP Corpus vs Endowment
@10% p.a. (conservative) — —
@12% p.a. (base case) ✓ — —
@14% p.a. (optimistic) — —

Term vs Endowment Insurance — India Ka Sabse Bada Financial Myth

India mein ek financial myth itni deeply rooted hai ki generations se log isko true maante aa rahe hain — "Insurance aur investment milake chalana chahiye."

LIC agent ne kaha — "Sir, ye policy lelo — ₹80,000/year premium doge — 25 saal ke baad ₹25 lakh milenge aur poore time insurance bhi milega!" Sounds great, right? Family protected + money back = best of both worlds.

Lekin ye actually India ka sabse expensive financial mistake hai. Chalo numbers dekhte hain:

Same ₹29.5 Lakh Total Investment — Dramatically Different Outcomes
ENDOWMENT PLAN
₹1,18,000/yr premium × 25 yrs
Maturity: ₹32 Lakh
TERM + SIP
₹10,500 term + ₹1,07,500 SIP/yr
Corpus: ₹1.70 Crore
Difference: ₹1.38 Crore — Same total money, same ₹1 Cr coverage!

Ye koi rocket science nahi — ye basic financial math hai. Lekin India mein crores of people still endowment plans le rahe hain kyunki agent ka commission endowment mein 20–25x zyada hota hai term se. faydemand.in ka Term vs Endowment Calculator ye exact calculation tumhare specific numbers ke saath karta hai.

What Is Term vs Endowment Calculator?

Term vs Endowment Calculator ek financial comparison tool hai jo clearly dikhata hai ki same insurance coverage ke liye term insurance + SIP investment kaisa perform karta hai compared to endowment insurance plan — exact rupee difference ke saath, over the same time period. Ye calculator woh calculation karta hai jo insurance agents kabhi nahi karte.

Calculator kya-kya compute karta hai: endowment IRR (actual annual return), term+SIP wealth gap, year-by-year corpus comparison chart, sensitivity for 10%/12%/14% SIP returns, and surrender analysis for existing policyholders.

ParameterTerm InsuranceEndowment Plan
Coverage (₹1 Crore)✅ Full coverage✅ Full coverage
Annual Premium₹8,000–₹12,000₹80,000–₹1,50,000
Maturity Benefit❌ None✅ ₹15–₹40 lakh
Investment ReturnVia SIP: ~12% CAGR4–6% IRR only
Total Wealth @25yr₹1.5–₹2 Crore₹25–₹35 Lakh
FlexibilityHigh — stop/start anytimeLow — locked in
Agent Commission7–15% (Year 1)25–35% (Year 1)
Net Winner✅ Term + SIP❌

How the Calculator Works

    1
    Coverage and Profile Input: User enters age, desired sum assured, policy tenure, and gender. This establishes comparison parameters — both strategies provide identical ₹1 Crore coverage for identical duration.
    2
    Endowment Policy Modeling: Auto-estimates annual endowment premium (~1.1%–1.9% of SA by age) and maturity amount (~1.4× total premiums). User can override with actual policy values from their benefit illustration.
    3
    IRR Calculation (Newton-Raphson bisection): Solves for r that satisfies Σ[P÷(1+r)^t] = M÷(1+r)^n where P = annual premium, M = maturity, n = tenure. This is the true annual return on the endowment.
    4
    Term Premium and SIP Calculation: Auto-estimates competitive market term premium (₹7.5–₹55 per ₹1L SA based on age/gender). Premium saving = endowment − term goes into monthly SIP at user's chosen return rate.
    5
    SIP Corpus: FV = PMT × [((1+r/12)^(12n)−1) ÷ (r/12)] × (1+r/12). Computed at three rates — 10%, 12%, 14% — regardless of the user's selected rate, to show sensitivity.

Key Formulas

Endowment IRR — solve for r: Σ[P/(1+r)^t, t=1..n] = M/(1+r)^n
Premium Saving: PS = P_endow − P_term
Monthly SIP: PMT = PS ÷ 12
SIP Corpus: FV = PMT × [((1+r/12)^(12n)−1) ÷ (r/12)] × (1+r/12)
Wealth Gap: WG = FV_sip − M_endow
Surrender (Option B): SV × (1+r)^n_rem + sipFV(PS/12, r, n_rem)
AgeEndowment PremTerm PremAnnual SavingSIP Corpus @12%Endow MaturityWealth Gap
25₹1,10,000₹7,500₹1,02,500₹1,79,00,000₹28,00,000+₹1,51,00,000
30₹1,20,000₹10,000₹1,10,000₹1,91,00,000₹30,00,000+₹1,61,00,000
35₹1,35,000₹14,000₹1,21,000₹2,10,00,000₹33,00,000+₹1,77,00,000
40₹1,55,000₹22,000₹1,33,000₹2,31,00,000₹38,00,000+₹1,93,00,000

For ₹1 Crore cover, 25-year term. Every row shows ₹1.5–₹2 Crore extra wealth from Term+SIP!

Worked Examples

Example 1: Classic Comparison — 30-Year-Old Vikash

Agent offered LIC Jeevan Anand: ₹1 Cr coverage, ₹1,18,000/yr, 25 years, maturity ₹32 lakh. Alternative: HDFC Life Click2Protect term ₹10,500/yr.

Endowment IRR: ₹1,18,000/yr for 25 years → ₹32 lakh → IRR ≈ 5.2%

Term+SIP: Saving = ₹1,07,500/yr = ₹8,960/mo SIP
FV @12%: ₹8,960 × [(1.01^300−1)/0.01] × 1.01 = ₹1.70 Crore

Wealth Gap: ₹1.70 Crore − ₹32 Lakh = ₹1.38 Crore more with Term+SIP! Same ₹29.5 lakh total invested.

Example 2: IRR Reality Check — Existing Policyholder Priya

Priya has been paying ₹55,000/yr for LIC Jeevan Anand for 7 years. Policy: ₹25 lakh cover, 20-year term, maturity ₹15 lakh.

IRR: ₹55,000/yr × 20 years → ₹15 lakh → IRR ≈ 4.8%

What SIP would have been: ₹4,583/mo for 20 years @12% = ₹45.66 lakh

Opportunity Cost: ₹30.66 lakh! Priya earned ₹4 lakh profit on ₹11 lakh invested; SIP would have earned ₹34.66 lakh profit.

Example 3: Surrender Analysis — Should Priya Switch?

Surrender value after 7 years: ₹2,10,000. Remaining: 13 years, ₹55,000/yr.

Option A (continue): ₹15,00,000 at maturity.

Option B (surrender + invest):
SV ₹2,10,000 → 13yr @12% = ₹9,16,335
Freed ₹55,000/yr SIP for 13yr @12% = ₹18,90,000
Total = ₹28,06,335

Surrendering is better by ₹13 lakh! Even after term cost (₹4,000/yr × 13 = ₹52,000), Option B is ₹12.5 lakh better.

Example 4: ULIP vs Term+SIP — Arjun, 35

ULIP: ₹1,00,000/yr, ₹1 Cr coverage, 20 years, 12% gross equity return. After all charges (~2.5–3.5% effective) → net ~9%.

ULIP corpus @9% net: ≈ ₹55.76 lakh

Term+SIP: Term ₹22,000/yr + SIP ₹78,000/yr = ₹6,500/mo @12% for 20yr = ₹64.47 lakh

Even ULIP (better than traditional endowment) loses to Term+SIP by ₹8.71 lakh. Plus better effective coverage.

Step-by-Step Guide

    1
    Gather Policy/Quote Details: For new buyers: get endowment quote + term quote (same coverage, same term). For existing holders: find annual premium, sum assured, policy start date, projected maturity amount from benefit illustration, and current surrender value (call insurer or check app).
    2
    Enter Basic Details: Enter age, desired life cover, policy tenure, gender. Calculator auto-estimates premiums — or enter exact amounts from your policy document in the override fields.
    3
    Check the IRR: The main card shows endowment IRR. Anything below 7% is worse than a bank FD. Anything below 10% loses significantly to equity. Typical range: 4.5–6%.
    4
    Review the Year-by-Year Chart: The line chart shows endowment corpus (orange dashed) vs term+SIP corpus (green solid) growing over time. The widening gap visually demonstrates the compounding difference.
    5
    For Existing Policy — Surrender Analysis: Enter years already paid and current surrender value. Calculator computes Option A (continue) vs Option B (surrender + invest) — and tells you which is better and by how much.
    6
    Take Action: New buyers: decline endowment, buy term, start SIP. Existing holders (<3 yrs): consider paid-up. Existing (3–10 yrs): use surrender analysis — most cases switching wins. Last 5 years to maturity: completing often better.
    7
    Buy Term + Start SIP: Term online — compare on Policybazaar or Ditto (unbiased). SIP — start on Zerodha Coin, Groww, or directly through AMC. Nifty 50 index fund (direct plan, lowest expense ratio) is a solid starting choice.
    8
    Share with Family: Use the WhatsApp share button. Show parents, siblings, friends who have endowment policies their actual numbers. One calculator session potentially creates ₹1–₹2 crore difference in their wealth trajectory.

Pro Tips

Agent Ko "No" Kehna Seekho

Agent endowment recommend karta hai kyunki Year 1 commission 25–35% hoti hai. ₹1,20,000 premium pe ₹30,000–₹42,000 agent ko. Term pe sirf ₹750–₹1,500. Agent ke incentive tumhare interest mein nahi hain. Calculator use karo — numbers dekhke confidently "term chahiye, endowment nahi" bolo.

"Paisa Wapas" Psychology Trap

Endowment ka biggest selling point hai "agar nahi hua toh paisa wapas milega!" Emotionally appealing — financially irrational. ₹30 lakh "wapas" milna 25 saal mein — jab same money SIP mein ₹1.70 crore banta. "Paisa wapas" ka emotional comfort ₹1.40 crore ka financial cost hai.

Sunk Cost Fallacy Se Bachna

"5 saal pehle se pay kar raha hoon — ab surrender karna toh loss hai." Ye sunk cost fallacy hai. Jo paisa gaya — gaya. Decision should be forward-looking: "Aage ke 15 saal ke liye kya better hai?" faydemand.in surrender analysis exactly ye forward-looking calculation karta hai.

IRR Jaano — Agent Ko Challenge Karo

Jab agent next time endowment present kare — poochho: "Is policy ka IRR kya hai?" 99% agents ye nahi jaante. faydemand.in calculator mein policy details daalke IRR nikalo — typically 4.5–6%. "5.2% IRR ke liye ₹1.20 lakh premium? FD 7% de raha hai bina lock-in ke."

Children Plan Bhi Endowment Hi Hai

"Children Education Plan" naam sunke lagta hai alag kuch hai — actually ye bhi endowment hai. Same low IRR (4–6%), same high premium. Bache ki education ke liye — dedicated equity SIP + term insurance for parent = far superior. Never buy "child plan" from insurance agent.

ULIP Bhi Compare Karo Term+SIP Se

ULIP better hai traditional endowment se — but still worse than term+SIP. ULIP ke charges 2.5–3.5% annually reduce returns significantly. Typically ULIP net return 8.5–9.5% vs term+SIP 11–12%. Over 20 years — ₹8–₹15 lakh difference. Term+SIP always wins.

Return of Premium Term = Another Trap

"ROP" term plans charge 2–3x premium for "getting money back." ₹10,000/yr term → ₹28,000/yr ROP. Extra ₹18,000/yr SIP @12% for 30yr = ₹62 lakh. You "get back" ₹8.40 lakh from ROP. ROP trap: ₹62 lakh vs ₹8.40 lakh. Same packaging as endowment.

Key Benefits of Term vs Endowment Calculator

Shocking Wealth Gap Visualization: Year-by-year line chart shows endowment corpus slowly growing vs SIP corpus exponentially accelerating. When Year 25 shows endowment ₹30 lakh vs SIP ₹1.70 crore — this visual creates permanent mindset change. Numbers + chart together make endowment's case impossible to defend.
IRR Revelation — Actual Return Exposed: Agent kabhi IRR nahi batata. Calculator automatically computes it — and 4.5–5.5% IRR dekhke log genuinely shocked hote hain. FD 6.5–7.5% de raha hai without lock-in. IRR visibility is the single most powerful weapon against endowment.
Surrender Decision — Data-Driven, Not Emotional: Existing endowment holders ke liye — biggest dilemma hai "surrender karo ya continue?" Calculator exact numbers deta hai dono options ke liye. Pure forward-looking analysis: Option A corpus vs Option B corpus. Removes emotion from a very emotional decision.
Agent Argument — Concrete Counter: Jab agent insist kare "endowment better hai" — calculator result dikhao. ₹1.38 crore wealth gap hard to argue with. Agent ke paas is difference ka koi justification nahi hota. Calculator empowers consumers to decline with data.
Education Tool — Family & Friends: Calculator share karo — parent, sibling, friend — unhe numbers dekhne do. Ek calculator session potentially ₹1–₹2 crore ka difference create kar sakta hai unki wealth trajectory mein. Most powerful financial education tool for India's insurance problem.

Common Mistakes to Avoid

Agent Ki Baat Pe Blindly Trust Karna

Insurance agent financial advisor nahi hai — woh product seller hai with strong financial incentive to sell endowment. ₹30,000–₹42,000 Year 1 commission vs ₹1,500 term commission. Always independently verify with faydemand.in calculator. Never buy insurance at first meeting — take time, do math.

Nominal Return Dekhna, IRR Nahi

Agent dikhata hai: "₹11 lakh doge, ₹15 lakh milenge!" — 36% more sounds good. But over 20 years, 36% more = 1.6% annual return. Always IRR pe compare karo. faydemand.in calculator IRR automatically compute karta hai — ye actual apples-to-apples comparison metric hai.

Sunk Cost Ke Wajah Se Chalta Rehna

"7 saal se pay kar raha hoon — ab switch karna waste hai." Ye thinking 13 more years of suboptimal returns justify nahi karta. Calculator surrender analysis ke liye use karo — agar switching ahead by ₹10 lakh+ — switch karo regardless of how many years paid.

"Insurance + Investment" Bundling Logic

"Dono ka kaam ek mein" — bundling creates compromise on both. Insurance coverage inadequate (₹25–₹50 lakh endowment vs ₹1 crore needed). Investment returns suboptimal (4–6% vs 12%). Unbundling — term for protection, SIP for wealth — maximizes both independently.

Tax-Free Maturity Se Confuse Hona

Endowment maturity typically tax-free under Section 10(10D). This sounds great — but 4–6% tax-free vs equity LTCG ~11% effective (after 10% tax on gains above ₹1.25L). Even post-tax, equity dramatically wins. Tax advantage does not compensate for 5–6% return gap over 20+ years.

Real-World Use Cases

Agent Appointment Ke Ek Din Pehle: Rahul ka agent kal LIC Jeevan Anand present karne aa raha tha — ₹1 crore, ₹1,18,000/yr. faydemand.in run kiya: IRR 5.1%, wealth gap ₹1.41 crore! Meeting mein agent ko numbers dikhaye. Agent stunned. Rahul bought HDFC Life Click2Protect term same day online. One calculator session saved ₹1.41 crore.
8-Year-Old LIC Policy — Surrender Decision: Sunita, 38, paying ₹60,000/yr for 8 years. LIC Jeevan Anand, ₹30L cover, 20-year policy, maturity ₹18L. Surrender value: ₹3.2L. faydemand.in surrender analysis: Option A ₹18L vs Option B ₹30.8L. Switched. ₹12.8 lakh better. One difficult decision, ₹12.8 lakh reward.
Parents Ne Policy Li Thi — Son's Analysis: Rohan, 26, parents ne 3 saal pehle uske naam par LIC Money Back kharida. ₹40,000/yr, 20 saal. faydemand.in IRR: 4.3%. Surrender + SIP → ₹28.7L in 17yr vs continue → ₹12L. Parents ko numbers dikhaye. They agreed to surrender. "faydemand.in ne wo tool diya jo pehle kisi ke paas nahi tha."
ULIP vs Term+SIP: Priya, 33, ULIP quote ₹1,00,000/yr, ₹1 Cr cover, 20 yr, 12% gross. faydemand.in: ULIP net ~9% after charges → ₹56.5L. Term ₹22,000 + SIP ₹78,000 @12% → ₹64.5L. Gap ₹8L. "Even ULIP which seemed much better than LIC — still loses to term+SIP." Chose term + SIP.
Corporate HR Workshop: Company organized faydemand.in Term vs Endowment demo for 50 employees. After 30-minute session — 34 out of 50 either surrendered existing policies or declined planned endowment purchases. Estimated collective ₹3.4 crore+ wealth impact over 20 years. "This calculator did in 30 minutes what 10 years of financial literacy campaigns couldn't."

Frequently Asked Questions

What is the difference between term insurance and endowment plan?expand_more

Term insurance pure protection hai — affordable premium, high coverage, no maturity benefit. Endowment plan insurance + savings combine karta hai — higher premium, lower coverage, maturity benefit milta hai. Term ₹1 crore coverage ₹10,000/year. Endowment ₹1 crore coverage ₹1,20,000/year. Premium difference (₹1,10,000/year) equity SIP mein dalo — 25 saal mein ₹2.5 crore+ additional corpus banta hai. "Buy term, invest the rest" always wins financially.

What is the return on endowment insurance plans in India?expand_more

Endowment plans typically 4–6% annual return dete hain on the investment portion. LIC Jeevan Anand, Money Back, Endowment plans — IRR typically 4.5–6% when you calculate properly. This is significantly lower than: bank FD (6.5–7.5%), debt mutual funds (7–8%), equity mutual funds (12–14% historical). Plus returns are partially taxable depending on sum assured ratio. Low return + high cost = poor investment vehicle.

Should I surrender my existing endowment policy?expand_more

Depends on how many years paid: Less than 3 years — surrender value minimal or zero. Consider stopping (paid-up) but check terms. 3–7 years — surrender value available but significant loss. Calculate if future premiums stopped + surrender value invested > continuing policy maturity benefit. More than 7 years — closer to maturity — may be better to hold than surrender if less than 5 years to maturity. faydemand.in calculator exact surrender analysis karta hai — specific numbers se decide karo, not emotion.

What is a ULIP and how does it compare to term + SIP?expand_more

ULIP (Unit Linked Insurance Plan) market-linked investment + insurance combine karta hai. Returns market-dependent (better than traditional endowment) but high charges: mortality charges, fund management charges, policy admin charges, premium allocation charges — 2–3% annual effective cost. Compare: ₹1 lakh/year ULIP vs ₹10,000 term + ₹90,000 SIP — SIP combination delivers significantly more wealth at same cost with better insurance coverage.

Is the maturity amount of endowment policy tax free?expand_more

Endowment maturity amount tax treatment: Section 10(10D) — maturity proceeds tax free IF sum assured is at least 10x annual premium (for policies issued after April 1, 2012). If sum assured < 10x premium — maturity proceeds taxable as income. Most traditional endowment policies pass this test — maturity tax free. But: 4–6% tax-free return still worse than equity LTCG (12% taxed at 10% above ₹1.25 lakh = effective ~11%). Equity still wins post-tax.

How do I calculate IRR of my existing endowment policy?expand_more

IRR (Internal Rate of Return) of endowment: Cash flows: negative (premium paid each year), positive (maturity amount at end). Solve for discount rate r such that NPV = 0. Example: ₹20,000/year for 20 years → ₹6 lakh maturity. IRR calculation: r such that ₹6 lakh = ₹20,000 × PVIFA(r, 20). Solving: IRR ≈ 5.5%. faydemand.in calculator automatically computes IRR of any endowment plan — just enter premiums paid, years remaining, projected maturity amount.

What is the "Buy Term, Invest the Rest" strategy?expand_more

"Buy term, invest the rest" — India ka most powerful financial planning principle. Instead of paying ₹80,000–₹1,20,000/year for endowment — buy term for ₹8,000–₹12,000/year (same ₹1 crore coverage) and invest remaining ₹68,000–₹1,08,000 in equity mutual funds. 25 years mein equity SIP ₹68,000/month → ₹2+ crore additional corpus. Same total premium, dramatically better wealth creation + better insurance coverage.

Can I convert my endowment policy to paid-up?expand_more

Paid-up option: stop paying premiums, policy continues with reduced sum assured. Coverage reduces proportionally but policy does not lapse. Example: 10 premiums paid on 20-year policy — paid-up value = 50% of sum assured. Policy continues till maturity with proportionate reduced benefits. Good option if: cannot afford premiums anymore, or decided to stop but do not want to surrender. Better than lapsing — some value preserved.

Is LIC policy a good investment?expand_more

LIC pure term plan — excellent. Government backing, 98%+ claim settlement, affordable. LIC endowment/money back/Jeevan series — poor investment returns (4–6% IRR typically). LIC is a great insurer — their term plans are competitive. LIC ki traditional savings plans are suboptimal investments — same as any endowment. The issue is product type, not LIC specifically. Buy LIC term plan for insurance. For investment — equity mutual funds (any AMC) significantly better than LIC endowment plans.

What is the typical commission structure of endowment vs term insurance?expand_more

Agent commission structure reveals why endowment is pushed: Endowment first year: 25–35% of premium. Term insurance first year: 7.5–15% of premium. ₹1,20,000 endowment premium → ₹30,000–₹42,000 agent commission Year 1. ₹10,000 term premium → ₹750–₹1,500 agent commission Year 1. This 20–25x commission differential explains why agents aggressively push endowment over term. Understanding agent incentives helps consumers make better choices.

Complete Your Insurance + Investment Planning

Ab tumhare paas exact numbers hain — endowment vs term+SIP ka real comparison. faydemand.in ka Term vs Endowment Calculator ne woh calculation kar di jo insurance agent ne kabhi nahi ki. Ab decision simple hai — term insurance lao, SIP shuru karo, ₹1–₹2 crore extra wealth banao!

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