See what the premium you would save by choosing a term plan over an endowment policy could grow to if invested monthly.
Endowment and money-back policies charge a high premium because most of it goes into savings, not cover. This calculator shows the other route: buy a term plan for the cover and invest the difference yourself.
How to fill it in. Take the endowment or money-back premium you were quoted, subtract the term premium for the cover you need, and divide by 12. Enter that as the monthly amount. Choose a return that suits what you would actually invest in (for example a PPF-like rate for a safe product, or a higher assumption for an equity fund, which can also fall). The tax box applies a flat rate to the gains at the end; set it to 0 for a tax-free product like PPF or use an effective rate for mutual funds.
Worked example (illustrative). An endowment policy costs ₹1,00,000 a year for 20 years with a sum assured of ₹10 lakh. A ₹1 crore term plan costs ₹15,000. The difference, ₹85,000 a year, is about ₹7,083 a month. At an assumed 8% a year this grows to about ₹41.7 lakh in 20 years, and the family had ₹1 crore of cover instead of ₹10 lakh throughout. If the endowment matured at ₹30 lakh, its implied return would be about 3.7% a year.
Limits. Returns are not guaranteed. The comparison only works if you really invest the difference every month. Maturity proceeds of high-premium policies can be taxable too. Read buy term and invest the rest for the full arithmetic.
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