Term Insurance vs Endowment Plan Calculator

Term insurance is pure life cover — you pay a low premium and your family gets the sum assured only if you die during the policy term. There is no maturity benefit; if you survive, you get nothing back. An endowment plan combines life cover with savings — you pay a higher premium but receive a maturity amount (sum assured + bonuses) if you survive the term. For a 30-year-old male, ₹1 crore term cover costs ~₹10,000-12,000/year, while an endowment plan for the same cover costs ₹4-5 lakh/year.

Term insurance is cheaper because the insurer only pays out if you die during the term — statistically, most policyholders survive, so claims are rare. Endowment plans are expensive because the insurer must pay everyone at maturity — they invest your premium in low-risk government bonds (4-6% return) and keep a large chunk as fund management charges, agent commissions (30-40% of first-year premium), and admin costs. A ₹12,000/year term plan gives ₹1 crore cover, while a ₹5 lakh/year endowment gives the same cover but at 40x the cost.

BTID means buying a cheap term plan for life cover and investing the premium difference in mutual funds or other instruments. Example: If an endowment costs ₹5,00,000/year and term costs ₹12,000/year, you invest the ₹4,88,000 difference in an equity mutual fund. At 12% CAGR over 25 years, the BTID corpus grows to ₹7.5+ crore — while the endowment maturity would be only ₹1.5-2 crore. BTID gives you higher life cover AND a significantly larger corpus, assuming you actually invest the difference and stay invested.

Endowment plans typically deliver 4-6% CAGR on maturity — barely beating inflation and far below equity mutual fund returns (12-14% CAGR) or even PPF (7.1%). LIC Jeevan Anand, one of India's most popular endowment plans, has historically delivered 5-5.5% returns including bonuses. After adjusting for inflation (5-6%), the real return is near zero. The maturity amount looks large in absolute terms but has poor purchasing power. The only advantage: forced savings discipline and guaranteed returns for extremely conservative investors.

For pure family protection, term insurance is unambiguously better. A 30-year-old can get ₹1-2 crore cover for ₹10,000-20,000/year with a term plan. The same budget in an endowment plan would give only ₹3-5 lakh cover — utterly inadequate for a family. IRDAI recommends life cover of 10-15x annual income. If you earn ₹10 lakh/year, you need ₹1-1.5 crore cover — achievable only with a term plan at an affordable premium. Use term insurance for protection and mutual funds/PPF/NPS for wealth creation — do not mix insurance with investment.