[Info.] Endowment Plans Return Calculation

Hello everyone, I’m going to share some tools and techniques today that’ll help you calculate a insurance policy’s yearly returns. If you already know how, then well and good, but this will be for those who don’t. Also no offense to insurance agents, this is just for educational purposes.

Endowment(Insurance + Investment) plans are very popular in India, and I wanted to let you know how to calculate the returns they provide.

So we are going to do this via IRR. No excel sheet needed, one can do it via this app.

Tools:
App – https://play.google.com/store/apps/details?id=c...
(You can also find out IRR for recurring returns as well)

Total Maturity Amount Calculator(For LIC) – http://www.liccalculatorpremium.com/lic-premium...
(Make sure the premium shown matches to yours actual, the 2nd year onwards premium)

(Example)
Let me show you with an example how it works, based upon real plan document. Not disclosing policy name to not degrade a specific policy.

Premium – ₹1,51,708(Incl. GST)
Paying Term – 20 Years
Policy Term – 20 Years
Sum Assured – 25,00,000

Total Maturity Amount Including All Bonuses- ₹49,25,000(Approx.)

(Calculation)
Now use the app,
Annual Premium – 151708
No. of Annual Premiums – 20

Return
(Single Return)
Policy Year – 21(Because we’ll most likely get the maturity amount after one more year after the last policy payment)
Return Amount – 4925000(Approx.)

IRR – 4.4143%

Surprised? Well at least I was after seeing this figure. I have not taken tax exemption into consideration because it doesn’t even matter after seeing the returns.

Again no offense to any policy agent, this is purely for educational purposes. That’s the reason I didn’t mention the plan name, to not degrade a specific policy.

Calculate yours and let me know below, you can also mention policy name if you want to.