Estimate the maturity value of a traditional endowment life insurance policy with reversionary and final bonuses.
Maturity value = Sum assured + accumulated reversionary bonus (a per-1,000-sum-assured rate declared yearly) + a final/terminal bonus at maturity. This uses an illustrative bonus rate, not any specific insurer's declared rate.
Illustrative estimate only — actual premiums and payouts depend on the insurer's underwriting, medical checks, and policy terms. Always get a quote directly from a licensed insurer.
An endowment policy pays a lump sum at maturity (or to your nominee if you die during the term), combining insurance with guaranteed or bonus-linked savings — and the maturity figure it advertises can look impressive purely because it's stated as a large one-time number after 15-20+ years of premiums, not because the underlying rate of return is actually high. Once you account for every premium paid over the full term and calculate the annualized return (the internal rate of return, not just "maturity amount minus premiums paid"), most traditional endowment policies work out to roughly 4-6% per year — a figure that needs to be compared honestly against inflation and against simpler alternatives, not just admired as a large final number.
The bundling itself is the core trade-off: an endowment policy combines a relatively expensive form of life cover with a relatively low-return form of saving, and separating the two — buying pure term insurance (which is far cheaper for the same sum assured) and investing the premium difference separately (in a PPF, mutual fund SIP, or other instrument) — very often produces both better life cover and a better accumulated corpus over the same period. Endowment policies do offer guaranteed maturity value and tax benefits under Section 80C and 10(10D), which matters for risk-averse savers who value certainty over higher expected returns, but that certainty is exactly what’s being paid for through the lower rate — it's not a free feature.
Once you calculate the actual annualized return (internal rate of return) across every premium paid over the full policy term, most traditional endowment policies work out to roughly 4-6% per year — a modest figure once inflation is considered, even though the headline maturity amount looks large as a one-time lump sum after 15-20+ years.
For many buyers, yes on pure numbers — term insurance is far cheaper than the insurance component bundled into an endowment policy, and investing the premium difference separately (PPF, mutual funds, etc.) very often produces both better life cover and a larger accumulated corpus over the same period. Endowment policies remain attractive mainly for their return certainty, not for return size.
Premiums paid typically qualify for deduction under Section 80C (within the overall 80C limit), and the maturity proceeds are usually tax-exempt under Section 10(10D), subject to conditions on the premium-to-sum-assured ratio. These benefits are a genuine part of the product's appeal, separate from its investment return.
Because the maturity amount is presented as one large lump sum after a long period, which feels impressive in isolation. The actual annualized return only becomes clear when you calculate it properly against every premium paid over the full term — a step most buyers never do, which is exactly why the internal rate of return matters more than the headline maturity figure.