LIC New Endowment Plan vs. Term Life Insurance | ₹1 Crore Life Cover Example | EP. #212

Endowment Plan is a life insurance policy designed to pay a lump sum after a specific term. Or, on death of the insured person. Despite being one of the most popular insurance policies out there, Endowment Plans are terrible when it comes to actual returns, flexibility, and surrender benefit.

THIS is the annual premium of LIC’s New Endowment Plan for a SUM ASSURED of Rs. 1 Crore, for a 35-year old male, for a Premium Payment Term of 30 years. It means, the nominee of the policy will get Rs. 1 crore + applicable BONUS on death of the insured person. Or the insured person will get Rs. 1 Crore + BONUS on maturity (that is after 30 years).

Now what’s wrong with this policy?

The problem with the Endowment Plan is, you have to pay over Rs. 3 lacs in Premium (Plus, GST of around 7k) per year to get a life coverage of Rs. 1 crore. Because you can get the same coverage using a Pure Term Plan for just Rs. 12,000 or so per year. And if you invest Rs. 3 lacs per year at 8% for 30 years. Your investment will be worth a whopping Rs. 3.5 crores. And that’s 50% more than what THIS LIC Endowment Plan is promising – which is 2.1 crores assuming a return of 8%.

And the worst part about this plan is that if you surrender the policy before 30 years, you may not even get back your full premiums. Because according to THIS illustration of the policy, if you pay the premiums for 25 years and then decide to surrender it, you will get only Rs. 74 lacs when the total premiums paid by you will be Rs. 78 lacs.

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RELATED VIDEOS:

Pure Term Life Insurance vs. Return of Premium Term Plan : https://www.youtube.com/watch?v=fEdVPKV_xaI

Unit Linked Insurance Plans In Less Than 60 Seconds : https://www.youtube.com/watch?v=3RgCJC9N1Yc

HDFC Life Click 2 Invest ULIP Policy Is Useless, Unless… : https://www.youtube.com/watch?v=lEVb7fW8GTc

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