Endowment Policy Calculator
InsuranceAn endowment plan pays a guaranteed sum assured plus accrued bonuses if you survive the term. It is safe and predictable — but the effective return is usually low. See what your plan is likely to be worth and what return it really earns.
In short: An endowment policy calculator estimates the maturity value of a traditional endowment plan as the sum assured plus accrued reversionary bonuses, and reveals the low effective return — typically around 4–6% — earned on the premiums paid.
Your inputs
Your inputs
- Sum assured
- ₹10,00,000
- Policy term
- 20 yrs
- Annual premium
- ₹55,000
- Bonus per ₹1,000
- ₹45
Results
Maturity value
₹19,00,000
Sum assured + bonuses
Sum assured
₹10,00,000
Total bonus accrued
₹9,00,000
20 yrs of bonus
Approx. effective return
2.77%
Approximation on premiums
Maturity build-up
A constant sum assured plus reversionary bonuses that accrue each year.
Year-wise accrued value
| Year | Cumulative bonus | Total value |
|---|---|---|
| 1 | ₹45,000 | ₹10,45,000 |
| 2 | ₹90,000 | ₹10,90,000 |
| 3 | ₹1,35,000 | ₹11,35,000 |
| 4 | ₹1,80,000 | ₹11,80,000 |
| 5 | ₹2,25,000 | ₹12,25,000 |
| 6 | ₹2,70,000 | ₹12,70,000 |
| 7 | ₹3,15,000 | ₹13,15,000 |
| 8 | ₹3,60,000 | ₹13,60,000 |
| 9 | ₹4,05,000 | ₹14,05,000 |
| 10 | ₹4,50,000 | ₹14,50,000 |
Simple (non-compounding) reversionary bonus accrual; terminal bonus, if any, is excluded.
How the Endowment Policy Calculator works
Formula
- Sum assured
- Guaranteed amount payable on maturity or death
- Bonus per ₹1,000
- Reversionary bonus declared per ₹1,000 of sum assured per year
- Term
- Number of years the policy runs
- Total bonus
- Sum of yearly reversionary bonuses accrued
Step-by-step calculation
Worked with the default values.
- 1
Annual reversionary bonus
(₹10,00,000 ÷ 1,000) × 45
= ₹45,000
- 2
Total bonus over term
₹45,000 × 20 yrs
= ₹9,00,000
- 3
Maturity value
₹10,00,000 + ₹9,00,000
= ₹19,00,000
- 4
Approx. effective return
CAGR(₹11,00,000 premiums → ₹19,00,000, 20 yrs)
= 2.77%
How it works
- A reversionary bonus is declared each year as a rupee amount per ₹1,000 of sum assured and added to the policy.
- These bonuses accrue simply (not compounded) over the term and are paid out only at maturity along with the sum assured.
- Comparing the maturity value with the total premiums paid shows the modest effective annual return the plan delivers.
Examples
₹10 lakh sum assured, 20-year term, ₹45 bonus per ₹1,000
Accrues ₹9 lakh of bonus → ₹19 lakh maturity, an effective return of roughly 5%.
₹25 lakh sum assured, 25-year term, ₹50 bonus per ₹1,000
Bonuses add about ₹31 lakh → a ₹56 lakh maturity, still a low single-digit return.
Understanding the Endowment Policy Calculator
What an endowment policy is
An endowment policy is a traditional life insurance plan that doubles as a savings vehicle. If you survive the term, it pays a maturity value — the sum assured plus accrued bonuses. If you die during the term, your family receives the sum assured (plus bonuses to date). It is the classic "money-back on survival" product sold widely in India.
The attraction is safety and predictability: the sum assured is guaranteed and returns are steady, because the premiums are invested cautiously, largely in bonds and government securities.
How the maturity value is built
The maturity value rests on two parts:
- Sum assured — the guaranteed base amount, fixed at the outset.
- Reversionary bonuses — an amount the insurer declares each year, usually as rupees per ₹1,000 of sum assured. These accrue over the term and are paid only at maturity.
This calculator adds a simple (non-compounding) bonus each year and shows the running total. It excludes any discretionary terminal bonus, so a real payout may be a little higher.
The catch: a low effective return
Because premiums fund both the insurance cover and conservative investments, the effective return is low — typically 4–6% a year. The calculator approximates this by treating your total premiums as a lump sum growing to the maturity value over the term. Against long-run inflation, that return barely preserves purchasing power.
Tax treatment
Maturity proceeds are tax-free under Section 10(10D) as long as the annual premium does not exceed 10% of the sum assured (for policies issued after April 2012). Premiums also qualify for a Section 80C deduction up to ₹1.5 lakh. If the premium breaches the 10% limit, the maturity amount becomes taxable.
The better alternative for most people
For most families, term insurance plus PPF or a mutual fund beats an endowment plan on both counts: a term plan buys far more cover for far less, and PPF or equity funds usually out-earn the endowment's modest bonuses. Use this calculator to see the effective return your endowment plan really offers, then decide whether separating protection from investment would serve you better.
Pros
- Guaranteed sum assured provides a predictable, low-risk maturity payout.
- Combines life cover and disciplined long-term savings in one plan.
- Maturity proceeds are tax-free under Section 10(10D) within the premium limit.
- Premiums qualify for a Section 80C deduction up to ₹1.5 lakh a year.
Cons
- Low effective returns, typically 4–6%, that often trail inflation over the long run.
- Life cover is small relative to the premium compared with a term plan.
- Low liquidity — surrendering early usually returns less than the premiums paid.
Tips
- 1Compare the effective return here with PPF or a mutual fund before committing.
- 2Keep the annual premium within 10% of the sum assured to keep maturity tax-free.
- 3For pure protection, prefer a term plan and invest the difference separately.
- 4Check whether the plan pays a terminal bonus, which can lift the final payout.
- 5Avoid surrendering in the early years, when the surrender value is lowest.
Frequently asked questions
Everything you need to know about the Endowment Policy Calculator.
What is an endowment policy?
What is a reversionary bonus?
What return do endowment policies give?
Is the maturity amount tax-free?
What is a terminal bonus?
Is an endowment plan better than term insurance plus PPF?
Can I surrender an endowment policy early?
Do endowment premiums qualify for tax deduction?
What is the difference between an endowment plan and a ULIP?
Are the bonuses guaranteed?
Methodology & sources
How the Endowment Policy Calculator is calculated, and where the underlying rules come from.
How we calculate it
Every result is produced by a single, shared and tested financial-formula library used across the whole site — so the maths is consistent from one calculator to the next. Figures are estimates based on the inputs you enter and standard assumptions (such as regular compounding and constant rates); real-world outcomes vary with taxes, fees and changing rates. All calculations run in your browser — nothing you type is stored or sent to a server.
Editorial policy & disclaimer. FinCalcHub provides free educational tools and estimates — not personalised financial, tax or investment advice. Verify important decisions with a qualified professional. Read our editorial approach, disclaimer and privacy policy.
Last reviewed for accuracy on .
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