Insurance vs Investment Calculator
See whether a traditional endowment or money-back policy is worth keeping.
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Premium you pay each year for the policy
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Sum assured + bonus at maturity (from policy document)
Common questions
Should I surrender my old LIC endowment policy?
Calculate the IRR first (use this calculator). If it's below 6%, compare the surrender value today vs continuing. Often, if you're past the break-even point (usually 8–10 years in), continuing to maturity and then redirecting is better than taking the surrender value now. The key question: what will you do with the money if you surrender? If it will be invested at 10%+, surrendering often makes sense after 10+ years.
My parents took an LIC policy in my name. What should I do?
Common situation. Calculate the IRR from the remaining premiums. If the policy is close to maturity (within 3–5 years), continue — the marginal return is acceptable. If it's early and premiums are heavy, consider surrendering (after the lock-in) and redirecting to term + MF. Keep the family emotionally prepared — these decisions can cause conflict.
What is a money-back policy and how does its return work?
Money-back policies return a percentage of sum assured at intervals (every 5 years, say). The reinvestment rate of these intermediate payments matters. If you spend them (as many do), the effective return is even lower than IRR suggests. These are generally the worst-returning insurance products.
Is there any scenario where an endowment policy makes sense?
Very few. Possibly: guaranteed insurance for uninsurable individuals (pre-existing conditions); tax planning in specific scenarios; psychological commitment device for compulsive spenders. For the vast majority with normal health profiles, pure term + mutual funds is strictly superior.
What happens if I stop paying premiums?
After 3 years of premium payment: policy becomes "paid-up" — cover reduces proportionally to premiums paid, but doesn't lapse. Before 3 years: policy lapses, you lose most premiums paid. After 5+ years, a surrender value becomes available. Always convert to paid-up rather than letting it lapse.