Insurance
Endowment Plan
pronounced: [E-n-d-o-w-m-e-n-t- -P-l-a-n]
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An Endowment Plan is a participating life insurance policy that combines insurance cover with a savings component, paying a lump sum on maturity or on the death of the policyholder, whichever is earlier.
Premiums are paid for a fixed term of 10 to 30 years, and the policy declares bonuses annually added to the sum assured. While endowment plans offer disciplined long-term savings, their internal rate of return of 4% to 5% is usually lower than that of a pure term plan plus a separate equity investment.
Key Facts
| Fact | Value |
|---|---|
| Interest Rate | 4% p.a. |
| Tenure | 30 years |
| Interest Compounding | Annually |
Example
A ₹5 lakh personal loan at 10% p.a. for 3 years has an EMI of ₹16,607/month. Total payment = ₹5,97,852, of which ₹97,852 is interest.
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Last updated: 2 June 2026