Endowment Policy Trap Calculator
Key Takeaway
Endowment policies often yield just 4-6% returns, failing to beat inflation. Separating insurance (Term Plan) and investment (Mutual Funds) is always mathematically superior.
1. The Bank's Policy
Enter the details of the endowment policy you were pitched.
2. The Smart Alternative
Buy a cheap term plan and invest the rest.
Policy Return (IRR)
5.1%
Barely beats inflation
Mutual Fund Return
12%
Wealth creation
The Real Cost of the Policy Trap
The Wealth You Lose (Hidden Commissions)
-₹33.59 Lakhs
This is why bank managers push these policies. You are paying for their bonuses.
RBI Mis-selling Alert (July 2026): If your bank forced you to buy an endowment policy or ULIP in order to approve a loan or open an account, you can now file an official complaint under the updated RBI Integrated Ombudsman Scheme to claim a full refund.
What to do next
Based on your Endowment Policy Trap Calculator, here are the tools you should try next:
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RBI's New Rules: How to Claim a Refund if Your Bank Mis-sold You a Policy
In July 2026, the Reserve Bank of India (RBI) issued a strict new "Anti-Mis-selling Framework". Why? Because millions of Indians were walking into their banks to open a simple Fixed Deposit or get a loan, and walking out with a 20-year Endowment Policy or ULIP they didn't understand.
Bank managers are under immense pressure to meet cross-selling targets, and the commissions on life insurance products are staggering. When you buy a ₹1 Lakh/year endowment policy, up to ₹35,000 of your very first premium goes directly to the bank as a hidden commission. To justify this, they pitch it as a "guaranteed tax-saving investment".
But the math is devastating. A standard endowment policy yields an Internal Rate of Return (IRR) of barely 4% to 5.5%. It doesn't even beat inflation. By mixing insurance with investment, you get terrible insurance cover and terrible investment returns.
### The Smart Alternative: BTIR The mathematically correct approach is BTIR: Buy Term, Invest the Rest. Instead of paying ₹1 Lakh a year for a ₹10 Lakh endowment policy, buy a ₹1 Crore pure Term Plan for just ₹15,000 a year. Invest the remaining ₹85,000 in a low-cost Nifty 50 Index Fund. At a conservative 12% return over 20 years, your investment will grow to nearly ₹68 Lakhs. The endowment policy? It will give you back around ₹35 Lakhs. The difference is the wealth you lost to bank commissions.
### How to Claim Your Refund Under RBI Rules Under the Revised Integrated Ombudsman Scheme (RB-IOS, 2026), if a bank forced you to buy a policy to get a locker or loan approved, or if they misrepresented the returns, you are legally entitled to a full refund. 1. First, email your bank's grievance redressal officer citing "Mis-selling of Third Party Products under RBI July 2026 Guidelines". 2. If they don't resolve it within 30 days, immediately file a complaint on the official RBI Ombudsman Portal (cms.rbi.org.in).
Don't let your hard-earned money fund someone else's bonus. Use the calculator above to see exactly how much you are losing, and consider switching to direct mutual funds and pure term insurance.
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