Insurance Vs Investment
"Never mix insurance with investment." Compare traditional Endowment/ULIP policies against the "Buy Term and Invest the Rest" (BTIR) strategy.
Example: LIC/HDFC Life Endowment premium quotation.
"Buy Term, Invest Rest" Assumptions
Cost of a 1Cr pure term plan.
Additional Wealth Created
+₹31,80,785
By explicitly separating your life cover from your investment strategy over 20 years.
Combo Policy (Endowment/ULIP)
Total Premium Paid
₹20,00,000
Maturity Value (5.5%)
₹36,78,608
Smart Split (BTIR Strategy)
Invested in MF Annually
₹85,000 (After paying Term premium)
MF Maturity Value (12%)
₹68,59,393
The Trap of Endowment Plans
Insurance agents aggressively push Endowment, Money Back, and ULIP policies because they carry massive hidden commissions (up to 30% of your first-year premium).
The Golden Rule:
Buy a pure Term Life Insurance policy for protection. Invest the remaining budget into Equity Mutual Funds (Index funds) for wealth creation.