What is the expected return on an endowment policy? I was shown an illustration with 10 per cent return – can I expect that much?
Rajshree Devanathan, Chennai
An illustration is indicative and is not to be treated as actual possible returns. Endowment policy illustrations are typically with 4 and 8 per cent per annum returns and not 10 per cent. The net returns on endowment plans are rarely more than 5-6 per cent, including the bonus, which accrues over time. Basically, a 10 per cent illustration is either old or is not the one approved by the insurance company whom the agent represents. Although the returns on traditional endowment plans are less volatile, the returns are not impressive compared to endowment options within Ulips. If you are looking for returns and not insurance, opt for pure investment products like mutual funds. If you are looking for life insurance—look for a term plan before settling for anything else.
