Why You Shouldn’t Buy Endowment Plans For Retirement Planning

Endowment Plans

These are insurance products that allow insurance and investment benefits both within a single instrument.

Low Returns On Investment  

These plans typically offer returns of 4-5 per cent per annum, which is lower than other low-risk investment options, such as bank fixed deposits or liquid funds.  

Liquidity Issues

Exiting an endowment policy can lead to hefty penalties, and while loans can be taken against them, other investments like FDs or mutual funds offer better liquidity with minimal penalties.  

Long-Term Premium Commitment

These policies require long-term premium payments.  

Better Alternatives Available

Term insurance is a more cost-effective way to get life coverage, while investments like mutual funds and FDs provide better returns and flexibility for retirement planning.

New Tax Regime Impact 

Tax benefits that once made endowment policies attractive are now less relevant. 

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