Life vs Term Insurance Calculator
Traditional Endowment (LIC)
Insurance + Investment Mixed
Historically, traditional policies yield 4-6%.
Buy Term & Invest Rest (BTIR)
Pure Insurance + Pure Investment
Nifty 50 historical average is 12%.
Investable Difference
₹85,000/yr
Saved from premium, invested in mutual funds.
Endowment Maturity
₹36,78,608
At 5.5% return over 20 years.
BTIR Wealth
₹68,59,393
At 12% return over 20 years.
The BTIR Wealth Gap
By separating your insurance from your investments, you generate an extra ₹31,80,785 over 20 years. That is 86% more wealth for the exact same yearly cash outflow!
Wealth Creation Trajectory
Comparing total corpus generated over 20 years.
What to do next
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The BTIR Math (Buy Term & Invest the Rest)
Traditional endowment policies mix insurance and investment, resulting in high premiums and terrible returns (4-6%). BTIR decouples them. You buy a pure Term Insurance policy for a fraction of the cost, and invest the massive premium difference into a high-growth mutual fund (10-12% CAGR).
Worked Example
The Uncle's LIC Trap
When Rohit got his first job, his well-meaning uncle, an insurance agent, came over for dinner. "Beta, you need to save taxes and secure your future. Buy this ₹50 Lakh endowment policy. You just pay ₹50,000 a year, and after 20 years, you get ₹15 Lakhs guaranteed!"
Rohit thought it sounded amazing. Guaranteed money! But then Rohit's friend, a finance geek, showed him the BTIR calculator. If Rohit instead bought a pure term plan for ₹50 Lakhs, it would only cost him ₹6,000 a year. He could invest the remaining ₹44,000 every year into a simple Nifty 50 Index Fund.
At a conservative 12% return, that ₹44,000 yearly investment would grow to a massive ₹35 Lakhs in 20 years. By signing the uncle's policy, Rohit was essentially setting ₹20 Lakhs on fire. The "guaranteed" return of the endowment policy barely covered inflation, while the hidden commissions destroyed his wealth.
Rohit learned the golden rule that day: Never mix insurance with investment. Insurance is an expense to protect your family. Investments are assets to grow your wealth. The moment you combine them, the only person getting wealthy is the agent selling the policy.
Frequently Asked Questions
Why do insurance agents push endowment and ULIP policies?
Commissions. An agent can make anywhere from 15% to 35% of your first-year premium as commission on an endowment policy. If you pay a ₹1 Lakh premium, the agent pockets up to ₹35,000. If they sell you a pure term plan for ₹10,000, they only make ₹2,000. They are financially incentivized to sell you terrible investment products.
But with a term plan, I get nothing back if I survive?
This is the biggest psychological trap. Term insurance is like car insurance—you don't expect a refund if you don't crash. By not getting a 'refund', you save a massive amount on premiums, which you invest in Mutual Funds. Your Mutual Fund corpus will be exponentially larger than the 'refund' the insurance company would have given you.
What does BTIR mean?
Buy Term and Invest the Rest (BTIR). It is the golden rule of personal finance. Never mix insurance with investment. Buy a pure term life insurance policy for protection, and invest the remaining money in Equity Mutual Funds for wealth creation.
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