Bhubaneswar: A social media post by market commentator Piyush Trades has reignited a wider debate on the investment value of traditional life insurance policies sold in the early 2000s. The post shared details of a Bima Gold policy launched in 2006, highlighting modest returns that have drawn sharp reactions online.
According to the post, the policy required a monthly premium of ₹462, amounting to a total investment of around ₹1.11 lakh over 20 years. On maturity, the sum assured stood at ₹1.5 lakh, translating into an annualised return (CAGR) of roughly 2.98%—significantly below India’s long-term average inflation rate of 6–7%.
Even after factoring in interim survival benefits totalling ₹60,000, the effective return from such endowment-style policies is estimated at 4–5%, still trailing safer and more liquid alternatives such as fixed deposits (around 7%) and equity mutual funds (10–12%) over the same period.
The post triggered a flood of responses from policyholders who purchased similar plans in the 2000s, many expressing frustration over poor wealth creation despite long-term commitments. Several users described these policies as “forced savings with insurance,” rather than meaningful investment products.
However, others defended the structure of traditional LIC policies, arguing that life insurance should not be judged purely on investment returns. Supporters pointed out that such policies were primarily designed to provide risk cover, guaranteed payouts and financial discipline, at a time when financial literacy and access to market-linked products were limited.
Amid the debate, LIC reportedly reached out publicly, offering to review individual cases and provide assistance, signalling sensitivity to customer concerns as scrutiny of legacy products grows.
The episode underscores a broader shift in investor awareness, with newer generations increasingly separating insurance for protection and investments for wealth creation—a distinction that was far less clear when many traditional endowment policies were sold two decades ago.
-OdishaAge
