Experts Reveal How Old Life Insurance Policies Are Delivering Up to 15% Returns

Summary

Many Indians who bought a life insurance policy before 2010 may not realise how valuable it has become. These old policies, especially traditional ones like endowment or money-back plans, are now giving returns of up to 15%, and that too tax-free. Experts say this is possible because older plans had high bonus rates and guaranteed maturity benefits. With interest rates on other savings options staying low, holding onto your old policy could be a smart financial move. This post explains how such high returns are possible and what you can do to get the most value from your old policy. Even if you have a term insurance plan, this guide will help you understand the role of insurance in long-term financial safety.

Experts Reveal How Old Life Insurance Policies Are Delivering Up to 15% Returns

Have you ever thought that your old life insurance policy, which you bought years ago, could give you better returns than a fixed deposit? Many people bought life insurance plans before 2010 just to save on tax or to protect their family. But these old plans can now offer much more—some are even giving tax-free returns of up to 15% per year.

This surprising value is due to how insurance products were designed in the past. Traditional policies like endowment and money-back plans used to offer fixed bonuses every year. These bonuses have grown over time, and when added to the maturity amount, they give a high total return.

In today’s market, where fixed deposit rates are between 6% and 7%, and savings accounts give even less, old life insurance policies have become very valuable for those who kept them going.

Why older policies give better returns

If your policy was issued before 2010, there’s a good chance it came with a guaranteed bonus every year. Some companies gave a bonus of INR 40 to INR 50 for every INR 1,000 of sum assured. On top of that, you may also get loyalty bonuses at the end of the policy term.

Many of these policies also protect your capital. That means the money you paid as premiums will come back to you, along with the bonuses, once the policy matures. And if your policy meets the rules under Section 10(10D) of the Income Tax Act, the final payout is tax-free.

What kind of policies are we talking about?

Not all life insurance policies will give these kinds of returns. The ones that usually qualify are:

• Endowment policies
• Money-back policies
• Traditional whole-life plans with bonuses

These plans are not linked to the stock market. They give fixed benefits and are less risky. They may not look exciting, but they can deliver steady and reliable returns if you stay with them until maturity.

What about term insurance?

Term insurance is a different type of life insurance policy. It is made only to give financial support to your family if something happens to you. Most term insurance plans do not offer any maturity amount or returns.

However, some older term insurance plans came with a return of premium feature. This means if you survive the policy term, you get back all the premiums you paid. While this return is not very high, it still adds value. So, if you have such a plan, it’s good to check the policy papers and see what you are eligible for.

How can you know what your policy is worth today?

If you have an old policy, you can follow these steps:

1. Ask your insurer for a bonus history. They will tell you how much bonus has been added every year.
2. Check your policy document to find the sum assured and maturity date.
3. Add all the bonuses to the sum assured. This will give you an idea of your final payout.
4. Use a simple return calculator to see how much return you are getting compared to what you paid.

If the returns are high and the maturity date is close, it’s best to keep the policy running.

Should you continue or surrender your policy?

Experts say that you should not surrender the policy if it’s close to maturity. Why?

• Many bonuses are paid only at the end of the policy.
• If you surrender, you may lose the loyalty bonus or terminal bonus.
• The surrender value is usually lower than the final maturity value.
• You may also lose the tax benefit under Section 10(10D).

So, unless there’s a strong reason, it’s better to keep the policy active.

What if you need money before the policy ends?

There are ways to use your policy for financial help without losing its full value.

You can take a loan against your life insurance policy. The interest rate is usually lower than personal loans. And your policy continues to earn bonuses during this time. You only need to repay the loan on time to avoid any issues.

Some people also talk about selling their policies in secondary markets. This is more common in countries like the US. In India, this is still very rare and can be complicated. It’s best to speak to a financial advisor if you are considering this route.

Don’t forget the tax benefits

One of the best parts of old insurance policies is the tax benefit. If the policy meets the conditions under Section 10(10D), your maturity amount is fully tax-free. To qualify, the sum assured should be at least 10 times the yearly premium.

If you surrender early or if your policy does not meet this rule, the final payout may be taxable. So, check with your insurer or tax expert before making a decision.

Simple tips to make the most of your old policy

1. Keep paying premiums on time.
2. Don’t surrender the policy unless absolutely necessary.
3. Ask for a bonus statement from your insurance company.
4. Take a policy loan if you need cash.
5. Track the maturity date and final benefit.

Conclusion

Old life insurance policies can be more than just protection plans. They can be strong savings tools with high returns and tax-free maturity benefits. If you or your family members have such policies, don’t ignore them.

Instead of surrendering them early, take some time to check the bonus history and maturity value. If the policy is nearing its end, it may be wise to stay invested and enjoy the full benefit.

While term insurance plans are best for life cover, endowment and money-back plans bought years ago could now be your silent wealth creators. In 2025, these policies are giving more value than many other savings tools. So, dig out those old policy papers—you may be surprised at how much they’re worth today.

Note to readers: This article is part of Mint’s paid consumer connect Initiative. Mint assumes no editorial involvement or responsibility for errors, omissions, or content accuracy.

Want to get your story featured as above? click here!