Endowment plans are India's most-sold and, simultaneously, most-criticised insurance product. Millions of Indians have bought them at a bank or from a relative who became an LIC agent. Whether those buyers made a good decision depends entirely on what they were trying to achieve — and whether they understood what they were buying.

An endowment plan is a hybrid: it provides life cover for a fixed term and pays out a sum (typically premiums plus bonuses) if you survive to the end. It's insurance and savings combined. The criticism is that it does neither particularly well — the cover amount is typically low relative to the premium paid, and the effective return on the savings component, after accounting for mortality costs, is modest.

"Buying an endowment plan for pure insurance is expensive. Buying it for pure savings is inefficient. But buying it for the disciplined combination of both — at a guaranteed, risk-free return — can make sense for the right person."

Where endowment plans genuinely work: for risk-averse savers who cannot stomach market volatility and want a completely guaranteed outcome at a specific future date. The return may be 5–6% effective yield — not exciting, but it's guaranteed and tax-free at maturity.

Where they don't work: as a substitute for adequate term cover (the cover is too low), or as a vehicle for serious wealth creation (better options exist). Many financial advisors recommend separating insurance and investment entirely — buying a cheap term plan for protection and better products for savings. That's often the right advice. But "often" isn't "always."