For endowment plan - Is it more worth to pay $375/month for 10 premium years or $750/ month for 5 premium years then lock the money up for 30 years. Which money grow better in insurance endowment plan?

Hi anon,

Besides what Hariz has mentioned, you also need to look at your cash flow and overall financial situation.

If you have a free cash flow of $1000/mth, committing to $750/mth might turn out to be a stretch if you lose your job.

If you have a free cash flow of $2000/mth, then $750/mth will be something comfortable and the remaining $1250 can be set aside for other uses, or even saved, so that it may be used to cover for your premiums if you lose your job.

As mentioned by Hariz, a shorter term premium payment for the same total premium will definitely reap better returns.

The question you should really ask is, which plan will better suit my needs? I know of a politician who wanted his entire family's insurance premiums to be paid up in 5 years - because that's the maximum term of each election cycle. He ended up paying very high premiums for the coverage that he was receiving. Of course, if he lived long, it will be well worth it as the cash value will be higher.

However, if he suffered premature death, he would have paid more than another individual who opted to pay with a longer premium payment term.