It is common to have two non-guaranteed returns stated in your endowment policy. A lower number and a higher number. It usually range from 3% to 5%.

Most people will take the returns at face value. Of course, financial advisors will caveat it is not guaranteed. But that is not the full story.

You need to know how to calculate your returns so that you can weigh your options to decide where your hard earned money will go to.

Here’s what a typical endowment plan would look like for the Surrender Value at maturity:

As this is a regular premium payment scheme, we need to use Internal Rate of Return (IRR) to calculate the returns over the years. Compound Annual Growth Rate (CAGR) is used if it is a lump sum premium paid only once.

Since the projected returns have two numbers 3.25% and 4.75%, we will have to break down the calculations ...