Term Life vs Endowment Nepal: Honest Comparison

Updated August 2026. Commission rates below are reported from the Insurance Regulation 2081 schedule via trade press — the Nepal Insurance Authority website has a broken TLS certificate and we could not open the regulation directly. Product terms are quoted from insurers’ own pages. Verify with your insurer before deciding.

Almost every life insurance policy sold in Nepal is an endowment plan — the kind where “your money comes back”. Almost nobody is offered term life, where it does not. There is a documented reason for that, and it is not that term life is unavailable.

The Two Products, Honestly

✓ Term life (म्यादी जीवन बीमा)

Pure protection. A large payout if you die during the term, nothing if you survive it. Small premium, big cover. No maturity amount, no bonus, no surrender value — and that is the design, not a defect.

⚠ Endowment

Protection bundled with saving. Pays out on death or at maturity, with bonus. Premium is many times higher for the same cover, and the savings portion earns very little.

Term life is genuinely sold in Nepal. Sun Nepal Life’s renewable term plan (Nabikaran Myadi Jeevan Beema) takes entrants aged 18–65 for terms of 5–25 years with a minimum sum assured of Rs 250,000. SuryaJyoti Life sells group term. Rastriya Jeewan Beema lists a term product. So “term isn’t available here” is simply not true — availability was never the problem. Distribution is.

Why Your Agent Never Mentioned It

Here is the commission structure reported from the regulation’s schedule. Read the last row against the first.

Policy type / term	Year 1	Year 2	Years 3–10
Endowment, 20+ years	25%	25%	5%
Endowment, 15–19 years	15%	15%	5%
Endowment, 10–14 years	15%	15%	5%
Endowment, 8–9 years	10%	10%	5%
Endowment, 5–7 years	10%	5%	5%
Term life (myadi)	10% cap	—	—
Single premium	6% cap	—	—

Do the arithmetic the agent is doing. A 20-year endowment pays 25% of a large premium in year one, and 25% again in year two. Term life pays at most 10% of a premium that is a fraction of the size. On the same amount of protection for your family, selling you term instead of endowment can cost the agent ninety-something percent of their income from that sale. They are not lying to you. They are responding to the incentive the system gives them.

The Return Nobody Explains Properly

Endowment is sold on the bonus. For FY 2081/82, Nepal Life declared bonus rates of roughly Rs 55–85 per thousand sum assured, and LIC Nepal roughly Rs 49–65 per thousand.

⚠ That is per thousand of SUM ASSURED — not a return on the premiums you paid. This is the single most misunderstood number in Nepali insurance. A bonus of “Rs 70 per thousand” sounds like 7%. It is not a yield at all, and presenting it as one is exactly how endowment returns get oversold at the kitchen table.

What matters is the effective return on the money you actually handed over across the whole term — and that is where the comparison with inflation becomes uncomfortable. Ask your agent to show you the total premiums you will pay against the guaranteed maturity amount, then judge it against what that money buys in twenty years.

The founder of this site has said the same thing from experience. In a podcast interview, Rabin Paudel described buying around eight policies before he understood any of this, and his conclusion was blunt: insurance is risk coverage, not savings. The full conversation is here.

🤝 Not sure which type of policy you actually hold?

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How to Compare Them Properly

Do not compare premiums. Compare cover per rupee of premium, then handle the savings separately:

Decide the cover your family actually needs — not what fits a premium you were quoted.
Ask each insurer the premium for that exact sum assured, as term and as endowment.
Take the difference between the two premiums. That is the amount endowment is charging you to save on your behalf.
Ask what that difference would earn elsewhere — a fixed deposit, for instance. See our fixed deposit guide.
Then decide. If the savings portion earns less than a plain deposit, you are paying a premium for the convenience of not deciding.

The tax angle, correctly stated. Life insurance premium is deductible from taxable income up to Rs 40,000 a year (the actual premium or Rs 40,000, whichever is lower), with a resident Nepali insurer. Health insurance premium is separately deductible up to Rs 20,000. Note that some tax reference pages still show the old Rs 25,000 figure — it was raised by the Finance Act of 2079. Term life qualifies for this deduction too, which agents rarely mention.

When Endowment Is Actually the Right Choice

This is not a case against endowment in every situation. It is a case against endowment being the default. Endowment can make sense if:

You genuinely will not save unless the payment is compulsory, and you know that about yourself.
You want a disciplined long-horizon commitment with a guaranteed floor and are content with a modest return for it.
Your protection need is small and the savings goal is the actual point.

Where it goes wrong is the household with a single earner, young children and a Rs 10–15 lakh endowment policy, believing they are covered. They are saving. They are barely protected. That is the mismatch this whole comparison exists to expose — see how much cover you actually need.

Frequently Asked Questions

Is term life insurance available in Nepal?

Yes. Several licensed life insurers sell term products, including renewable individual term and group term plans.

Why do agents push endowment instead of term?

Commission. Reported schedules give up to 25% first-year commission on a long endowment against a 10% cap on term, on a much smaller premium.

Does term life have any surrender value?

No, and it is not supposed to. Insurers state plainly that their term plans carry no surrender value, no paid-up value and no bonus.

What does “bonus Rs 70 per thousand” mean?

It is declared per thousand of sum assured, not as a return on premiums paid. It is not a percentage yield.

Can I claim tax deduction on term life premium?

Yes — life insurance premium is deductible up to Rs 40,000 a year, and term qualifies.

Should I surrender my endowment policy and buy term?

Not automatically. Surrendering early can lose a great deal, and once surrendered a policy cannot be revived. Understand the surrender value first — see our guide on lapse, surrender and revival.

Is my insurance agent allowed to give this advice?

An agent is a licensed, commission-based representative of an insurer — not an independent adviser. That is worth remembering when comparing products.

Sources

Sun Nepal Life and SuryaJyoti Life published term product pages; Rastriya Jeewan Beema product listing.
Commission schedule reported from the Insurance Regulation 2081 schedule via insurance trade press.
Nepal Life and LIC Nepal declared bonus rates for FY 2081/82.
Finance Act 2079 raising the life insurance premium deduction to Rs 40,000.

Term Life vs Endowment in Nepal: Which One Actually Protects Your Family