Rate of return on endowment life insurance according to personal tax bases of FWD Life Insurance Public Company Limited

Abstract

The objective of this research is to examine the rates of return on endowment life insurance policies, comparing two scenarios: tax-exempt cases and personal income tax brackets ranging from 5 to 35 percent. The study compares the "Triple Seven" (77/7) plan, which provides coverage until age 77 with a 7-year premium payment period, and the "Khum Kha" (85/8) plan, which provides coverage until age 85 with an 8-year premium payment period, offered by FWD Life Insurance Public Company Limited. This study utilized the Internal Rate of Return (IRR) as the primary criterion for financial analysis. The results indicate that the IRR of these endowment life insurance policies increase in correlation with the personal income tax brackets. Furthermore, a comparison between the two insurance plans reveals that for both male and female investors, the optimal investment choice varies by age and tax status. For tax-exempt individuals and those in lower tax brackets, the "Khum Kha" (85/8) plan is more suitable for the 22–47 age group, whereas the "Triple Seven" (77/7) plan is more appropriate for those older than 47. Conversely, for investors in medium to high tax brackets, the investment trend shifts, making the "Triple Seven" (77/7) plan more suitable across a broader range of ages. Notably, for those in the 35 percent tax bracket and above, the "Triple Seven" (77/7) plan offers greater value, as it yields a higher IRR compared to the "Khum Kha" (85/8) plan.