erm.. right off the bat, i'd say it's more of an Insurance thing - if U calculate the returns per annum, it's kinda miserable (mental calc - too lazy to Excel-ize it  ). If you / yr mum's looking for that - great. Else.. erm, yr mum may be better off doing other things with the cash. Keep in mind - (lockedin period VS minimum returns (for sure get) + maybe get) VS FD VS REITs VS Stocks Vs. etc if she's not into insurance reasoning.

This is Insurance Endowment Plan. Your mom can just spend little premium (lower premium for high sum assured) for income replacement insurance (example: Investment-Linked Policy/ILP) instead of this one lump sum big amount of premium (RM52.4k, the sum assured is low in Endowment Plan compare to those Sum Assured in ILP). The remaining of money can invest in other investment tools instead solely on this endowment plan. The allocation for the insurance is very low in the first few years, most of premium goes to the company's. 

Many insurance companies have similar investment fund. My wife used to work with AIA so I know. If your mom has such extra money in FD, then this would definitely be a better option.
A few things that you shall clarify though:
1. is the 5% return guarantee or projected?
2. Is there any early termination (20 year term is very long)?
3. What's the coverage? It shall come with life insurance.

Aiya bro, if it's her bestest friend and yr mum wants her bestest friend to enjoy 5 to 6 years of yearly reducing commissions (usually for life insurance lar, unsure this exact one), ok mar. Spread the wealth and help the country's economics 

Ok ok - back to reality. Sometimes our parents' decisions seem illogical to us. What to do - their perception is not our perception. Most important thing is - does she need the $ to live on + is it your $? If no to both, aiya, just chill lor coz even if she doesnt put it there, U are not well versed enough in other vehicles to allocate & manage the $ mar. Not everything needs to be optimized or efficient-nize Right or right?

1. How can you mess up your FD and get <1% after 5 years? Unless what you put in is a savings accounts and/or capital protected products  . Now FD is min 3.00% p.a. For longer term ones, you can achieve up to 3.7% p.a.

2. For the plan above you deposit 262,000 in 5 years and then mature at 20 years with 435,553, you will get roughly an annual return of 2.6% compounded interest. However if you take option 3, lump sump, then the rate will be 3.86%. 

3. IMHO at the calculated rate above, if you are interested in the 'guaranteed' yearly payment, might as well go to get a long term FD done and get better rate. Then if you are interested in lump sump, it is only ever so slightly better than FD, but with commitment of 20 years. Then I suggest that you invests these money in a PNB fund (AS1M, ASW) to get an almost guaranteed 6-7% return or put in a nice reliable bond fund with an average return of 5%.

4. If you are nice to WMK, I am sure he will be happy to guide to purchasing a suitable bond fund. 

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Added on July 27, 2011, 9:34 am

Yeah, but FD yield better, and is more flexible with no 20 year commitment. Still want to go ahead with this investment? Calculate before you make decision.