Comments on: Jeevan Varsha Analysis http://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html Financial Planning , Insurance , Mutual Funds , Investments Sat, 11 Feb 2012 14:23:57 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-8087 Manish Chauhan Wed, 21 Apr 2010 16:19:16 +0000 http://www.jagoinvestor.com/?p=125#comment-8087 Raja Thanks for your follow up comments . Raja

Thanks for your follow up comments .

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-1544 Manish Chauhan Tue, 10 Nov 2009 21:06:36 +0000 http://www.jagoinvestor.com/?p=125#comment-1544 @Raja <br /><br />Awesome !! <br /><br />Manish @Raja

Awesome !!

Manish

]]> By: Rajahttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-1543 Raja Tue, 10 Nov 2009 17:46:22 +0000 http://www.jagoinvestor.com/?p=125#comment-1543 Manish :<br />1. Glad to see you incorporated the correction<br /><br />2. Your formula for computing IRR is correct. Since payments are made at the start of the year. We have to use the annuity-due formula. I stand corrected.<br /><br />3. To compute the IRR to decimals, I got 5.176% that gave 10,67,544.<br /><br />4. Worthless policy. Manish :
1. Glad to see you incorporated the correction

2. Your formula for computing IRR is correct. Since payments are made at the start of the year. We have to use the annuity-due formula. I stand corrected.

3. To compute the IRR to decimals, I got 5.176% that gave 10,67,544.

4. Worthless policy.

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-1495 Manish Chauhan Wed, 04 Nov 2009 13:44:21 +0000 http://www.jagoinvestor.com/?p=125#comment-1495 @Raja<br /><br /><br />1. Yes I know its not the correct way , I have mentioned that already in the post . It was just to keep things simple . you know people dont like complex things :)<br /><br />Regarding everything else . you were correct , I made a mistake . I have corrected it now . <br /><br />However , check your IRR once , I dont think the rate of return would be calculated by just plain IRR formula , see what i have done . <br /><br />Thanks a ton .<br /><br />manish @Raja

1. Yes I know its not the correct way , I have mentioned that already in the post . It was just to keep things simple . you know people dont like complex things :)

Regarding everything else . you were correct , I made a mistake . I have corrected it now .

However , check your IRR once , I dont think the rate of return would be calculated by just plain IRR formula , see what i have done .

Thanks a ton .

manish

]]> By: Rajahttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-1492 Raja Tue, 03 Nov 2009 17:32:06 +0000 http://www.jagoinvestor.com/?p=125#comment-1492 Manish,<br />First let me compliment you. I like your blogs.<br /><br />1. Only the second model is correct to compute the IRR. By simply adding all payments received ( model 1) in different years, you are trying to make it simple for your readers. But it is incorrect and You know that already. We come to read your blog for accurate analysis not approximate analysis. Pls remove it.<br /><br />2. check your calc.<br />At 9th year, 30% is received that is Rs.1,50,000.<br />you indicated your calculation as below.<br />1,50,000 after 9 yrs : 299,850 [ 1,50,000 * (1.08)^ 3 ]<br /><br />It should be <br />1,50,000 after 3 yrs : 188,957 [ 1,50,000 * (1.08)^ 3 ]<br /><br />4. So, the total comes to Rs.10,67,594. ( even a smaller number).<br /><br />5.IRR comes to 5.9%. FVIFA(78547,8%,9) which is compounded at the same rate for next 3 years. Manish,
First let me compliment you. I like your blogs.

1. Only the second model is correct to compute the IRR. By simply adding all payments received ( model 1) in different years, you are trying to make it simple for your readers. But it is incorrect and You know that already. We come to read your blog for accurate analysis not approximate analysis. Pls remove it.

2. check your calc.
At 9th year, 30% is received that is Rs.1,50,000.
you indicated your calculation as below.
1,50,000 after 9 yrs : 299,850 [ 1,50,000 * (1.08)^ 3 ]

It should be
1,50,000 after 3 yrs : 188,957 [ 1,50,000 * (1.08)^ 3 ]

4. So, the total comes to Rs.10,67,594. ( even a smaller number).

5.IRR comes to 5.9%. FVIFA(78547,8%,9) which is compounded at the same rate for next 3 years.

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-187 Manish Chauhan Sat, 28 Feb 2009 13:01:00 +0000 http://www.jagoinvestor.com/?p=125#comment-187 Rajnish , you should take into conseration how much premium you have already paid and for how many years . If you have already paid premium for good amount of time than the best thing would be to go with it , other wise you will suffer good loss. <br/><br/>Financial planning is very broad term , you have to identify your goals and cash flows and risk appetite and then in discipline manner you have to follow it .<br/>You can go through my earliar articles to understand more things . <br/><br/>Manish Rajnish , you should take into conseration how much premium you have already paid and for how many years . If you have already paid premium for good amount of time than the best thing would be to go with it , other wise you will suffer good loss.

Financial planning is very broad term , you have to identify your goals and cash flows and risk appetite and then in discipline manner you have to follow it .
You can go through my earliar articles to understand more things .

Manish

]]> By: rajnish kumarhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-186 rajnish kumar Sat, 28 Feb 2009 11:34:00 +0000 http://www.jagoinvestor.com/?p=125#comment-186 excellent blog.very informative.after going through your blog i starts thinking about my investment. as you said insurance and investment should not be mixed. but i already did and want to get it cancelled . i have bima gold lic money back for 20 years.and bharti axa life insurance growth plan.both these i will get cancelled and planning to reinvest in lic term insurance and ppf account for long terms. please suggest and help me for my financial planning. i am 27 year old guy working in government organisation DRDO and having 40000+ salary. please suggest me. i can invest upto 10000 pm. your suggestion will be highly appriciated. thank you .rajnish kumar excellent blog.very informative.after going through your blog i starts thinking about my investment. as you said insurance and investment should not be mixed. but i already did and want to get it cancelled . i have bima gold lic money back for 20 years.and bharti axa life insurance growth plan.both these i will get cancelled and planning to reinvest in lic term insurance and ppf account for long terms. please suggest and help me for my financial planning. i am 27 year old guy working in government organisation DRDO and having 40000+ salary. please suggest me. i can invest upto 10000 pm. your suggestion will be highly appriciated. thank you .rajnish kumar

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-185 Manish Chauhan Thu, 26 Feb 2009 18:37:00 +0000 http://www.jagoinvestor.com/?p=125#comment-185 Ranjan , The reason i have not highlighted the tax benefit part , as its common to this product and the comparable products i have discussed . 80C benefits are with all the products i am discussing on this article , so its not a special benefit when it comes to Jeevan Varsha . Thats the reason i have not covered it . May be i should write one-two lines from next time , just for mentioning . <br/><br/>Manish Ranjan , The reason i have not highlighted the tax benefit part , as its common to this product and the comparable products i have discussed . 80C benefits are with all the products i am discussing on this article , so its not a special benefit when it comes to Jeevan Varsha . Thats the reason i have not covered it . May be i should write one-two lines from next time , just for mentioning .

Manish

]]> By: Manish Chauhanhttp://www.jagoinvestor.com/2009/02/jeevan-varsha-policy-from-lic.html#comment-184 Manish Chauhan Thu, 26 Feb 2009 17:52:00 +0000 http://www.jagoinvestor.com/?p=125#comment-184 Ranjan<br/><br/>Point 1 : You are correct , I overlooked that . I will make the corrections .<br/><br/>Point 2 : I am not sure how you got the premium of 76865 . As per LIC website i calculated it this way .<br/><br/>Total Annual premium for 30 yrs old for 12 yrs policy = 165.30<br/>Mode Rebate of 2% <br/>High Sum Assured rebate of Rs 5 .<br/><br/>So Total premium = (500000/1000)*(165.3 - 5) * .98 = 78547.0 (So i took it approx 79000 .<br/><br/>Was it supposed to be calculated any other way , let me know .<br/><br/>Point 3 : May be it comes around 6% after adding Loyalty bonus. I have not calculated Loyalty bonus in my calculations though they are not guaranteed , but paid every year , from company side there is a possibility that Loyalty bonus is not paid , so i consider it as risk of not getting it . though there is a track record of loyalty bonus payments . <br/><br/>Point 4 : If you see the article , i have covered both aspects of Policy (investment + Insurance) . See the end of article with Heading "<br/>Can we do better than this policy with same amount of premium" . <br/><br/>Anyways , I appreciate your review and thanks for pointing out the mistakes .<br/><br/>Manish Ranjan

Point 1 : You are correct , I overlooked that . I will make the corrections .

Point 2 : I am not sure how you got the premium of 76865 . As per LIC website i calculated it this way .

Total Annual premium for 30 yrs old for 12 yrs policy = 165.30
Mode Rebate of 2%
High Sum Assured rebate of Rs 5 .

So Total premium = (500000/1000)*(165.3 – 5) * .98 = 78547.0 (So i took it approx 79000 .

Was it supposed to be calculated any other way , let me know .

Point 3 : May be it comes around 6% after adding Loyalty bonus. I have not calculated Loyalty bonus in my calculations though they are not guaranteed , but paid every year , from company side there is a possibility that Loyalty bonus is not paid , so i consider it as risk of not getting it . though there is a track record of loyalty bonus payments .

Point 4 : If you see the article , i have covered both aspects of Policy (investment + Insurance) . See the end of article with Heading “
Can we do better than this policy with same amount of premium” .

Anyways , I appreciate your review and thanks for pointing out the mistakes .

Manish

]]>