Don’t buy “Return of Premium Term Plan” – It does not make sense!

POSTED BY Jagoinvestor ON December 22, 2020 COMMENTS (262)

Does it makes any sense to buy “Return of Premium Term Plan”?

The one-line answer is “NO – it does not make sense”

A “Return of Premium Term Plan” or TROP as its called – pays back all your premiums at the end of the period, whereas the plain term plan doesn’t return back anything. Before we get into the analysis further, I want you to know why these return of premium term plan came into existence!

Term Insurance with Return of Premium

Why the Return of Premium Term Plan came into existence?

Term plans have become very popular in the last few years. We are seeing so many advertisements screaming about term plans importance. However, a lot of investors who don’t understand term plans fully, still feel a pinch that their premiums get “wasted” if nothing happens to them.

They equate “paying premiums” as “losing premiums” if they dont die. They compare it with an investment policy (read traditional insurance plans) where they get back there a sum assured towards the end of the policy.

Insurance companies sensed this behaviour and they introduced something called “Term Plan with Return of Premium” which can now proudly tell customers that they have nothing to lose. They get claim money on death, and if they don’t die, they get back all their premiums paid. Many investors who do not understand the time value of money concept fall for a product like this, as to human mind “getting back all your premiums” sounds very attractive offer.

Now, let’s talk about why it does not make sense as a product.

Return of Premium Term plan has an extremely low return

The premium for the TROP (return of premium term plan) is higher than the plain term plan and it can be 2x-3x times the normal premium in some policies.

So basically, you are paying an extra premium for getting your premiums back after 30-40 yrs!

Let’s look at an example of a 30 yr old male, who wants to buy a 1 crore term plan till 60 yrs of age (for 30 yrs tenure). In which case the premiums are as follows (Example is of Max Life Term Plan as on 21st Dec 2020)

Type of Plan Yearly Premium Details
Simple Term plan Rs 9912 One has to pay Rs 9912/yr for 30 yrs for Rs 1 crore cover. You don’t get back anything at the end on survival
Return of Premium Term Plan Rs. 17,969 One will have to pay an extra amount of 8057 for 30 yrs (apart from 9912) and will get back Rs 5.01 lacs (this is all premiums paid excluding the tax amount) at 60th year

If you look at the example above, you can see that in both the plans you are paying Rs 9912 for the Rs 1 crore cover. Only difference is that in second policy, you are paying an extra Rs 8057 to get back Rs 5.01 lacs (excludes the taxes part) at the end. This is the only difference between the two versions.

So internally, the term plan with return of premium is simply a bundled product of a normal term plan and an investment policy. If we ask what is the return of this investment policy where you are paying Rs 8057 per year and getting back Rs 5.01 lacs after 30 yrs.

The answer is 4.05% CAGR.

Yes, its barely above saving account rates and a little below a normal fixed deposit interest.

I did the same analysis for the tenure of 40 yrs and 50 yrs policy (read why you should not take such a long tenure term plan) and the IRR return was 3.92% and 3.00% respectively, which means that if you buy the policy for a longer tenure, the return gets lower and lower and the product becomes even worse.

Below is the IRR return calculated in an excel sheet for your reference 

return of premium term plan irr return

Note : The above calculations are done in Excel for just one company plan, however similar kind of numbers are expected from other companies return of premium term plan. Please do IRR calculations yourself if you looking at other companies plans.

Return of Premium Policy ties you up with the product

What do you do, if you want to stop a “Return of Premium Term plan” in-between? Let’s say after 10 yrs?

It will not be as simple as a normal term plan, because, with the return of premium policy, your mind will tell you that you just have to continue it for another 20 yrs and you will get back all your premiums. Very smartly, the insurance company has converted a pure term plan into an “investment policy cum term plan” with very bad returns.

so the better alternative than a “term plan with return of premium” is to buy a simple term plan (here are 20 checklists before buying term plan) and invest the extra amount in another investment products like PPF, FD’s, Equity mutual fund or debt mutual fund and you will have better flexibility and returns.

Check out this video from Subramoney talking about this product

What happens if you stop paying a premium for Return of Premium Term plan?

There is an option to get a surrender value if you stop paying the premiums in between. Just like traditional plans, there is the concept of “Guaranteed Surrender value” in these kinds of policies which comes into picture once you have paid 3 yrs premium. However, the amount you get back is a fraction of what you have paid. There is a percentage assigned for every year which tells what part of the premium paid will you get back if you surrender the policy in a year. Below is a snapshot of the chart taken from Max Life Brochure

Surrender value chart of the max life insurance return of premium term plan

So, as per this chart – if one wants to surrender the policy in 10th year, they will get back only 55% of the premiums paid (excluding premiums).

Some other Info

  • The TROP gives you income tax benefits as per sec 80C
  • There is an option to pay premiums on a monthly, quarterly or yearly basis
  • There is also an option for limited pay (pay in 10 yrs) or in one single premium


So TROP is a very carefully designed product which favours the insurance company but makes the product look very good and works on the psychology of the investor. Better stay away from it. The best idea is to buy the simple term plan with the lowest premium.

If you have already invested in this kind of plan, then you need to evaluate what will make sense for you!

Do let us know if you liked the article and does it make sense to you? Share in the comments section!

262 replies on this article “Don’t buy “Return of Premium Term Plan” – It does not make sense!”

  1. Amit says:

    pleas review “IndiaFirst Life Long Guaranteed Income Plan” in some post

  2. Thanks for sharing some of the great and informative insight into the term plan. Keep up the great work.

  3. Swaminathan says:

    HI Manish,

    Thanks for the article..I already have SBI E -Shield term plan of 50 L for 30 years and paying since 2014 onwards & it is wiser to have another term plan probably for another 50 lakhs… please suggest

    1. Jagoinvestor says:


      But its better to take a single 1 crore term plan now if costing is fine .. and close the old one!


  4. onkar gupta says:

    Sir, I m confused I m invest in term plan or mutual fund plz suggest me .

    1. You dont INVEST in term plan, its for your life insurance purpose. You can invest in mutual funds for long term

      Do one thing , just leave your details here and our team will call and guide you

  5. sid says:

    aergon ireturn plan.. for 20 years if i invest 11459 rs for a cover of 50 lakh.. i get my premium returns 11459 -112 rider – 15% service tax multiply by 20 = 223540.)
    now term plan comes to around 4405, but for others its 6-7k.. so i invest remainder in tax saver FD every 5 yearly for 4 times.(20 years) i get 240000, around 15k more than investing in this plan while 220000 if i invest in other term insurances..
    so ultimately its almost the same thing.

    1. Hi sid

      I am not clear on what is your question. Please repeat it with more clarity


  6. Aravind says:

    Hi Manish,

    Thanks for the well written article. The example you have given above is just for 12 Lakhs. What happens if the minimum sum assured is 1 crore? Will we still be able to compare the PPF+life term option.

    1. the example is still applicable ..

  7. Ram says:

    Hai Sir, I have Jeevan Taran Policy. i have started by 2012 Feb up to now i have paid regularly.Now after gone through your articla i am scaring to continue my policy. I have a doubt if i complete my tentur i.e 20yar at the end how much money i will get . i thought full sum assured (600000) + Additional Benifits i will get after the completion of 20yrs .But you have mentioned in that artical only special assured only i will get afte my accumulation period.Sum assured after my death only it will come or after the tenture it comes to me….please guide me sir……

    1. Yes, as I mentioned only what is written in policy documents will be done

  8. sameer says:

    hi Manish,

    I have simple question for you on this, I think you have posted in some other post about the tenure of the term plan. if you know(high probability) that you are going to survive more than 70 years of age then take cover only for years when your family is dependent on you(for income purpose) i.e. till 60 years. so if I already investing in ppf & mutual funds already then would it be better that I go for term plan with return of premium? I understand I would be paying more but as you mentioned anyway I am going to survive full term of the policy so I would atleast get my money which I gave to insurance company. Is it correct way of think?

    Please advise as I am planning to buy term insurance with rop in next couple of days.


    1. No Sameer

      Its not correct way to think. You are not taking into account VALUE OF MONEY concept. The money you will get after the full tenure, just think how much it will be after 25-30 yrs , it would be peanuts at the end and at that time, it will not help you at all .. So right now just go for normal term plan and any extra money use for investments.


    2. Satish says:

      Hi Sameer,

      Simple explanation to your query would be value of money decreases as the time passes because of inflation, this concept is called time value of money.

      For example, just compare the purchasing power of a 100 rupee note in your childhood to its current purchasing power.

      In the current context, the purchasing power of what you get after 20 or 30 years (premiums paid) will be very when compared to the extra premiums what you pay now to get it back at the end of the term.

  9. Ravikiran says:

    Hi Manish,
    My name is Ravi and I am staying in Bangalore.
    I am planning to get a term policy worth of 50lkh coverage and also I would like get return on my investment if incase nothing bad happens to me. So I contacted SBI and they said they have a plan where I need to pay 28600 for 30 years and as I said if nothing happens to payee he will get 28600*30=858000.
    After reading your comments I am in doubt whether I need to go for term policy with return on investment or just go with simple term policy and invest in mutual funds.
    My age is 32
    My investments:
    LIC:32400 Per year
    MF(ING):48000 Per year
    MF(RIL):35000 Per Year


    1. Better not to go for it ! ..

  10. Sandeep Chandrashekhar Pawar says:

    Dear Manish,

    Thanks for the Mathematical explaination however scenario changes if we go for higher coverage value e.g 1.2 Cr instead of 1200000 as Term insurance is meant to pay all your debts plus provide enough income to your family for all those rest of the years one whould have been earning. In such case, the premium difference is coming out to be 10000 ( regular term plan (max life) 14700, premium return plan (aegon religair 24000 with coverage 1.2 Cr & return of premium) Do you still suggest to go for regular term plan in this case say for 20 Yr policy term?

    1. Hi Sandeep Chandrashekhar Pawar

      Even then term plan is a good choice . Let us know if you need our help in choosing and buying a right term plan . You can leave your details here –

  11. vikash says:

    How is the insurer Edelweiss Tokio ?? I am looking for a term insurance.

    1. Hi Vikas

      Every insurance company is fine as far as you are honest in filling up the form . HDFC Click2Protect is a great option too , and you can look at it . If you want a call back from them , you can participate in our Action month we are running this month and you would get our support in choosing the plan .

      Check out –

    2. Its a new company . I cant comment on how good or bad it is, but you can take it if you can connect yourself with it. Why not go for other companies like LIC, HDFC , Aviva etc !

  12. Dipak Katekar says:

    Dear Manish,

    First I want to say Thank God, that I visit this site today.
    Today I am [35 yrs old] goining to pay today my Aviva i Life insurance policy 5th premium Rs 5099/ [30yrs term plan – 50 lacks]. Now days I am seeing term plans with return premium so I am confused. Please help me that I have yo continue with these policy or I have to exit and take new one. I have more to ask you regarding my financial planning but first i want guidence from you for above mentioned issue.

    I have gone through all your bloks and impressed very much with your advice.
    I like to join this forum too so please help.
    Thank you.

    Best regards,
    Dipak Katekar

    1. You can go with it .. no issues ..

      1. Dipak Katekar says:

        Thank you very much for you guidence

  13. yashwant says:

    Hi Manish,

    I have subsribed to term insurance from aviva ilife term is 35 years SA is 60lac age is 29 years, all this is along with health insurance for 30 years SA 10 lac from aviva, now could you please suggest me shall i continue with my LIC tarang or go with balanced and growth oriented MF or PPF, thank in advance

    1. You can be with LIC tarang for investment reasons, from insurance point of view I think its anyways not a big amount and does not serve you !

      1. yashwant says:

        Sorry to bother you again

        I have term insurance of 60 lac from AVIVA plus health insurnance of 10 lacs all this for term of 30 Years, would like to know shall i invest in PPF or MF or in both if i want to generate maximum out of my investment


        1. Yes, you can invest in PPF or MF , but how is it related to your insurance part , they are totally seperate part !

  14. yashwant says:

    Great review…

  15. Mayank says:

    thanks a lot first of all for posting such a easily understandable article.

    i want to take your valuable advice for my future planning and will be highly thankful to you always.

    (i am 24 year now and will take term plan for 54 year term.[because taking 30 year term will be probably make no sense. as in general average indian will not die till 70 year]

    my current income is 4 Lakh per annum. and wish to take cover of 1 crore).

    my budget is around 24,000 per year for term insurance + investment options.

    i also wish to have corpus after 20 years around 10,00,000(in current value of rupee-please calculate inflation as i dont know how to calculate it :sorry for inconvinience).

    what should i plan for the best possible return and that too considering life insurance in mind ???

    i think i should buy term plan from AEGON for 1 crore (as it is the cheapest and longest cover provider )
    so should i go for AEGON or change the company ? or split into two companies ?

    but i have a doubt regarding their existence after 54 years ???
    and second doubt is claim settlement ratio as i found that it is only 67% now a days for 2012-2013 ???

    what do you suggest to me for above situation ???
    pls. guide me and suggest the best looking into current trend …..

    p.s :-can you meet me personally (or do you have any assistant) in surat,gujarat ???


      1. mayank says:

        thanx a lot first of all.

        i have read the article you mentioned above. my question is that difference in premium is only 516 rupees per year for coverage till 75 year & 60 year. then why to take chance ? if i dont want to continue after 60 years of age then just stop paying premium and thats all. but in case i wish to go for new cover on that age it will be highly costly.
        and another question is that why should WASTE money with insurance company by taking insurance till 60 years only ?as per general circumstances average age of indian is 75 currently. (instead take till 75 and pay around 150000 more to insurance company and take 1 crore is a better deal what i think) WHAT IS YOUR OPINION ?

        AND sir , perhaps you missed my another question regarding 10,00,000 corpus after 20 years from today .. pls. reply on the same sir,

        Thanks a lot once again.

        1. Mayank , you can go ahead if you are ok with the extra payment !

  16. prabhash says:

    Dear Manishji
    As i have checked on while showing that i am a mariner, there are few company like Aviva, Maxlife they have the option in their “profession” column, Marine. So should i take from there?
    Please advise me that what are the things need to be checked before taking the term policy.


    1. Yes please choose it from dropdown and move ahead . They might put some loading factor or deny it , but you cant do much from your side, go ahead !

  17. Prabhash says:

    Dear Manishji
    Good day
    I am a mariner & want to take a policy of 50 lacs for 20/25 years. Please advise me which term policy should i take, as i dont have any idea.

    Thanks a lot


    1. Hi Prabhash

      I can see you also opened a thread on our forum for this . Lets wait for answers there . From my side I can tell you that very few companies will be ready to give you term plan , You should look at some offline term plans . Contact each company in market and tell them you want it, see what they say ! .. There is no one company which is known to give it to mariners !

  18. manohar says:

    Hai manish, me and my brother have taken ULIP policies from lic namely lic money plus and market plus1 each with premium of Rs10000 per annum, 5 years ago.. Their performance is not good.. Do U suggest us to surrender them..

  19. Chetan Ambi says:

    Excellent article Manish !!

  20. Rakesh says:

    Hi Manish,

    Nice contribution to leyman investment knowledge..

    Keep posting such posts.. I’m loving it!! 🙂

    Thanks & rgds,

  21. biju says:

    nice reading with an easy illustration.Thanks
    when i taken the home loan,bank asked me to take insurance plan to cope up with the unexpected emergency related with the my life.But i intend to take a term insurance plan other than offered from the bank.My age is 37 and loan amount is 12 lacs for 20 years.Can u suggest a term plan for this purpose?

    thanking u
    biju t n

  22. sreenivas says:

    hi sir
    i had 2 children ,and which company i choose for term plan for high risk coverage
    and better claim settlement in future if iam nomore ,what is ur valuables suggestions.
    and children plans for future my childrens ;i want to take
    term plan with combinations of children plans.
    i will pay rs:25000 for annum ,so pls help choose ever good plans combinatios.
    my age :30. children1:2yrs children2:02months

    1. Can you put your questions points wise ?

      1. sreenivas says:

        hi sir
        term and child plan combinations tell me sir
        my age :06/06/1983
        my wife:31/10/1986
        my son:05/02/2012
        i will pay for annum: up to 25000
        pls give u suggestions ,tem and combinations of plans
        thanking u sir .its ugent

        1. Get a 1 crore term plan

  23. sreenivas says:

    good evening sir,
    in insurance industry , in which company is best,andchoose term policy

    1. Kotak ,Aviva and HDFC are good options !

  24. Rahul Chandrakant Amin says:

    Dear Manishji,

    I am 42 years of age and diabetic. I have quitted smoking 5 years back. I want to go for term insurance, PPF and SIP. Can you pls suggest what term plan and SIP i should invest.

    1. HDFC click2protect and HDFC Prudence !

  25. Sandeepan says:

    Brilliantly written article! Removed all my confusion about these so-called “Return of Premium” term policies. Thank you for this highly informative post 🙂

    1. Welcome Sandeepan . Spread the knowledge !

  26. Biju says:

    Hello Manish interesting read ..
    I would like to get some clarification regarding splitting of term policies .What are the benefits for splitting of policy ?

    1. I will give you the biggest one .

      When you split a term plan into two , you have a choice later to stop one incase you want , if you do not split, the only option is to close the whole term plan and take a new one with lower sum assured , it will be high premium one because that time your age will be high .


  27. Pankaj says:

    Hi Manish,

    I am unfortuntly one of those who read your blog late. I guess I realised this pretty late that if its your money don’t trust anyone even if they are certified financial investors company, be vigilant.

    I got trapped in TROP offered by aviva my policy has a term of 30 years with yearly premium of 16500/- and a cover of 50L.
    I have already paid two permiums and i am thinking of not paying the third one, taking a new traditional term policy (with premium of 10000 and 1cr coverage) and investing the rest of the amount 6500/- in the PPF (8.8 %) for next 30 years. Do you think its a right thing to do or should i keep the existing one?

    1. Yes, thats a right move . Go ahead !

  28. Abhi says:

    Hi Manish,

    Can you plz provide your review on EdleweissTokio online Term plan giving max of rider which are not available in other Online Term Plan??

    1. Its fine to go with them .. NO issues

  29. Honey says:

    Hi Manish,

    I have a LIC term insurance plan for which I am paying yearly premium of Rs. 10160.
    Now, I am planning to shift to aviva term insurance with premium return plan.
    For which I am supposed to pay Rs10577 yearly. so illustration u have given shows a major diff in premium but in this case their is a marginal difference. What whould you suggest ?

    1. This is an old article, the new rates are very less

      1. Honey says:

        I know
        But I wanted to know your opinion …
        I did lil research on premium ..Aviva charging hardly four thousand for a basic term plan whereas for ROP Rs. 10000….what you said in your example still applies.

        Now I am planning to shift my policy to some other good company. Can you please suggest me few of them.

        1. You have other options like Kotak , HDFC life

      2. Shivaprasad R says:

        Hi Manish,
        I want to thank you for educating people like me on investment and planning.
        I have taken Aviva Life Shield Advantage Plan (ROP) for Rs. 1 crore with an annual premium of Rs. 61500 (Rs. 40000 basic premium + Rs. 20000 as health extra, as I was diagnosed with high cholestrol levels) without any riders. The insurance agent told me that in case of normal policies (no ROP) the extra premium for health related issues will be 100% to 150% whereas for ROP policies it is 50%. If we consider Rs. 15000 as premium for non-ROP policy then the premium may increase upto Rs. 37500 (Rs. 15000 basic + Rs. 22500 health extra considering 150% increase). What is your take on this? Now I am thinking what I can do. Whether to stop this and take another policy or continue?

        1. You need to discuss this in detail here –

  30. Raj says:

    Really nice, I was planning to take premium return term insurance. Now after reading your article I have decided for just term insurance.

    Thanks for explaining by providing simple and easy understandable example.
    Good work. Keep posting good articles.

    1. Good to know it helped you Raj !

  31. Vikas says:

    Hi Manish
    Nice article.

    I want to know , should i go for Aviva term insurance plan. I am 27 years and want to have term insurance plance for 50l.
    What do you suggest ?

    1. Aviva is good ,go for it !

  32. Keith says:

    Hi Manish,
    First of all.. Nice work 🙂
    hey i have a Met smart plus (sum assured 12 lacs)
    its on multiplier 100% allocation
    i have paid the premium for the same for 3 yrs (dec 2006 till dec 2009)
    after which i opted for the premium discontinuance (with the policy being active).
    reason:i wasnt really happy as the total invested was 144000 (48000pa*3yrs) and the fund value till today hasnt really been good. i guess the market aswell hasnt been doing good since then.
    Metlife charges a substantial sum if i take the money out so i dont have a choice but continue. so the service charges whatever is getting deducted every month.
    few days back i got a call from met life asking me if i want to reinvest a part of my premium that i had paid to reinstate the policy. And this part that they would take out of my premium will be treated a partial withdrawal.

    my question to you:
    1. do u think i should go for it? (the partial withdrawal- for the premiums that i havent paid)
    2. you think i should again start paying the premiums..which would mean that i wld have to first cover the premiums that i havent paid for so long since 2009.
    3. or should i just wait for nother 4 yrs for the return charges comes to zero?

    if i have confused yu then lemme know 🙂

    Any advice is appreciated.

    1. I guess 5 yrs is now complete , you should now get 100% of your fund value , take it out now

      1. keith says:

        metlife says it would charge 50% of a years premium if i withdraw now.. and every year it would fall by 10%. so by the end of 10th year it will be nil.

        They want me to go for the partial withdrawal which they would invest 80000 back to my insurance.

        I am not sure if i should go for this or just stay put and wait for 10 yrs!!

        i dont want to lose my money and in a way i am losing it bit by bit with the charges they levy every month.

        How would the company benefit by reinvesting my own money?? m not able to understand that. and also would that be beneficial for me??

        Thanks for the speedo reply..


        1. I think you should check what does the document brochure says about withdrawing of your money, what ever is written there will apply !

  33. Neetu says:

    Hi Manish
    Thanks a lot …i will read up more abt MF and also check out the funds u have suggested. Really thanks a lot again for ur suggestion i will keep in touch with the blog for more smart ideas.

  34. Neetu says:

    Hi Manish
    Thanks a lot for ur reply but what do u mean by ”policies”. I thought traditional plans are a sign of Safety even is the returns r not very rosy …aren’t Mutual Funds more riskier than ULIPs..

    1. Neetu

      By policies I mean any products which combines insurance and investments , Yes Endowment products are Safe , 100% safe , but only in terms of return of your money + some basic returns like 4-5% .. Why do you need endowment plans in that case ,you can be better off in a Bank FD in that case .

      Look at products from returns above inflation point , else you are loosing a lot .. I would suggest you get my book from flipkart and read its 3rd chapter on Equity and Debt , that will open up that concept very well for you , here is the link :

      1. Neetu says:

        Thanks a lot … i understand what u mean about traditional plan. But as u said ULips r no good then the only thing remains is mutual funds ….but what abt ppl like us u have zero knowledge abt M.F will we know where, how & how much to go about it .

        1. Neetu

          Truely speaking , you need much less info about mutual funds than you can imagine to start investing in mutual funds. I really suggest you to take few understanding about mutual funds first and then ask your questions on our forum to get more idea .

          To start with , I would suggest pick 2 funds – HDFC Prudence and DSPBR top 100 . Do a SIP in both the funds for 1 yrs . Dont look at them on regular basis !

  35. Neetu says:

    Hi after leaving on the last post i read ur answers & guides thoroughly and finally decided that i will not opt for any ULIP plan any more .. so i have decided to go for Birla sun life’s ”Birla Vision” for 5K montly for 25 yrs plan with life cover 12L…and also another 5K in Tata Aig’s ”Maha Life Gold” for 15 yrs with life cover 10L & lastly SBI’s ”smart sheild for 25 L policy for 30 yrs . I Hope i am doing the right thing this time . Ur Opinion will be highly apprieciated .Thanks a lot

    1. These plans are worse then ULIP’s /.. never invest in “policies” , just take few mutual funds !

  36. Neetu says:

    Hi Manish
    i am 35 . i have read ur blog recently & i found ur suggestion & guides really helpful to ppl like us with Nil knowlegde …U really r doing a great job …thanks a lot anyways i have recently started off with the investment plans . So far i have taken LIC 2k (10L insurance) plan & Tata Aig invest assure (2K) montly for 20 yrs PT. i want to take more plans with 50 to 75 L cover & also good returns , My agent has suggested that i take Aviva freedom Life advantage where the Sum assured is 1000000 , PT is 15 yrs , PPT 5 yrs , premium 100000(p.a) on my kids name so that the mortality charges r less & along with this take Aviva Life sheild on my name with the cover of 50 L (ROP) with 22000 premium (p.a) .. do u think i should go for this or should i take the freedom plan from Aviva & life insurance plan from LIC ..kindly suggest if u feel i can do any better ..Thanks In Advance

    1. Just get term plan for life insurance and as I suggested some time back , take mutual funds

  37. Jayachandran says:

    What a clear , simple explanation . I just had a realization of how much fool I was when I took an endowment policy without any idea what I am doing 🙁 .

    Thanks a lot for saving my day .

    1. All you need to do now is define the next action !

      1. Radharanjan Das says:

        Hi Sir,
        I’m now 31 Years old. I want to invest monthly 5000/- for a period of 15 to 20 years Horizon. I’m deciding to opt for the following.
        1. Aegon Religare I maximize ulip plan(rs 2000/- monthly)
        2. Sbi Subhnivesh/Kotak Capital Multiplier Plan/ HDFC Life Sampoorn Samridhi Insurance Plan.(rs 25000 PA)

        Kindly suggest if ulip of religare is worth & from 2nd whicle one is good(kotak, sbi or HDFC)

        I want have some good & guaranteed returns after 15/20 years. Please guide me.

        Many Thanks.

        1. Radharanjan

          If you want to have guaranteed returns , then you should put money in bank FD, all the other kind of investments will have some kind of risk . I would suggest you putting money in mutual funds through SIP over 10-15 yrs

  38. prasanna says:

    Dear manish and others
    I am sorry to deviate from this actual article. All suggestions by manish are good
    for active personal finance manager. but i think from the mutual funds we can go
    to an extra mile. I used to see the portfolio of successful mutual funds in and invest directly in the list of company stocks specified there.
    At the same time i purchase the mutual funds also. The results are amazing. My portfolio grows very fastly then the original fund NAV and goes down fastly when
    my fund is also going down a bit slowly. so instead of investing in a particular fund
    we can follow the updates of the fund and proceed ourself to gain maximum

    1. Prasanna

      Good that this worked for you, but you might have just bought a couple of stocks in that fund and in that case you were lucky that what you bought went up . Next time if those went down , then what will do you , for how many years this has happened ?

  39. Madhu says:

    Hi Manish,

    Does Aviva has any return on premium term plan insurance?

    1. I am not sure on that , why do you want return of premium term plan ?

  40. SAURABH SAWANT says:

    Dear All,

    I wish to suggest all SIP investor one fact about Reliance SIP Insure scheme.
    Pls be carefull in selecting term of Rel MF Schemes with SIP Insure feature as there is 2% exit load on this scheme and later on you can not change the term also.
    Agent or the company people may not tell you about this fact.So go through clear terms & conditions in fine prints.


    1. Thanks Saurabh

      Good to know those points from you . Keep contributing !

  41. ChPCR says:

    Hi Manish,

    Your suggestions and guidance is very impressive. Its good that finally I landed on a site I have been looking from long time.
    I have 1 yr old daughter and now I would like to start investing for her education and marriage. I have 10L savings and paying insurance of 1L pa. Policies include Jeevan Shree (24K), Money Plus(10K), New Bima Gold(6K) and few Ing Vysya policies. I get 12K per month on my 10L savings.
    I have a home loan of 26L with EMI of 26K for 20 yrs. EMI hasnt started. After my expenses and home loan I will be left with 15K from my salary.
    Now for my daughter’s future, I am confused whether to take any SIP or Quantum Gold ETF. Please suggest if any better choice.

    1. ChPCR

      First you should slow down and relax. The first thing people start getting worried is child education the moment they are born ! . All you need to do is take a good term plan with right cover and start investing in mutual funds and other simple products for long term wealth creation !

      1. ChPCR says:

        Can you please suggest good term insurance plan?

        1. ChPCR

          There is nothing like that . it all depends on your trust and belief . LIC , Kotak ,Aviva ,HDFC are the options

  42. vishal dhish says:

    Hi Manish,

    I found out abt religare and since I am 34 years old, for 1 crore sum insured its coming to about 15000 annualy.

    How do I divide my 25 lacks in equity, SIP etc so that my risk is moderate


    1. Vishal

      If you want totally secure investment, then equity mutual funds are not for you .. I think you can take STP route here .. Put money in some debt fund or bank account and then transfer some X amount each month in some balanced and debt funds


  43. vishal Dhish says:

    Hi Manish,

    I would like to invest 25 lacks and things that i want is the following:

    1) Term Insurance for 1 crore
    2) monthly benefit for my mother, I dont understand anything apart from tradational investments such as FD and buying property

    Kindly guide me where to invest so as to get the maximum return on investment

    Vishal Dhish

    1. Vishal

      You can get a cover of 1 crore from companies like LIC , Aviva , HDFC or Kotak , ICICI , not sure if you want to make yearly payments or just one time payment ?

      Also for generating regular income ,you can use FD and take the option of quarterly interest payment , with 20 lacs you might get around around 15k per month income or near that .. However there are other options also you can learn about them here :


  44. Rajendra says:

    Hello Manish,
    I have gone through all comments and forums but they are quite old, now I want to know about the current Aviva Life shield advantage term plan where I need your valuable feedback please. The plan details as per below :
    My age= 29yrs
    Premium = 20055
    Term = 30years
    Coverage = 50lac plus accidental 1cr plus permanent Total disbaility coverage
    Plan=Aviva Life shield advantage plan (option B)
    Minimum first 3 years premium payment required
    Premium paying holiday of 2 years after 3 continuos yrs of payment
    Incase to total discontinuation policy still persists but sum assured will be reduced as per time lapsed since discontinuity
    LIC 50lac term plan cost 16800 (not sure it has accidental + PTD)

    As its a money back plan, The premium is so less that it beats PPF plus term plan of LIC for 30yr term and its the least Premium Money back plan in market at the moment.
    Is it worth taking ? As compared to other private players how trustworthy is Aviva amoung market players and its claim/settlement please ?

    Also m thinking of Aviva + LIC of 1 cr total, means a
    ROP(50L) + NROP(50L) = 20055 + 16800 = 36855 per year
    while LIC 1 cr premium costs around 33600
    how does it sounds ?

    Thanks in advance.

    1. Rajendra

      I dont thikn you should still buy it , can you compare it with same company term plan + PPF or same company term plan + Equiyt funds ?

      Take the cheapest term plan + PPF , compare with that


  45. Santosh says:

    which term insurance plan is better??? i want 25k insurance for my family
    Please advice….

    1. Santosh

      25k of insurance ? Only ? Are you saying premium or sum assured ? Is 25k not too less-


  46. Mukundan says:

    Dear Manish

    It is great to come across this article. I need some advice.
    #1. I am 51 yrs and not insured much (Just some PLIs for 2 lakhs) . My monthly income is 60k and my total monthly expenses are 35k. My sons are settled and I want to save the remaining 25k every month wisely. Can you please advise the best way to go ahead?

    #2. I have some 10 lakhs spare cash which i have invested in bank FDs, Is there any other better and safe way i can increase the return?

    Thanks in advance

    1. Mukundan

      As you now in your 50’s .. you can put your Money in balanaced funds assuming you want moderate risk on your money


      1. Mukundan says:


        Thanks for the quick reply.
        I will go for balanced funds. Any specific funds?
        Meanwhile, any advice about term plans?


        1. Mukundan

          You can take HDFC Prudence, for term plans you have an option like Aviva and LIC


          1. Mukundan says:

            Thank you very much

  47. Vishwas dastake says:

    i have taken LIC term insurance Jeevan amulay for 25 lacks & premimum paing Rs 16970 per year, policy duration is 30 years.
    now i come to know from calculation as this plan term increses the primium also increses.
    if i salender this policy and take new one from LIC with 5 years plan i will pay less premimum.
    is it advisible,
    Let me know

    1. Vishwas

      Yes , its true that for a lower tenure ,the premium would be low , but whats the use of it , at teh end of 5th year ., you will again buy the policy but that time the premiu would be for your age that time and premium would be high . So its not advisable , I hope you are looking for insurance as pure insurance and not investments


  48. Santosh says:

    Dear manish,

    I have planning to buy term insurance for 25 years for assured amount 2500000, with rider.but there is lot of company in insurance sector and also everyone having online insurance policy also . As per i have seen above comments kotak preferred is good or some one else . Can u give me advice for to buy policy online or offline is acceptable. kindly suggest your opinion for the same. You have good knowledge on term insurance
    Kindly Advice, waiting for u reply.


    1. Santosh

      There is no harm in taking online term plan , go for it .. you can go with ICICI , kotak or AVIVA


  49. vandana says:

    Hi Manish,

    me too vry impressed of your site……very nice site & specially ur replies & ideas are awesome…..


    1. Vandana

      Thanks for appreciation 🙂

  50. Ravindra says:

    Wich company’s SIP of best

    1. Ravindra

      Your question is vague … its like asking which cuisine is best and which restaurant has better food ? Its never hte best company which has best SIP , things go up and down , what is your requirement ?


  51. Ravindra says:

    Term life insurance policy with return of premiums

  52. SAURABH says:

    Hi Kawardeep & Manish,

    Actually it was told by Reliance Mutual Staff only, not by any Agent
    That’s why i trusted.
    I will check again with my SIP amount and no. of units being alloted to me
    in my statement. This will make things clear I suppose.

    1. Saurabh

      Its no different .. people move from company to company in few months/years .. there is only code of conduct , but no track of who is following that code of conducts .. So my previous reply still stands !


  53. SAURABH says:

    hi there, thanx for good suggetion on TROP.
    I have one existing Reliance MF SIP. Very recently when i renewed it they told me about insurance of SIP installments and i opted for that when they told me that they are not charging any single penny as premium for that insurance from my SIP amount.

    1. Saurabh

      Who told you that ? If agent has said that , then its not true because they lie generally .. what is the whole plan overall ? Please explan


      1. Kawardeep Singh says:

        Hello Manish and Saurabh.
        Yes even i get some emails on insurance of SIP from reliance too. There may be some hidden charges for the same. I discussed it with my financial adviser and he is strictly against these type of products.

        1. Kawardeep

          Yea .. right . better go for just plain insurance ..

  54. Kawardeep Singh says:

    Hi Manish, Your blogs are really awesome.
    Well want your advice in some cases. My age is 29 yrs, Married and i have 8 months old daughter. So i have to plan right now for her study and her marriage. I am investing 8000/- per month in SIP from last 1 year. Details are given below.

    HDFC GROWTH FUND(G) – 1000 P.M
    IDFC SMALL & MIDCAP – 1500 P.M

    1. Are these plans are good enough for my goal or i have to change any one ? 2. I think i have to invest in gold through SIP for marriage of my daughter. Which funds are good for this ?
    3. Should i invest in SIP or other options ?
    4. Now as per my thinking i should have term insurance plan for safety of my family and my daughter’s future.
    Please Advice.

    1. Kawardeep

      I think you are going good .. focus on consistency rather than funds name .. Do a yearly review .. you are ok at the moment . Dont add more funds

      Go for term plan .


      1. Kawardeep Singh says:

        Thanks for your advice Manish.
        i know long term investment is right way to achieve our goals.

        1. Kawardeep

          Nice .. good to see you on right direction as well as your financial advisor is good one


  55. Lara says:

    Dear Manish –

    I may sound like a fool to some. I have some basic questions on Term Insurance.
    1) Is it better to take a long term or a short term plan.
    2) In case you outlive your term period, what happens to the premium.

    Many thanks.

    1. Lara

      1. Dont see it like that , Take term plan for the remaining time for your retirement .

      2. Nothing .. policy expires ..


  56. Ashutosh says:

    Dear Manish,

    Your blog is very helpful for the person like us. I am a 30 year old male living in Delhi and earning around 25k per month. From lat year, I started investing and currently I am maintaining a PPF account with SBI (Annual investment about Rs 25000)and Rs 10,000 annual investment in NPS. Recently, I started SIP of three mutual funds viz., HDFC Top 200, DSP Blackrock Top 100 Equity Fund and ICICI Prudential Focussed Bluechip with the invetsment of Rs 1000/- per month in each fund. Just two days back, I taken the Aviva i Life Term Plan from their website. Can You please suggest that whether my portfolio is OK or I need some change in this.
    Please suggest.
    Thanking You.

    1. vishal says:

      Hi Ashutosh,

      Could I get your number please, I need some info on Aviva I-life, I have already filled the form, just about to make payment.

      1. Ashutosh says:

        Hi Vishal,

        I made the payment through my credit card.
        I can not post my mobile number at this website due to privacy concerns. However, if you need to talk to me, please give me your email ID and I shall send you my contact address at the same.

        1. vishal says:

 is my id. It will be very helpful if I can talk to you as soon as possible. I have already filled up the form and waiting for a sugestion from someone who has taken this policy on one or two questions and their impact before I make the payment.


  57. akhilesh says:

    Hi manish,

    Need your guidence
    I am 28 years of age and investing in 7 SIP namely hdfc top 200, hdfc equity, hdfc mid cap, hdfc tax saver, hdfc prudence, fedelity equity and fidelity tax advantage for Rs 1000 each.
    I am planning to take two Term plan Religare and ICIC for 50 lacs each for 25 years.
    Is my sip and insurance combination right or not


    1. Akhilesh

      yea. you are going right

  58. SHYAM says:

    Hi Manish

    i am 33 year old married with 2 kids and i want to know about sbi smart life term insurance plan.
    Is this plan is sutable for me for 15 year
    can i choose single premium option
    and tell me any best plan.


    1. Shyam

      Take any term plan . Are you not ok with online options ?


  59. Chakri says:

    Hi Manish,

    Thanks for all the replies in patience. I am a new add to your fanlist.

    Am planning to take a term policy but confused on private-public fear. I am almost finalising a deal in LIC. Have some points to conclude and hope these are the common points for all the aspirant policy takers.

    Appreciate your thoughts on the below:

    (a) Can I go for Private Co., with the same confidence as I have on Public Co.,s?
    (b) Term policy is issued on any basis (like salary of a person multiples, individual networth or just the paying capacity of an individual…)?
    (c) Is it suggestible to go for riders (like permanent disability, etc)?
    (d) If I take the term policy from 2 different Co.,s, will the beneficiary get the insured sum in full from both the compaines?

    Once again highly appreciate experts inputs as this is a once in a life time decision.

    1. Chakri

      1. There is lot of confusion here , There are few ununderstood things because of which public is too fearful . Its true that if you are with a new company and its an early death , it would be not as easy as it would be with an old company and late death (more than 2 yrs). So truely speaking I would say split the cover with LIC and non-LIC . balance can be there .

      2. Yes , if its a large cover , it would be your networth and mainly its dependent on how much cover you alreayd have ?

      3. There is no suggestion , each riders provides you some benefit , its only you who can decide if you want it in your life or not

      4. yes , the beneficiary will get it from all the companies in full

      All I would say is take action , you have done the ground work , not where is the action , I want you to complete this and take the term plan and share your victory with us here . I am setting up the deadline for you 🙂 . Next 15 days !


  60. Vishal says:

    Hi Manish,
    Excellent Forum and hats off to you knowledge.

    I need you advise.
    I have the Endowment Assurance policy from LIC
    Sum Assured:3,50,000
    Policy & Premium payment term:30 yrs
    Premium:10,667 per annum
    Accrued Bonus:1,97,400
    I have already paid 10 premiums (policy commenced in 2000)
    Apart from this I have Principal Personal Tax saver (investment 80k,current value 60k, divident received 19k) & HDFC Tax save (investment 45k,current value 44k, divident received 7k) thru SIP which i could not continue for long as I have booked a Flat and am paying 10,oo,ooo as the EMI.

    Currently I save 8000 a month after paying EMI, I need a term plan for family security, wealth accumulation for my 1 month old son’s education etc… health insurance is thru company so am not thinking of additional Health plan.

    Aviva iLife is the cheapest term plan with 50,00,000 cover,35 yrs term, premium 4769 pa. Is it ok to go as I did not find anyone enquiring for this or suggesting this? After this I will be left with about 4000 pm. My complication is should I liqidate the LIC, agent says I will get about 2,00,000 if stoped and if completed the term I will get 8-8.5 Lakhs on maturity. I also have to start SIP for wealth accumulation.

    You advise is highly appriciated.


    1. Vishal

      You have too many questions . Please ask generic questions which can be answered with ease .


      1. Vishal says:

        Sure Manish,

        If you can help me with this.
        I have only one LIC policy which is the Endowment Assurance policy Sum Assured:3,50,000
        Policy & Premium payment term:30 yrs
        Premium:10,667 per annum
        Accrued Bonus:1,97,400
        I have already paid 10 premiums (policy commenced in 2000)

        Now I think I need atleast 50,oo,ooo coverage for my dependants.So am going for a term plan. Now an confused which will give me more benefit , If I continue I will have to pay 10,776 for LIC and 5000 aprox for term plan. The agent says I will get 2,00,000 if I surrender the LIC.
        Should I surrender, which means 5,000 aprox in term plan and balance 5000 in an SIP (Mutual Fund).

        Which will be more beeficial if you can give an illustration as you have in some cases above.


        1. Vishal says:

          Sorry, forgot to add.

          According to the agent , if I complete the policy I will will get 8-8.5Lakhs at maturity.

  61. AJ says:

    Hi Manish,
    I just happened to stumble upon ur blogs, they are excellent!! Your passion for this field is clearly visible in you clear and simple writings…. Keep up the good work 🙂
    Regarding Term Insurance plan I had a doubt…… I am a Marine Engineer by Profession so a physical disability of any kind would render me jobless. Will the term insurance cover this? or do i have to take a separate medical insurance for that?
    Also as I am more than 180 days out of India, I do not pay tax, so am I eligible to invest under PPF and ELSS?
    Thank you for your time.

    1. AJ

      You need to take a rider called “Disability Rider” along with term insurance , that will give Sum assured in 10 equal parts each year .

      You have to see what is your residential status at the end ,if its not NRI , you can open PPF .
      You can invest in ELSS anyways

  62. Naveen Kumar says:

    Hi Manish,

    Let me put down my financial condition and my personal life requirements.

    My monthly take home is 28k

    I have one personal loan 2 lakhs wich will close in next 5 years. i have invested this amount in my brothers business. out of that i am getting 2000 pM as intrest and same will be invested in Jeevan Saral insurance taken for 20 years.

    Loan EMI is 5584

    House rent is 6000

    Other expence is 10000

    Let me put down my requirement

    Recently i am blessed with twin baby girls.

    I need to take care their education and marriage expences.

    Please suggest me the best investment plans.

    Also i 50k in my hand now.


    1. Naveen

      You need to invest in equity for long term for those goals . Relook at your current policy and find out how much are they givning you in llong term .


      1. Naveen Kumar says:

        I am planning to invest 3000PM in mutial funds in two different AMC’s

        Please suggest me the best mutial funds

        And what is your openion on investment in Silver


  63. Priya says:

    Hi Manish ,

    Gr8 work here.You cleared all my doubts regarding term insurance (whether to go with the one which returns back the premium or the one which does not).I have a question here..We have finalized one property (90%) and have applied for a home loan from IDBI bank.

    I have heard that if u dun have adequate cover (atleast worth the loan amt which we have taken) , the bank will ask us to take an insurance forcefully , whose premium is added to loan amt and we end up paying the interest on that too.Is it true ?

    If yes , would you suggest us to go for a term policy from Aegon Religare , which does not return premiums ?
    My income is 26K pm and my husband’s is 49K Pm.

    I would also want investment tips from u , in order to get steady returns , so that we can pay off the loan amount periodically and finish it soon ?

    We are currently invested in HDFC top 200,Reliance banking sector SIP and Birla Sunlife SIP.We also have 4 LIC policies (I guess with a premium totally amounting to 30K PA together)

    Just to add , the property which we have finalized will be ready in August 2012,for possession.We have a loan amount of 27lakhs and we will be paying a Pre-EMI interest now (maybe starting from April 2011.)

    Thanks in advance!

    1. Priya

      Yes Banks will ask you to have adequate cover , incase you dont have , it will be in home loan itself , you might consider that , actually you should !

      The other suggestions which you have asked needs a detailed look and committed time to plan , You should look at paid services for this


      1. Priya says:

        Thanks for your reply Manish ..

        You have said “incase you dont have , it will be in home loan itself , you might consider that , actually you should !” ..Do you mean I should go for the insurance products that are sold by bank ? I have heard they add this premium to the loan amount and we end up paying interest on that as well ? About Aegon Religare iTerm plan , I googled to find out if there are any exclusions.But I could find only one , the suicide one.

        If you are aware of any hidden exclusions , can you plz tell me ? If there are none , then I thnk this is the perfect one!

        1. Priya

          When you take a home loan , there can be a added term plan with it self which will cover your life upto the cover amount, the cover will come down as per your loan , so at any point of time, it will cover you for the loan outstanding.

          These loans are designed to give you many benefits like it will cover you from even partial and permanent disablement , loss of job etc ..

          Hence over all its a good thing , but the premiums for this is higher than a stand alone plan which you buy from outside .

          So you have to choose over cost and convinience .


          1. Priya says:

            Thanks Manish..I will enquire about it. Regarding Mutual fund investments , you have mentioned about consulting paid financial services.How do you rate HDFC bank’s investement services ? I personally am not willing to listen to agents’ advice on this , because many of them are misleading.But agents claim that banks like HDFC who offer investment services , will advice their own mutual funds to us..I want a genuine advice..Plz suggest.Even if you are able to help us out periodically , as and when u have time , thats ok ..because we still have time for the EMI cutting to start (about a yr and a half) isnt it enough time to plan a portfolio ?

            Thanks in advance for all your advice..

            1. Priya

              Its recommened not to go with specific banks as they will advice for thier own products .. they have to …

              Let me mail you on paid services part


  64. Pragnesh says:

    Hi manish,

    I am pragnesh and i am 28 yrs old married person. Here is my portfolio:

    Total income – Rs. 35K/per month
    Home Loan – Rs. 5800/- per month for 4 yrs.
    1 New Bima Gold (873491503) 13884 (4 lac coverage) — shall i surrender? how is this policy. just 4 yrs old
    2 Jivan Mitra Policy (873257493) 5010 (1 lac coverage)

    Mutual Fund monthly SIPs:
    HDFC Top 200 Fund 2000
    IDFC Premier Equity Plan A – 2000
    Sundaram Tax Saver Fund – 1500
    DSP BR Equity Mutual Fund – 1000

    PPF total investment till date: Rs. 20000/- (NO EPF deducted in my co.)

    I want to take Term plan. suggest me what should be cover i should buy and from which company and do you think i need to add more SIPs to get more returns?


      1. Pragnesh says:

        Thank you manish. I have just ask under Financial Planning. please reply.

        1. Pragnesh

          Keep an eye on it , it will be answered there


          1. jayajonty says:

            Hello Manish
            I have 30 years Jeevan Mitra Triple cover policy with quarterly premium of Rs. 6,887 (Rs. 27,550 /year) from April 2006 onwards. It has accrues bonus of 1,00,000 as per the LIC data against the policy vailable online. If we consider appr. 14,000 yealy spent to cover insurance portion and remaining 13,000 is invested the return of 1,00,000 as bonus is almost 13% return on 13,000/ year investment for 5 years (I used your Excel tool to calculate) which in my opinion much better return.
            I did this exercise after reading your various articles on term insurance when I was getting convinced, the above figures make me rethink.
            Your reply is appreciated. Thank you. Am I making any mistake while doing the

            1. Jayjonty

              So you paid only 4 premiums of 27,550 each per year , which means you paid around 1.1 lacs till date ,with that I doubt that your bonus would be 1 lacs as of now , please login to your account in LIC and see how much bonus is accrued . Also get your agent on this and ask him details .


  65. jig says:

    Not possible.
    You might be choosen OPtion A.
    Try to calculate with OPtion B.
    For 50 Lac coverage of 30 yr age for 30 year term ….

    ROP of advange : 20762

    Premium of Plus: 13732. ( without riders )
    Now remaining 7030 per year put in PPF.
    at the end of 30 year amount will be 8,77,673.

    ROP total is 6,22,860.

    Hope this helps now.

    well manish can better explain whether with riders it wll be good or not?


    1. amarawargaonkar says:

      Jig, Manish,
      Yes i used the option A
      But i have downloaded the policy document from their site.
      It says the following regarding options –
      Option A: single premium or regular premium (equal to policy term)
      Option B: regular premium (equal to policy term)
      The only difference i came to know was if you go for option A the maximum sum assured is more and if you opt for option B the maximum sum assured is 50,00,000/-.
      Thank you both for helping me.
      Dr.Amarnath Awargaonkar

      1. So finally did you get your answer and able to take decision or not ?


      2. Jig says:

        Hello Amar,
        I think still you are looking somewhere else.
        Option A is Plan without Return of Premium
        Option B is Plan with Return of Premium

        please check with patience and sure your doubt will be clear.

        1. Jig says:

          I mean either of the plan is for ROP and other one is without ROP.


          1. amarawargaonkar says:

            Jig, Manish
            Life shield advantage is ROP
            in that there are two options
            option A where there is no cap on sum assured but you can insure yourself only upto 65 years of age
            and Option B where the cap is 50 lacs for sum assured not only that when i downloaded the brochure for Life shield advantage it clearly mentions –

            Option A: single premium or regular premium (equal to policy term)
            Option B: regular premium (equal to policy term)
            any way i have opted not to buy the ROP plan and continue with my old term insurance that is Life shield plus plan
            where there are no return of premiums.
            I have to admith although that my doubts have not cleared.

            1. amarawargaonkar says:

              jig, manish,
              Life shield advantage is ROP
              Life shield plus is pure term insurance
              ROP plan has two options
              Pure term plan does not have options
              I believe in manish’s words “….but looks like the return of premium makes sense in this case unless I am not able to decode something hidden” If he is not able to decode then i thought it is best to stick to the term plan but i would like the members here to have a look, so that if it is really a good plan then it can be reccomended.
              Dr. Amarnath Awaragonkar

            2. jig says:

              As i mentioned we can take an example of SA 50 lac for term 30 years and age 30 years. now below are the outcome of results for
              Life shield plus
              Life shield Advantage with ROP.

              1) WIGHOUT ROP

              Product Features
              Name of the Product: Aviva LifeShield Plus
              Unique Identification No.: 122N064V01
              Sum Assured : Base Plan ADB Rider Aviva Dread Disease Rider

              5,000,000 Not Opted Not Opted

              Policy Term: 30 Years
              Single Premium/Regular Premium Option : Regular Premium
              Premium Paying Frequency: Annual
              Base Premium: Rs. 13,732
              ADB Rider Premium: Nil
              Aviva Dread Disease Rider Premium: Nil
              Regular Installment Premium : Rs.13,732

              2)NOW ANOTHER ONE WITH ROPProduct Features
              Name of the Product: Aviva LifeShield Advantage
              UIN: 122N081V01
              Plan Option : Option A – Regular Premium
              Sum Assured : Base Plan Aviva Dread Disease Rider
              5,000,000 Not Opted

              Policy Term: 30 Years
              Premium Paying Term: 30 Years
              Premium Paying Frequency: Annual
              Base Premium: Rs. 16,367
              Aviva Dread Disease Rider Premium: Nil
              Regular Installment Premium :16,367

              well in both case i didnt include riders.





            3. amarawargaonkar says:

              Thank you for the appreciation.
              This forum has helped me a lot and if i can give back something it would be worthwhile.
              Dr. Amarnath Awargaonkar

            4. jig says:

              Hello Dr Amarnath,
              Recently Aviva launched Life Shield Platinum. Can you share your view on that? I tried to understand its monthly income plan but still not clear about it.

              I request Manish to review it and please share merits if good for readers.

              keep sharing


            5. Jignesh

              its a pure term plan , what review are you expecting ?

              Here is a review you can read :


  66. amarawargaonkar says:

    I have taken Lifeshield plus term plan (term 30 years) from aviva. Sum assured 60lacs and an additional 50lacs for accidental death, as i am overweight they have charged 11k extra. The total premium is 38600/-. I have this policy from one year.

    My agent is telling me to get it converted to Lifeshield advantage, reason it is premium back term plan. We calculated the premium for 65L and it came around 30,500 although you do not have the facility of ADB rider. But the biggest advantage of this policy is, it is premium back term plan. Even if we add 11K as extra charge for being overweight it would be 42K but i will get back my 30,500 at the end of policy.

    What do you suggest??
    one more thing i lost my password i am a existing member of jagoninvestor can you retrieve it.

    Dr. Amarnath Awargaonkar

    1. Amarnath
      You should read this article for clarification on return on premium plan :

      Rearding your password thing , i hope you are talking about forum, can you please create it once again, I think because of inactivity , it got removed


      1. amarawargaonkar says:

        Dear Manish,
        My poinf of contention is that if we go to avivaindia site and calculate premium through their site the premium for pure term and ROP term plan comes near about the same give or take 5,000 Rs. how is it possible?
        If it is!! then it would make logic to buy ROP term plan.
        Regarding the password issue I tried to register with my old email id it is not accepting, it says email id already taken up or something like that.
        Kindly advice about the term plan vs ROP
        I have 25 more days to pay my yearly premium for the pure term plan which i have taken one year back.
        Thank you and as always it is my honour to have a friend like you.
        Dr. Amarnath Awargaonkar

        1. Amar

          You should do a similar analysis what has been done in the article , see how much is the difference in premium , What if you invest the difference in some other instrument like PPF or Equity funds , can you make more than what you will be paying in total tenure ?

          Show me the maths .


          1. amarawargaonkar says:

            Here is the maths
            Life shield Plus policy
            Term: 29 years
            Premium: 27,818/-
            Maturity benefit: Nil
            Sum assured: 65,00,000/-

            Life shield advantage policy
            Term: 29 years
            Premium: 30,602/-
            Maturity benefit: Return of premiums paid excluding rider premium, taxes and extra premium paid if any.
            Sum assured: 65,00,000/-

            All this calculations done on avivaindia website considering my age as 36 years.

            Please suggest as i am really confused!!!
            How can a company launch such a product where the beneficiary is only the customer?
            Dr. Amarnath Awargaonkar

            1. Amar

              Hmm.. I did the maths , but looks like the return of premium makes sense in this case unless I am not able to decode something hidden , It would not pay the taxes involved , so in the premiums of 30,602 you also have taxes at 10.3% , which means your without-tax premium is only 27541 . So for 29 yrs you will pay total of 8 lacs . Now you can save 30602 – 27818 if you go for first options , Only if you can generate 13-14% return in next 29 yrs CAGR , then you can get more than 8 lacs by investing the difference in some mutual funds , which is possible , but if thats the case ,going with the ROP option might make sense !


  67. Dip says:

    Artical is excellent. However one has to look while choose the Insurance company. Till now, LIC is the best for claim ratio and others (private players) are not tested. And there are lot of hasslement during claim. If Family is getting the claim, what is the point of investing?
    Manish can you write something about this issue?

    1. Dip

      Yes i wll comeup with that soon


      1. Dip says:

        What is Age limit of opening PPF account? I am 45 yrs old. If I open a PPF acount for 15 yrs, it will mature at my age of 60. As per the PPF rule, is it possible? OR is this adviceable to you Manish?

        1. Dip

          No limit on age, you can open it anytime


  68. Satish H says:

    An eye opening article.. Awesome 🙂

    1. Satish

      Thanks for your appreciation 🙂


  69. Varun says:

    Hi Manish,

    First of all great article and superb advice.

    However, I would like to point out one scenario where ROP might look relevant. My acquaintance is 38 yrs diabetic (on insulin). As a result, his term application has been rejected by one company and the initial response from other companies is not very encouraging. This is when someone from LIC told me about the ROP policy. According to him, in ROP, medical is not required and the policy application will not be rejected even after disclosing all the facts.

    So, in this situation, I find ROP relevant, not because it is better that Term, but it is the only option which gives a high cover and the net cost (after adjusting the capital returned) is managable. Do let me know your opinion. In case you wish to suggest any other insurance plan (with a high cover like Term) which is better that ROP in this situation, please do let me know. Some one told me whole life is better, but I am yet to analyze that.


    1. Varun

      Great point. In that case yes ROP term insurance would make sense . When one can not get pure term for medical reasons but he can get ROP , then he can go for it . Whole life plan would not make sense , i am sure on that , You can check Jeevan tarang analysis on this blog . It a whole life plan only .


  70. jignesh says:

    Hello Manish,
    I have 30K per month to save,protect and building wealth. Asset Allocation is about 50% equity and remainig 50%. I dont have any insurance right now. I will turn 30 in Dec 2010. My calculated Insurance amount is 1 Cr. I am confused with ULIP/ Term Plan/ Premium Return Term plan.

    Can you suggest me best way of planning the insurance and investment?

    let me know if you require any more information aside.

    Thanks & Regards


    1. Jignesh

      You should invest in Mutual funds through SIP and take a pure term plan .


      1. Jig says:

        Thanks a lot. Exactly i was thinking for the same. You really made life simple for so many ppls.


        keep it up


        1. Jig

          My pleasure 🙂


  71. Santosh says:

    Hi Manish,
    i want to go for short term investment plan (max 10-15 years) with maximised returns( if insurance is there then added advantage)
    there are 6 policies from which i have been told are good or any other thing you suggest would be best

    1) Aegon religare premium gain plus
    2) tata lakshya plus
    3) Bharti Axa Bright star
    4) Aviva Safeguard
    5) Kotak Super Adv
    6) Birla sunlife dream
    any suggestions which would be best ? or any other policy which is best

    Also please suggest which is the best child plan currently (was blessed with a baby last month )

    regards many thanks

    1. Santosh

      You should not buy any of these . There are ULIP’s and are not recommended unless you are profecient in Markets . Invest in Mutual funds


  72. Hitesh says:

    Manish ,
    I realised it that how simple it is to calculate the returns and even we should do these at the time of purchasing any investment rather than just checking the premiums and the end amount. Thanks for the information.
    Also let me know if there are other calculators for calculating returns on sip, ppf, ulips, etc

    1. Hitesh

      Great to hear that , you seem to not give a look at the top nav and side bar . There are many calculators which you can use .


  73. Hitesh says:


    As read on ur blog, lic policies normally offer returns of about 6%.
    I have a personal example now
    My mom had a Jeevan Sanchay policy. Premium was @6059 for 12 years.Sum Assured was 50000.
    She got 10000 at 4th and 8th year respectively. Now at maturity she is getting 72000. So in all she is getting 92000 aginst payment of 72708. What are the returns ?


    1. Hitesh

      Its exactly 4.8% . Its a wrong way of seeing that she paid 72708 and got 92000 , it matters that when did she get the money and what was the cash inflow and outflow every year . If you do the IRR analysis (the way we calculate return for situation like this) . You will see that following cash inflow .

      3,941.00 (becasue she got 10k and paid some premium)

      4.80% = IRR

      See IRR post in archives

  74. Hitesh says:

    Hi Manish,

    I have these policies from LIC.
    1. Jeevan Anand
    2.Bima Kiran
    3. New Bima Kiran
    4.Endowment Assurance
    5. Money back – 2 nos
    6.jeevan Saral
    7.Jeevan Mitral (half year old)
    Premiums for above is about 45000 and sum insured is about 25 lacs
    Q. Which of above should i retain and which should be surrendered ?
    also can i surrender the jeevan mitra which is just 6 months old ?

    Additonally i have a ulip from max new york (5 years old and current value is same as total invested till date so no profit even after 5 years)
    Premium is about 15000 per year.
    Q. What action to be taken? Retain or wait for more time

    Plus I have two SIPs
    1. BSL tax relief 96 (D)
    2. HDFC top 200.
    Both r almost 7 months old.
    Q. Are they good enough ?

    My age is 29 yrs, married with one son of 8 months and dependent parents (senior citizens)
    Can i think of investing in senior citizen savings scheme @ 9%?


    1. Hitesh

      Your overall Portfolio is so messed up , You are not insured properly and your investments are for the sake of investing and doesnt seem to be linked with your goal .

      What is your total insurance cover ? You can surrender LIC policies only after 3 yr and even after than you wont get more than 30-40% of money .

      you can get out of the ULIP now , it was a bad marriage and now is the time to get out of it .

      You should hire a financial planner or get it done yourself by learning things from this blog .


      1. Hitesh says:

        Yes , after reading some articles on ur blog, even i realised that my portfolio is not planned. And I think so its not late to replan. Actually most of the policies were taken by my mom (agents misguided her). 6 policies r almost more than 7-8 yrs old. If i surrender them will i get more than what i have paid or less ? Then i will go for term plan purely for insurance.
        also can i invest in senior citizen savings scheme, as the returns r @ 9% ?

        1. Hitesh

          I am not sure how much will you get if you surrender it now , In general you should get around the same what you have paid till now including bonus, but even if you make it paid up , you are not going to benefit much , as you will get more , but at very later point ,so overall its the same thing .

          You cant invest in Senior Citizen Saving scheme , unless you are a senior citizen 🙂


  75. Pradeep says:

    Hello Manish,
    Can you confirm one thing,
    One of my friend who wanted to take the term insurance for 40 lakhs, got the reply from a LIC agent that he can only get the insurance of about 22% of his total income. He just joined a company and has starting package of 1.5 lach annually. So according to LIC agent he can only get the term cover of near about 30 lakhs. Is that correct ?

    1. Pradeep

      Yes , it can be the case , company relate the cover amount with the income , so as per LIC they can restrict it to some percentage


      1. Pradeep says:

        Hi Manish,
        But is this applicable to all other companies or just the LIC. and why is that ? After all it is the choice of person whether he wants to invest the whole money in insurance cover or not

        1. Pradeep

          Nope , a person cant have choice like that , as per principles of Insurance , one should not take advantage of Insurance and get himself insured for more than what his worth is . So if a person earns 1.5 lacs annually and chooses to invest 1 lac in term insurance , he can take a cover of 5 crores , which is not possible as a person earning 1.5 lacs will not have a potential cover of more than 50-60 lacs , or max 1 crore , so its generally restricted at some level .

          This will be true for other insurance companies also , so you cant take term insurance for any amount , there is a limit, and companies will tell you that , thats the reason why you should disclose your cover to other companies so that you are not “over insured”


          1. Pradeep says:

            Thanks Manish,

            I just came to know that he has one more money back policy on his name from LIC, so it might be the case.
            Thanks for the information

  76. chakri says:

    Hi Manish,

    From past 1 week I am browsing for sites which gives me some idea on mutual funds, investing and insurance. Your site is simply superb.
    Kudos to you.

    1. chakri

      Thanks 🙂 . Do keep posting your comments 🙂


  77. Padmaja says:

    The maximum term in a term insurance plan across all the major insurance providers is 20-25 years.

    I found ‘Bharti Axa Elite Secure’ to be different from the rest which provides life cover till the age of 75. Wouldnt it be advisable to take a life cover with maximum term. Of course, the premium is definitely higher when compared to Religare i term.

    I would like to know if only cost should be taken into consideration or the age of individual and term for which they need to be covered also to be considered before taking a term insurance plan.

    1. Padmaja

      I mailed you 🙂

      Anyways .. you can take the insurance till 75 if you plan to work till then and if someone is going to be financially dependend on you .. Insurance is protection against the loss of income , so if you are planning to retire around 55-60 , you should look at retirment date – current date kind of tenure .


  78. ronak kumawat says:

    hi manish ..

    thk 4 reply..

    please provide your valuable feedback on the following MF portfolio:-

    uti master share ( D)
    reliance regular saving E. share (G)
    reliance natural resources (G)

    require your suggestions.
    Is there any risk associated here?

    plz suggest me more funds ..
    (i want 2 invent 2 to 3 thousand per month )

    i also want to do insurance policy or ulip ., which is more suitable for me . my age is 22 ..

  79. Vinoth says:

    Dear Manish

    Nice to read all your views. I am 35years old. Do you have any info on Met Suraksha Plus Term life insurance? Their website calculator is quoting me the cheapest per annum for 25 Lakhs and for 30 (Rs 9183) or 35 years (Rs 10562). Is it worth to go for the longest term 35 years or for a lesser term like 25 or 30 years? Only LIC and Metlife offer term life for 35 years. Your inputs on this will be highly appreciated.


    1. Vinoth

      All the term insurance plans are same except the premium cost and claim ratio . LIC is considered the best in claim ratio but its costly . you can take this one but make sure you split your cover in two 🙂


  80. Vivek says:

    Dear Manish,

    Thanks for your comments.

    For insurace I have just taken one example of family health, company have lot’s of reasion to reject your claims. How policy holder get all the list of reasions before taking policy because there is no use of taking term plan if your claim is rejected by the company.

    For term plan I should go with LIC+iTerm or iTerm only.

    I am planning to invest 5K every month from my salary in above MF. As you said SIP is better than one time investment. I have 30K please suggest how to invest this money for long term.

    Thanks & Regards,

    1. Vivek

      Take the SIP in 2-3 good funds , invest whatever is comfortable for you every month , the key is consistency .


  81. Vivek says:

    Hi Manish,

    I want to take term plan but have some queries.

    1. Go for goverment(LIC) or private fund(iterm).

    2. What I think both the companies don’t like to give money to your family, they have lots of reasions to reject your claim. If my family don’t get any amount from companies so what is the perpose of term plan. For example death happen due to breaking traffic rule or some family disease that you have not mentioned in you policy becasue you never notice while taking policy .

    3. Tell what steps we need to take so that I we can insure that company will not reject my policy claim. While selling policy companies don’t highlights points that they show during claim process.

    Please suggest how to acheve my future goals
    My age is 28,software engineer, married, one six month old boy, monthly salary 45000,staying in rented house cost 10000 per month.

    Future Plans:-
    Want to take Term Plan
    Want to Buy House
    Want to take Child Education plan

    For Retirement taken SBI Pension Plan–annual premium 50000
    For Health Insurance — Company provided 1.5 Lac Family Cover

    My Mutual Fund Investment plans are to start SIP
    1. Reliance Regular Saving Equity(G) — 1000 SIP(Monthly)
    2. Sundaram select midcap(G) — 1000 SIP(Monthly)
    3. HDFC Top 200 — 1000 SIP(Monthly)

    Can Robeco Equity TaxSaver — 1000 SIP(Monthly)

    Please suggest……….

    Thanks & Regards,

    1. Vivek

      You are asking for doing financial planning here 🙂 . As we cant go in that much detail here as it will takes hours to plan and evaluate things , i will give you a fast review and what are the answers .

      Insurance :

      You can take insurance from any company , but make sure you fill in details well . You mentioned about “not mentioning family disease because we never notice it” . Now this is an issue on customer side, we are taking an insurance policy , its our responsibility to take care of these things . if someone does not investigate about these things in family and give uncompleted information , its not company problem , they have the right to reject the claim and “they should” .

      Investments :
      You have to plan each of them seperately , find the amounts you have to save per month (use monthly calculator i have on this blog) . Mutual funds , ETF , gold ETF , index funds , real estate are some of the things you have to use .


  82. Rana says:

    Dear Manish,

    I am planning to buy a single invest policy from Kotak for 5 lacs premium, do you think it is going to earn me a reasonable return in 5 years time…..or else what is your suggestion considering that this money I wish to invest for my son who is about 8 years old and I wish to park this for his higher education.



    1. Rana

      What you suggest looks like a ULIP . I would suggest using other plain products to plan child education . Did you go through ?

      You have close to 15 yrs in hand , so you can use Equity funds + ETF + Gold ETF + PPF or debt funds .


  83. Patrick says:

    Dear Manish,

    Thought through this and here’s my final QUERY !!

    The difference amount between a Term and ROP plan for same death coverage amount and same term period, if invested in a recurring deposit will fetch me how much in 20 years?

    Are the deposit rates and inflation rates going to be fixed through out??? so we can do the compounding calculation without any doubts. In case we get a fix on this figure and that is a guaranteed higher amount than the amount of premium paid in a term plan then this should help me find my fix to this debate !!!

    Help solicited…… 🙂


    1. manish says:


      The deposit rates and inflation rate would not be same .throughout the term ,, but then we can see what is average numbers and the standard deviation of it and calculate it using two numbers on min and max side . lets discuss this sometime on another article i will come up with .


      1. Patrick says:

        Dear Manish,

        While you are guiding all of us lost/misguided investors here, it would be a nice coclusion to answer my last question in details…..since this link is important for a decision on ROP vs TI for every Indian in this dilemma??

        The answer is there is no guarantee on your investment related return side even on the fixed return instrument side (a mean or a median or a standard deviation calculation is a approximation in the end and not a proven rule ), so suggest we leave aside any statistical equation to prove the future happenings and guide other investors to a conclusion without even having any proof to substantiate any futuristic assumptions……even the Nobel laureates were unable to predict regarding the financial breakdown of 1930s and 2008 !!

        While your blog is rather honest in its approach, you my friend are also in the getting into the zone of prediction, which is not beneficial for anyone reading this link.

        The truth is either its guaranteed or its not… why take help of maths…..stats…algorithms…astrology….. calculated risk etc…. to predict anything at all!!!!

        I sign off …….. hoping 21/12/2012 is not happening since astro scientists have calculated through complex statistical and mathematical methods since the Mayan culture that a judgement day is in the offing!!! So did they when we were hitting Y2k…..:-)

        Thanks for your views anyways…..

        P.S.: Dear Readers this is not my blog page so I do not intend to directly point out the right and wrong of any individual’s views and I do not intend to run any blog in future, but I guess my logic should be good enough to tickle your judgement.

        1. manish says:


          thanks for your inputs .. so finally what have you decided . ROP or Plain term ?


  84. Patrick says:

    Dear Manish,

    Thanks for your prompt response !!

    Well I have re checked on these figures and spotted the error on my part while writing the blog note,apologies for that!! The returns guaranteed under this plan is 16 lacs at the end of 25 yrs, whereas my premium payment term for approx. 25 k per annum, is for 16 yrs only. So I pay a net total premium of around 5 lacs and get 16 lacs at the age of 52.

    Now we have say around 15 lacs guaranteed cash flow at 52 and the next idea was to safeguard my property investment by taking an additional death cover of around 85lacs for which I am planning to buy an insurance….and hence the idea of buying ROP insurance plan.I am not here to disagree with any part of your blog, but I guess its a difference of risk appetite that we have here and hence while I am fighting the mental battle before signing up,and thats when I saw your blog!! While I agree the term will be a cheaper option, its also a full loss option if I don’t die, but ROP being almost double the cost for a similar death cover at least is giving my money back along with a meager return of 10% on premium paid amount.So here’s my take….

    a) since I am not willing to part with my capital invested in a term plan which does not return anything back to me incase I don’t kick the bucket, ROP makes more sense.
    b) The plan I have in hand from metlife suraksha is giving me a paltry additional top up of 10% of my net premiums paid on maturity.Well the returns are insignificant but still scores above a traditional term which will cost me much lesser and not even return my 4~5 lacs that I will have to shell out during this time frame.

    While I am invested in the markets through other channels( SIP/ELSS etc.) the rest of my investible amount which is variable but certainly much higher than my premium amounts out together is of course growing at significant higher return rate, I am kind of convinced that in the event of my death between now and 60,whatever accumulation would occur ( insurance and investments added up) will add up to my dear to life event costs !

    What’s your take??


    1. manish says:


      So if the term is 25 yrs , in that case the return works out to be around 7.5% .

      >>> r=.075
      >>> (25000*(1+r)*((1+r)**16 – 1)/r)*((1+r)**9)

      However , still i dont think its 7.5% . It might be less than that as the bonus amount is still not fixed and other LIC policies do not cross 6% . Will need more investigation on this .

      Now coming back to this same thigns , please try to change your focus from returns and lets see other critical factors like

      – Liquidity (how liquid is this policy)
      – What kind of flexibility it gives to you every year (what if some year you dont have money to pay premium or you have less money )
      – What is the opportunity cost ? (if you stop this and start redirecting the money to some thing else)

      Now the ROPTI and TI , still i am not understanding why you are inclined towards ROP thing , In this same article I have shown how you can outperform the ROP by taking the plain term insurance and investing the rest in some long term investment like MF or PPF or something else .. It does not depend on risk appetite here . Its just mental blocking I suppose ..

      Suppose you pay Rs X for Y insurance and Z money back after N years , Can you outperform that that same setup by paying same Rs X by investing rest amount in MF or MF + PPF or some combination . Try to think yourself and then revert back .

      So at the end , the final note from my side is .. You can surrender your LIC and then from now onwards take a pure term insurance for 1 crore (split in 2) and invest rest of it in mix of MF , PPF , Gold ETF and other products .. this will be painful as it involves “changes” and “coming out of cushion” one is lying on till now … so its tough 🙂

      What do you feel ?


  85. Patrick says:

    Dear Investment Guide ,

    Quick check…..for the nth time but am still caught in the maze…!!

    I am 35, married with a kid of 3 years…. have an existing LIC Jeevan Shree for which I pay abt 25 k per annum the amount assured at the end of 16yrs is around 15 lacs, need a cover of about 85 lacs additional to make it a crore on my life since I have bought a property for a similar value.

    I am stuck with the idea of giving up all the premium amounts for the next 20 years to a term policy in case I don’t kick the bucket !! So, I went around searching for ROP (return of Premium ) plans. The logic is, I want to get my money back in capital invested terms plus what ever more the insurance company wishes to return!!

    Further up the rest of my savings are all towards SIPs/ ELSS / MFs for the last 7~8 years, so am pretty covered on that ground, since I always felt this was the best way to lower my cost of buying into market related instruments in tax efficient manner, instead of creating wealth through strangling ULIP plans !! Metlife gave me a decent offer of Met Suraksha TROP, in which I calculated that for 85 lacs of additional cover I need to pay around 50k for 20 yrs term and get a Guaranteed maturity return of my premiums paid, alongside with a 10% of the net premium paid as an additional guaranteed amount thrown in by the company over and above my net paid up premium amount.

    This seems like a decent idea than getting a pure term for 85 lacs cover where I loose the entire money in case I do not pop it!! And moreover even if I pay a lower premium amount for a term plan and increase my investible surplus towards market related instruments barring PPF/ NSC/ RBI / FD /TD s, there is no one giving me a guarantee on the MF items!! (All of these debt instruments to my mind will not bear a decent return, in case you account for cost of inflation viz. CPI index in the net yield)

    What would be an ideal mix in this case….would much appreciate your comments on this please.


    P 🙂

    1. manish says:


      there are some points I need more explainations.

      You said that your LIC jeevan shree policy will pay you 15 lacs after 16 yrs with 25k per annum premium and thats “guaranteed” . Now it translates into 14.5% return annual . There is no LIC policy in this universe I know of which even beats inflation !! .

      >>> r=.145
      >>> 25000 * (1+r) * ((1+r) ** 16 – 1)/r

      Even we dont expect a return of 14.5% from equity forget LIC policies which are mainly debt .. It looks to me a misselling of LIC product which promise from agent who gave you illustration to you with fancy figures .. I wont be excited with your claims untill you confirm with me that your policy document says that its “guaranteed” and not “illustration figures” with different interest figures .
      I dont think you will get more than 7.5 lacs from your policy at the end of 16 yrs . Kindly investigate .

      Next thing is after going through this article, still you want to go with “return of premium term plans” .. Why ? What part do you disagree with on this article .

      lets brainstorm 🙂


  86. Himanshu says:

    thanks dear….will keep on nagging you for some more financial advises. Trust you wont mind. 😉
    Cheers !!

  87. Himanshu says:

    Dear Manish,

    I was searching for something else on google but got into your writings. Its simply amazing and the langauge is so simple that gives a feeling of live talk. In short, I have become your fan.

    Now, can you please advise me on how to plan my investments. My details are –
    Age – 29
    Martial Status – Unmarried
    Monthly Salary – 35K
    Monthly exp – 12K

    I have few insurance policies from LIC (premium 6331 p.a.), Relaince Life Insurance (15K p.a. – thoroughly useless policy) and every year I buy NSCs. I want to know
    – which insurance co. is good to go for Term plan (coverage??)
    – good funds for SIPs and how much would you advise (does this give any tax relief)
    – any alternate for PPF?

    Trust me , this will really help.

    Thanks for all free advises buddy !! 🙂


    1. manish says:

      Thanks for your comments

      Here are the answers

      Q : which insurance co. is good to go for Term plan (coverage??)
      Ans : Depends on how you define “Good” .. If you are asking in Price term , then Aegon Religare is the cheapest (I would prefer to take from them) . If you are talking about Claim ratio then LIC is the best right now .. but i think thats obvious , we dont have others history , we dont know the claim settlement of Term Insurance , so i cant say anything .. its now a question of how comfortable you are with Pvt companies .. which i feel can be considered (should be considered) . Insurance sector is seeing some huge shifts now and IRDA is the bid daddy making sure there is no problem . So i recommend that you can just go for the cheapest one . Split your cover into 2 .

      Q: good funds for SIPs and how much would you advise (does this give any tax relief)
      A: There are ELSS funds (Tax saving mutual funds) which comes under sec 80C and give your tax benefit .it will get locked for 3 yrs . some good funds are Sundaram tax saver and HDFC taxsaver , you can also see other non tax saving funds at my article

      How much you should invest depends on your goals , classify each goal and find out what is the target amount and time and how much you need to invest per month .. you can find that info on my blogs itslef .. find it 😉 ,

      Q : any alternate for PPF?
      Ans : EPF (your company PF) is another option , make sure you put max into your EPF , but still open a PPF account , 500 a year is nothing 🙂


  88. Manish Chauhan says:


    Depending on your age , you pay the yearly premiums for a term plan .

    Total you have 72k in a year , so after paying for Insurance premiums , what ever is remaining you can divide that in PPF and SIP .
    Choose 2-3 good Mutual funds from the list I have provided .


  89. Pravesh says:

    Manish sir ! I am PSU employe and want to invest Rs 6000 monthly in TERM Plan +
    SIP (Equity diversified) +
    PPF . kindly advice me where to invest.

  90. Manish Chauhan says:


    Thanks a lot for your kind words 🙂 . The more simple a concept or process is , the more appealing it becomes to masses and hence more important 🙂 .


  91. Vikas says:


    Once again Excellent post to read. If one can understand English language, they can not only understand what you write but also implement and use their common sense. No big hype. I am indeed your fan of "keep it simple" writings:-) Vikas

  92. Manish Chauhan says:


    Yes , I like Aegon Religare a lot for the way it has taken Insurance sector . The premium is least but people are not aware of the company because of Public-private fear 🙂

    Call me at 9886409654 or mail . I am sure we can talk on this 🙂


  93. Rahul Nair says:

    Hi Manish,

    I am a manager with Aegon Religare based in Mumbai. You seem to rightly have a positive impression of Aegon even though its new in the Indian market. It would be great to have a talk on this some time.

  94. Manish Chauhan says:


    I am glad for the Invitation 🙂 . Definately i would meet you when I visit the place sometime 🙂 .


  95. Amarnath Awargaonkar says:

    Dear Manish,
    Thanks a lot your guidance as always is inspiring.
    I do not live in bangalore but in aurangabad, maharashtra.
    If you visit do come.
    Our family also owns a hotel in aurangabad.
    It goes by the name of Hotel Panchavati. We have a website also if you want to check out.The link is
    I would gladly play host to a person who lends such important advise free of cost.
    Cheers and keep it up.

  96. Manish Chauhan says:


    Mind Blowing ….. other word is "sweet and simple"

    You have choose the perfect way .

    SIP will give you good returns
    PPF will help in stable and guaranteed returns .
    Term Insurance will take care of Risk

    and the fund you have choosen are great and that will help in diversifying .

    Funds look good , You can also look for alternatives of ICICI Ifra Fund , even ICICI is great , the only think is look for other opportunity if exists .

    I can sense that your Insurance requirement is around 40-50 lacs atleast . So you can go for 30 lac of more insurance , you can take it from SBI or Kotak etc . If you are in bangalore let me know i will connect you with my SBI agent , he is good 🙂


  97. Amarnath Awargaonkar says:

    Dear Manish,
    I am a govt. servant aged 35 years.
    earning rs.28k a month.
    I want to start a Term plan + SIP + PPF combo plan as discussed earlier and i will be able to invest in that for another 20 years.

    I will start from August One 2009 an SIP of 5,000 as below:
    1)DSP black rock Top 100 fund – 1.5K
    2)Reliance RSF equity fund – 1.5K
    3)ICICI Prudential infrastructure fund – 1K
    4)Sundaram Select Mid cap fund – 1K


    5,000 more will go monthly in PPF. I have opened an PPF account in SBI recently.

    I have a aegon religare term plan of 20Lacs,
    I want to take another term plan what should be the cover? and which company do you suggest?
    Also regarding the SIP what are your views regarding the above funds. If you have a better advise please tell.
    If some additional information is needed i will provide it.
    Thanks A Lot.

  98. Amarnath Awargaonkar says:

    Dear Manish,
    For a long time i was thinking on the super combo plan but never thought it was good untill i read your blog.
    You are doing a great service to every small investor. Please keep it up. Your prompt response also has impressed me a lot.
    As of now you can be assured that i am your regular reader. I will also recommend this blog to all my friends.
    Keep it up buddy and may god bless you for your selfless service.

  99. Manish Chauhan says:


    I am 26 yrs old (completed) and The best quote for me is from Aegon Religare at 21,000 per year fr 1 crore or (18,233 montly) After taxes .

    Which plan is yours and how is it better than this ?


  100. rakeshranjan says:

    as i think that term insurance with SIP investment is more profitable. i have a good plan in whilch u can get insurance of 10000000 by paying just 1923/= per month. for more information contact me on+91- 9650055981

    1. pazhanivel says:


    2. vel says:

      i read ur nsg. can u explain that

    3. Gaddam says:

      I would like to know about your plan.please help me.

  101. Manish Chauhan says:


    oops , where did i say that SIP is worst in falling markets , i said that for rising markets in some post , never for falling markets 🙂

    I agree with all you said for falling markets and SIP in your comment . well done


  102. Amarnath Awargaonkar says:

    Dear Manish,
    Whichever way you look at it a
    TERM Plan +
    SIP (Equity diversified) +
    PPF is a super combo for every investor.
    However i do not agree with the logic that in a falling market SIP is the worst thing. Infact a falling market always down averages the price and if you ride the downturn the profits are enormous whenever the markets move high.
    The latest upsurge in the market only helped a disciplined investor i.e a sip holder and even if the market trade down from here the same will happen again. Markets will keep falling then stop make a base and surge ahead when things improve, only an sip holder in such a situation will have the advantage, nobody else. You have the PPF which ensures a steady guaranteed return.
    The more complicated the products the more an investor loses.
    With SEBI now removing entry load SIP is the best.

  103. Manish Chauhan says:


    I am not joking , I truly bad in Real estate knowledge 🙂 … I know little .. I will try to write something on it .. but cant promise ..


  104. Yogi says:

    Hi Manish,
    I am regular audience to your blog.
    I really appreciate your initiative.
    I am looking forward to buy a house in another 6-8months timeframe.
    If possible, please post some articles on
    How to select right bank/institution for home loan?
    what is better floating interest rate or flat rate?
    What should be a good tenure of loan?
    How much loan can be sanctioned based on an individual’s income?

    …etc etc

    Yogesh Tiwari

  105. Manish Chauhan says:


    1. Both are among “good” category .. personally i like Religare more … I personally have one policy with SBI , and this time I am going to take another Policy with Religare too .

    2. Yes , its better to split up the policy in 2 companies … I am not sure if 20 lacs is sufficient for you , may be your would like to go up . Split it in atleast 2 companies …

    3. Its your choice , You have to work out what suits you … See if you want your cover to go up every year or not … If yes , then you can go for increasing one .

    4. AR also tells you total premium after tax , SBI does not … See the premium page .


  106. Kishork says:

    Manish, Thanks for the nice write up.

    After all the “Gyan” I got for reading your and different blogs; I’m currently in market for a Term Plan.

    1) I zeroed on SBI and “Aegon Religare” as the two potential companies that I would go for. Which one you think is better? (Only worry is that Aegon is newbie and SBI here to go nowhere).

    2) Also, I need 20 lakh cover now, should I split them (Into multiple policies with multiple companies)? (So that I can discontinue one when I do not need that much cover?) If I split the premium would go up

    3) Should go for Level Term Plan or Increasing Term Plan (Both SBI and AR offer it).
    If I can go for Increasing Term Plan then probably I can avoid the spilt?

    4) Lastly, do you know SBI and AR web sites include Service Tax in their premium calculations? (I can ask an agent, but they will suck my blood and ensure I take a wrong policy)

    Your help would be much appreciated

  107. money says:

    Hi all,Please have a look at this blog

    For retail Investors and Traders this blog is very informative and all set at one place.

    You can chat and share your thoughts on markets,Direct links to all useful sites and Blogs.

    Moneyvistas Team.

  108. money says:

    Hi all,Please have a look at this blog

    For retail Investors and Traders this blog is very informative and all set at one place.

    You can chat and share your thoughts on markets,Direct links to all useful sites and Blogs.

    Moneyvistas Team.

  109. Manish Chauhan says:

    Thanks income.portfolio

    Yes … You said it write … All that financial experts dont know more than informed investors like me and you all who are this blog readers …

    Cheers 🙂


    1. vandana says:

      me toooooo agree with you ……you said correct!!!!!!!!!!!!!!!!!!!!!!!!!

  110. income.portfolio says:

    Couldn’t agree with you more! The simpler it is the better. All these financial engineering is a hoghwash to fill there own pockets.

    It was a good read!!

    Best Wishes,
    TIP Guy

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