Hi,
I have tried to calculate LIC’s – whole life endowment policy-IRR.
All data input are from LIC declared information from LIC website.
Policy : Whole Life Policy Plan Number-2
As per policy document, the policy will cease at 40th policy year with benefits like;
Total benefit= SA (Sum Assured)+ Bonus+FAB(Final Additinal Bonus)
In my case; age=27, premium =~ 12000 p.a., premium paying term=40
SA= 5,00,000. Riders opted( Accident Benefit+ 5 lakhs critical illness)
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As per Bonus information of LIC website 2010-2011,
bonus for plan-2= 70 per 1000.(same bonus in 2009-2010 also)
FAB per 1000 for a 40years policy = 3550 (It’s true)
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So when I turn age =67 (after 40 years) believeing that
bonus 70 per 1000 and current rate of FAB;
Total Bonus per year= (5,00,000/1000) X 70= 35000
40 years’ bonus= 35000 X 40= 14,00,000. (14 Lakhs)
40 FAB (assuming current rate) = (5,00,000/1000) X 3550 = 17,75,000
Total benfit= SA+Bonus+FAB= 36,75,000
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So, I am getting 36.75 lakhs investing 12000 per year for 40 years.
My calculation information are collected from LIC website (www.licindia.in/bonus_info.htm)
Along with a 5 lakhs ciritical illness and 5 lakhs Accident benefit.
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Experts what is your view? Am I correct?
kindly Help me calculate IRR on this investments.