### LICs combination of samruddhi 12 year premium and life time returns ?

POSTED BY ON December 22, 2011 4:25 pm COMMENTS (2)

Hi,
Recently my LIC agent told me about a plan which is combination of LIC samruddhi and some other plans. It seems close to Jeevan Tarang plan as it gives back inverstor/insurer life time same amount that he paid every year.
Plan is like this :
For the first 12 years pay 1,00,000/- per year.
After completing 12 years you will get 1,00,000/- per year by LIC for life time/ 100 year age limit.
Also after starting the policy risk cover starts which is @ 17,00,000/- (double in case accidental death) and this will last till age 80.
From 80 to 100 year of age no risk cover.
Plan comes with minimum premium of 50,000/-. In this case you will get 50,000/- after 12 years. Remaining terms are same.

## 2 replies on this article “LICs combination of samruddhi 12 year premium and life time returns ?”

1. Dear Milind, the agent is making fool of you. How here it is – You did not quote your age so I assume it’s 30Y for you. The Term cover of 34L Rs. of LIC’s Amulya Jeevan policy for 35Y ‘ll cost you 13192 Rs. only. So out of those 1L Rs. you are now left with actual amount to be invested = 86808.

Now the real magic starts – Invest this 86.8K figure in a simple product like PPF & calculate yly interest rate @ 8%. (It’s recently hiked to 8.6%, but I’m calculating on conservative estimates). At the end of 12Y, your fund value in PPF is almost 17.8L Rs. From that you ‘ll withdraw that 1L Rs. amount as well as the prem. to be paid for term cover, total 113192. Next year i.e. year 13, the fund value ‘ll go up to 18L Rs. & accordingly it ‘ll keep on going high, higher & higher.

At your age 85, the fund value in PPF ‘ll be 90L Rs. yes you read it right, 90L Rs.

Should I say more for this combo offered to you by that agent or are you good enough to refuge your agent for the garbage offered to you.

For simplicity as well as making things comparable I did not mention to inves that amount in Eq. MFs instead of PPF.

Thanks

Ashal

Hi

I did a small calculation in the excel sheet based on the values given by you.

Initially i was bit astonished to see the numbers without calculating the rate of returns.

On calculating the returns only I came to know the truth.

say Insurer s age :25.

he lives up to 100.(He receives 1,00,000 every year)
After the 100 th year the annualized returns earned by him would be around 6 percent…
the return will be reduced as insurer sage increases.

generally for long term wealth creation we need to avoid these kind of money back,endowment policies.

we need to adopt term insurance and Mutual funds based on our risk profile for our long term wealth creation.

so conclusion it is better to avoid this policy

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