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POSTED BY ON February 22, 2014 10:08 am COMMENTS (7)
I was mis sold Birla SunLife Vision Plus insurance policy.Kindly go through the followings details & advise me whether to continue or discontinue it.I have paid the first premium till now & I am 26 yrs now.
Premium : 100000/
Commencement date: 31.05.13
Policy paying term(GSB) : 21 yrs last due on 31.05.33
Sum Assured: 19,47,860/
Guaranteed Survival Benefit: 26,99,733/
Monthly Addition: 8473/ (for FS:2013-14,it is subjected to change every year)
On survival of GSB term 21 yrs:
G.Survival Benefit=26,99,733/
Total Monthly Addition=8473*21*12 (considering Rs 8473 avg monthly addition)=21,35,196/
Total Maturity Benefit=26,99,733 +21,35,196=48,34,929/
Maturity value is tax free under 10(10D)
I have done the IRR calculation in the attached excel file.Kindly review that & tell me if I am wrong.
Doubts
Initially I was mis-sold these policy as an investment tool & letter on I realized my mistake.I fall under 30.9% tax bracket.
First of all whether my IRR calculation saying 7% return is right or wrong? Should I stop paying more premium or should i continue? If i stop paying premium then where should I invest that money to gain long term tax free return other than mutual fund? I alredy invest 100000/ in PPF in on 1st april each yr.I invest 10,000 pm in Mutual fund & 3000/ pm in ETF.
I am grateful expecting your kind reply.
Regards,–
PRIYAJIT
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Dear Priya, it’s my pleasure.
Thanks
Ashal
Dear Priya, w’d you like to amputate a finger today or an arm tomorrow? Please do note even a simple product like Fd ‘ll provide much better return for this remaining 2Y period. Choice rests with you.
Thanks
Ashal
Thanks Ashal…got ur point.
Under Paid UP
31.05.2013 0 -100000 0 -100000
31.05.2014 1 -100000 0 -100000
31.05.2015 2 -100000 0 -100000
31.05.2016 3 0 0 0
31.05.2017 4 0 0 0
31.05.2018 5 0 0 0
31.05.2019 6 0 0 0
31.05.2020 7 0 0 0
31.05.2021 8 0 0 0
31.05.2022 9 0 0 0
31.05.2023 10 0 0 0
31.05.2024 11 0 0 0
31.05.2025 12 0 0 0
31.05.2026 13 0 0 0
31.05.2027 14 0 0 0
31.05.2028 15 0 0 0
31.05.2029 16 0 0 0
31.05.2030 17 0 0 0
31.05.2031 18 0 0 0
31.05.2032 19 0 0 0
31.05.2033 20 0 0 0
31.05.2034 21 0 690704.1429 690704.1429
IRR= 4.3%
Dear Ashal
Thanks for ur reply.I didnt get ur point.What is Gtd? My only assumption is that I hav considered Rs 8473 monthly bonus, which I am getting for this FY, to continue for next 21 yrs which it may be or may be not.I have already mentioned that every yr in the month of April I consume my PPF limit.
Now neither I want to continue it nor i can forget my 1lakh premium.I can make it paid up only after 3 yrs i.e i have to give 2 yrs premium more but in that case the IRR would be 4% (plz refer my calculation below).Hence i dont want to make it paid up.Now only 2 options left either continue or forget(which is indeed vry tough)ab the premium paid.
Dear Priyajit, the basic fault in your calculation, you are counting 8473 Rs. Gtd. which is not the case. With 1L Rs. yly prem. paying capacity, it means you are earning 12-15L Rs. at least in 30.9% Tax slab. Even a simple product PPF ‘ll return you better than this policy.
Thanks
Ashal
sorry not being able to upload the excel file showing IRR calculation.
BSLI VISION PLAN
Year Outflows Inflows Total
31.05.2013 0 -100000 0 -100000
31.05.2014 1 -100000 0 -100000
31.05.2015 2 -100000 0 -100000
31.05.2016 3 -100000 0 -100000
31.05.2017 4 -100000 0 -100000
31.05.2018 5 -100000 0 -100000
31.05.2019 6 -100000 0 -100000
31.05.2020 7 -100000 0 -100000
31.05.2021 8 -100000 0 -100000
31.05.2022 9 -100000 0 -100000
31.05.2023 10 -100000 0 -100000
31.05.2024 11 -100000 0 -100000
31.05.2025 12 -100000 0 -100000
31.05.2026 13 -100000 0 -100000
31.05.2027 14 -100000 0 -100000
31.05.2028 15 -100000 0 -100000
31.05.2029 16 -100000 0 -100000
31.05.2030 17 -100000 0 -100000
31.05.2031 18 -100000 0 -100000
31.05.2032 19 -100000 0 -100000
31.05.2033 20 -100000 0 -100000
31.05.2034 21 0 4834959 4834959
IRR= 7.06%