This is in continuation of my previous post. Reason to choose new thread I could not post a table in the comment part (Comments are just plain text).
Some Background
“I had taken LIC Money Back policy (Plan Table 75) back in Dec-2003 for 20 Years term. I am paying Rs 31364/- as annual premium for Sum Assured of Rs. 5 Lakh.
Till Dec-2013 I have paid 10 premiums and 10 are still pending. In my online LIC account it shows the vested bonus as 1,81,500/- I have already received 2 cash back of Rs 1 Lakh each at the end of 5 (Dec-2008) and 10 (Dec-2013) years respectively. “
After calculation as mentioned in below table I have decided to surrender my policy even after 10 years (Half of the Policy term) looking for better returns of my investment.
The assumption here is that if I could generate annual returns of 9.5% or more with the Surrender Value and Pending Yearly Premiums (10) I will get more returns than the total returns including one more Cash Back after 5 years and Maturity Amount after 10 years.
Considering a long term of 10 years it should not be difficult to generate a annualized returns of 9.5% or more.
Policy Start Date |
28-Dec-2003 |
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Policy Maturity Date |
28-Dec-2023 |
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Total Payment Terms |
20 Years |
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Pending Term (Years) |
10 Years |
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Yearly Premium |
31364.00 |
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Current Surrender Value as on 30-Jan 2014 |
1,10,770 |
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Expected Maturity Value After 10 Years |
650000.00 |
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One More Cash Back After 5 Years on 28-Dec-2018 |
100000.00 |
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0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Interest Rate % |
In 10 Years Recurring
Premium will Grow To(A) |
In 10 Years Single Deposit of Surrender Value Will Grow To
(B) |
Total Returns After 10 Years on Surrendering the Policy Now
( C ) = (A) + (B) |
In 5 Years Cashback ( in Dec-2018 ) will Grow to
(D) |
Total Return on Continuing the Policy = 6,50,000 + ( D )
( E ) |
Benefit in Returns on Surrendering the Policy Now
( F ) = ( C ) – ( E ) |
8.5 |
504838.0 |
250449.1 |
755287.1 |
150365.7 |
800365.7 |
-45078.5 |
9.0 |
519397.0 |
262232.9 |
781629.9 |
153862.4 |
803862.4 |
-22232.5 |
9.5 |
534396.0 |
274513.3 |
808909.3 |
157423.9 |
807423.9 |
1485.4 |
10.0 |
549848.0 |
287308.9 |
837156.9 |
161051.0 |
811051.0 |
26105.9 |
10.5 |
565764.5 |
300638.7 |
866403.3 |
164744.7 |
814744.7 |
51658.6 |
11.0 |
582160.7 |
314522.7 |
896683.4 |
168505.8 |
818505.8 |
78177.5 |
11.5 |
599049.9 |
328981.0 |
928030.9 |
172335.3 |
822335.3 |
105695.5 |
12.0 |
616446.3 |
344034.8 |
960481.2 |
176234.2 |
826234.2 |
134247.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
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Regards
Arun