Dear friends, There is a new money back product on offer from LIC with GTD. Returns. The plan is open for purchase from 16th February, 2009 to 31st March, 2009. The prem. paid are eligible for Section 80C Tax benefits as well as money back & maturity amounts are also Tax free underSection 10 (10) (D). Here is the plan scan for benefit of all of you.
Minimum Entry Age: 15 years (completed)
Maximum Entry Age: 66 years (Nearest Birthday) for 9 years term policy, 63 years (Nearest Birthday) for 12 years term policy
Policy Term : 9 years & 12 years
Premium Paying Term: 9 years
Maximum Maturity Age: 75years (Nearest Birthday)
Minimum Sum Assured: Rs. 75,000/- for monthly ECS mode : Rs. 50,000/- for other modes
Maximum Sum Assured: No limit
PREMIUM PAYMENT MODES: Yearly, Half-Yearly, Quarterly, Monthly (by ECS mode only).
For 9 Years Policy Term
15% of the Sum Assured is payable at the end of 3 years.
25% of the Sum Assured is payable at the end of 6 years.
60% of the Sum Assured is payable together with Guaranteed Additions, and Loyalty Addition, if any, at the end of 9 years.
For 12 Years Policy Term
10% of the Sum Assured is payable at the end of 3 years.
20% of the Sum Assured is payable at the end of 6 years.
30% of the Sum Assured is payable at the end of 9 years
40% of the Sum Assured is payable together with Guaranteed Additions, and Loyalty Addition, if any, at the end of 12 years.
In case of death of the life assured during the policy term, the full sum assured is payable irrespective of the survival benefits paid earlier.
On death during the policy term excluding last policy year: Sum Assured with accrued Guaranteed Additions
On death during last policy year: Sum Assured with accrued Guaranteed Additions along with Loyalty Addition, if any.
Guaranteed Addition :
The policy provides for Guaranteed Addition at the following rates:
Rs. 65 per thousand Sum Assured per year for a policy of 9 years term.
Rs. 70 per thousand Sum Assured per year for a policy of 12 years term.
I calculated the return generated by this policy for a healthy male aged 30 years & sum assured of 10L Rs. with annual prem. Mode (to get highest rebate on tabular prem. Thru annual prem. Mode & high sum assured) for both term 9 & 12 years. For 9Y policy the prem. is 153909 Rs. per annum & for 12Y policy the prem. is 157094 Rs. per annum. Now plz. Go thru the following calculation. Here I had assumed the money back received from the policy ‘ll be reinvested till maturity of policy to earn post tax return of 8%.
1. 9Y Term
A. Total prem. paid over the policy term = 1385181 Rs.
B. 1st M/B (Money Back) after 3Y = 150000
C. Value of B at policy maturity (after remaining 6Y) = 238031
D. 2nd M/B after 6Y = 250000
E. Value of D at policy maturity = 314928
F. Final M/B at policy maturity = 600000
G. Gtd. Addition @ 65 Rs. per annum per 1000 SA = 585000
H. Loyality addition (not Gtd.) = 50000
I. Total Maturity amount = C+E+F+G+H = 1788000 Rs. appx.
For an annual prem. of 1.54L Rs. The I above (maturity amount) is @ 5% rate of return only.
2. 12Y Term
A. Total prem. paid over the policy term = 1413846 Rs.
B. 1st M/B after 3Y = 100000
C. Value of B at policy maturity (after remaining 6Y) = 199900
D. 2nd M/B after 6Y = 200000
E. Value of D at policy maturity = 317374
F. 3rd M/B after 9Y = 300000
G. Value of F at policy maturity = 377913
H. Final M/B at policy maturity = 400000
I. Gtd. Addition @ 70 Rs. per annum per 1000 SA = 840000
J. Loyality addition (not Gtd.) = 75000
K. Total Maturity amount = C+E+G+H+I+J = 2210000 Rs. appx.
For an annual prem. of 1.57L Rs. The K above (maturity amount) is @ 5.62% rate of return only.
Conclusion – From the above calculation, everyone can see itself that the returns generated by this policy r not that much impressive as it looks on first glance. For lower Sum assured say 1L or 2L Rs. & for higher age the returns ‘ll be even lower. Also there is no guarantee of Loyality addition which I had considered in my calculation.
Plz. Don’t fall in the trap of gtd. Returns offered by this policy. It’s making wealth for LIC & it’s agents only, not for U, the Policy Holder.