LIC has recently
launched a new single premium endowment plan. The plan offers guaranteed
maturity and death benefit of sum assured. The sum assured is guaranteed at the
time of maturity. Plan offers minimum term of 10 years and maximum of 25 years
and policy holder has not to pay premium only once. Minimum entry age in the
plan is 90 days (complete) and maximum is 65 years. Minimum age at maturity is 18
years and maximum it is 75 years. Minimum sum assured is 50,000 and there is no
upper limit on the maximum sum assured. The sum assured after Rs. 50,000 is in
multiple of Rs. 5,000 only.
The points to know this
before investing. The return is very poor as illustrated below and further
service tax of 3.09% in first year will further reduce your return. The same
can be understood with the help of following example. If a 30 year healthy male
takes this plan for sum assured of Rs. 50,000 for 25 year term, then his single
premium will be Rs. 23,545/- exclusive of service tax. He will get guaranteed amount
of the sum assured i.e. Rs. 50,000 at maturity and plan also may give non
guaranteed return which is assumed in the illustration at 4% and 8% p.a. The
IRR is of the plan is only 2.93% considering return on investment @4% p.a. and
5.93% considering return on investment @8% p.a. which is calculated with the
help of excel and using IRR formula. The detail is as under. The premium is
taken inclusive of service tax.
|
|
Scenario I
|
Scenario II
|
|
Year
|
Maturity @4%
|
Maturity @8%
|
|
1
|
-24,273
|
-24,273
|
|
2
|
0
|
0
|
|
3
|
0
|
0
|
|
4
|
0
|
0
|
|
5
|
0
|
0
|
|
6
|
0
|
0
|
|
7
|
0
|
0
|
|
8
|
0
|
0
|
|
9
|
0
|
0
|
|
10
|
0
|
0
|
|
11
|
0
|
0
|
|
12
|
0
|
0
|
|
13
|
0
|
0
|
|
14
|
0
|
0
|
|
15
|
0
|
0
|
|
16
|
0
|
0
|
|
17
|
0
|
0
|
|
18
|
0
|
0
|
|
19
|
0
|
0
|
|
20
|
0
|
0
|
|
21
|
0
|
0
|
|
22
|
0
|
0
|
|
23
|
0
|
0
|
|
24
|
0
|
0
|
|
25
|
0
|
0
|
|
26
|
50,000
|
1,02,500
|
|
IRR
|
2.93%
|
5.93%
|
The plan also offers
high sum assured rebate above 1lakh sum assured. The same is 18% of S.A.
between 1lakh to 1.95 lakh sum assured, 25% of S.A. between 2lakh to 2.95lakh
sum assured and 30% of S.A. above Rs.3lakh sum assured. Even after considering
the highest rebate of 30% in the same above same illustration of person aged 30
years taking policy of Rs.3lakh sum assured for 25 year term, the single
premium payable is Rs. 1,01,945 including service tax. The IRR taking
guaranteed maturity benefit is 4.41% p.a. As the illustration for scenario two
is not available it is not possible to give possible IRR for higher amount but
unlikely to exceed 7% p.a.
|
Year
|
Maturity
|
|
1
|
-1,01,945
|
|
2
|
0
|
|
3
|
0
|
|
4
|
0
|
|
5
|
0
|
|
6
|
0
|
|
7
|
0
|
|
8
|
0
|
|
9
|
0
|
|
10
|
0
|
|
11
|
0
|
|
12
|
0
|
|
13
|
0
|
|
14
|
0
|
|
15
|
0
|
|
16
|
0
|
|
17
|
0
|
|
18
|
0
|
|
19
|
0
|
|
20
|
0
|
|
21
|
0
|
|
22
|
0
|
|
23
|
0
|
|
24
|
0
|
|
25
|
0
|
|
26
|
3,00,000
|
|
IRR
|
4.41%
|
