Reliance life has recently launched a new non linked, participating, non variable money back insurance plan. The plan offers guaranteed payouts periodically depending on the term selected. The Plan offers only five fixed terms i.e. 10, 13, 16, 19 and 22 years. Minimum entry age in the plan is 14 years (last birthday) and maximum is 55 years (last birthday). Maximum age at maturity in the plan is 24 years (last birthday) and maximum is 70 years (last birthday). Minimum sum assured is 1lakh and maximum there is no limit. The plan also gives the option of choosing four different options for payment i.e. yearly, half yearly, quarterly and monthly. There is high sum assured addition as percentage of sum assured for sum assured of Rs. 2.50 lakhs and above.
Moneyback
payouts:
|
Policy Term
|
Money Back Benefits Payable as a % of
Sum Assured
|
|||||
|
4th Year
|
7th Year
|
10th Year
|
13th Year
|
16th Year
|
19th Year
|
|
|
10
|
10%
|
15%
|
-
|
-
|
-
|
-
|
|
13
|
10%
|
15%
|
20%
|
-
|
-
|
-
|
|
16
|
10%
|
15%
|
20%
|
25%
|
-
|
-
|
|
19
|
10%
|
15%
|
20%
|
25%
|
30%
|
-
|
|
22
|
10%
|
15%
|
20%
|
25%
|
30%
|
35%
|
The points to know this before investing. The return is in negative as illustrated below. The same can be understood with the help of following example. If a 30 years healthy male takes this plan for sum assured of Rs. 2,85,361, then his annual premium will be Rs. 30,000/- exclusive of service tax. He will get guaranteed amount of the sum assured in the regular interval as per above table. The IRR is in negative i.e. -1.20% considering return on investment @8% p.a. which is calculated with the help of excel and using IRR formula. I am very much surprised why IRDA has approved this plan. The detail is as under.
|
Year
|
Premium Payable after taking payouts
|
|
1
|
-30000
|
|
2
|
-30000
|
|
3
|
-30000
|
|
4
|
-30000
|
|
5
|
-1464
|
|
6
|
-30000
|
|
7
|
-30000
|
|
8
|
12804
|
|
9
|
-30000
|
|
10
|
-30000
|
|
11
|
27072
|
|
12
|
-30000
|
|
13
|
-30000
|
|
14
|
41340
|
|
15
|
-30000
|
|
16
|
-30000
|
|
17
|
55608
|
|
18
|
-30000
|
|
19
|
-30000
|
|
20
|
245410
|
|
IRR
|
-1.20%
|
