Reliance life has
recently launched a new limited premium non linked non participating endowment insurance
plan. The plan offers only three terms of 12,15 and 20 years and policy holder
has the option to pay premiums for limited period i.e. 5,7 and 10 years. Minimum
entry age in the plan is 8 years and maximum is 60 years. Maximum age at
maturity is 80 years. Minimum annualised premium is 25,000 and there is no upper
limit to maximum premium. The plan also gives the option of choosing four different
options for payment i.e. Yearly, Half Yearly, Quarterly and monthly. The policy
holder has to pay higher premium in case he/she chooses option other than
yearly option.
The plan offers fixed regular additions every year depending on
premium paid. The same is 8% in 1st year, 9% in 2nd year
and 10% 3rd year onwards. Even the payout looks very attractive one
should note that the same is on premium payable every year and not on all
premiums paid till the end of every year. There no compounding effect and
therefore don’t judge the product by the % of regular additions.
The points to know
before investing in the plan. The
service tax of 3.09% in first year and 1.545 second year is payable over and
above basic premium. The return is very poor as illustrated below The same can
be understood with the help of following example. If a 30 year healthy male
takes this plan with an annual premium of Rs. 50,000 for 20 years and chooses
to pay the premium for only 7 years. He will get guaranteed amount of the premiums
paid and also fixed regular additions. The IRR is of the plan is only 4.17%
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.
|
Year
|
Premium
|
|
1
|
-51545
|
|
2
|
-50773
|
|
3
|
-50773
|
|
4
|
-50773
|
|
5
|
-50773
|
|
6
|
-50773
|
|
7
|
-50773
|
|
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
|
7,15,525
|
|
IRR
|
4.17%
|
