Reliance Life has
recently launched a new endowment cum whole life plan. The plan is non linked participating
endowment plus wholelife plan which pay guaranteed additions of 4% for first
five years. Minimum age of entry is from 7 years to 55 years. The term
available in the plan is 15 years to 30 years. Also there is limited premium
payment option of 10 years for the age group 7 to 50. Age at maturity is from
22 years to 70 years. There are two cover options standard and Extended. The
plan also gives the option of choosing four different options for payment i.e.
yearly, half yearly, quarterly and monthly. The policy holder also gets high
sum assured rebate that depends on sum assured opted.
The points to know
before investing in the plan. The
service tax of 3.50% in first year and 1.75 second year onwards is payable over
and above basic premium. The return is very poor as per sample benefit illustrated
below. The same can be understood with the help of following example. If a 35
year healthy male takes this plan for him for 15 year term with regular premium
paying term option. His annual base premium will be Rs. 23,823 for sum assured
of Rs. 3 lakhs. His annual premium will
increase by applicable service tax. The IRR is of the plan is only 3.56% which
is calculated with the help of excel and using IRR formula. The detail is as
under.
|
Term
|
Premium
|
|
1
|
-23823
|
|
2
|
-23823
|
|
3
|
-23823
|
|
4
|
-23823
|
|
5
|
-23823
|
|
6
|
-23823
|
|
7
|
-23823
|
|
8
|
-23823
|
|
9
|
-23823
|
|
10
|
-23823
|
|
11
|
-23823
|
|
12
|
-23823
|
|
13
|
-23823
|
|
14
|
-23823
|
|
15
|
-23823
|
|
16
|
478125
|
|
IRR
|
3.56%
|
PPF, Sukanya Samridhi
Scheme and NSC are better option in debt category compared to this plan. I
really wonder why IRDA is clearing this type of plans which will erode people’s
savings. My strong advise is please stay away from this plan. The plan is good
for the company better for the agents and worst for the investors.
