 have this policy. I pay 1.23 lacs for 13 years and I receive 2.508 lacs from 15 to 26 years. My rate of return is 4.78% as per XIRR after paying GST.
I also get life cover of 18.33 lacs during the first 13 years only.
If I stop the policy during first five years, I lose almost all the premium I pay. Therefore once you take this policy, there is no point in cancelling it.
BEWARE:
- Most agents and bank relationship managers will try to sell this policy because they get a very high commission for doing so.
- I was told that I could withdraw my money after three years. Actually the policy has a lock-in of 5 years.
- Even after five years you cannot actually withdraw whole amount.
- I am getting a post tax CAGR of 4.77% on this policy, which is less than fixed deposit.
- Inflation will actually make my returns negative.
- I am getting a life cover of 18 lacs only for first 13 years only.
- I have paid almost 2.5 lacs as my first two premiums and my current surrender value is only 72000/-
What are the better options:
- Buy a term insurance plan. It will give you better life coverage at a very small premium.
- Invest your money in PPF, Sukanya or even an index mutual fund. The returns will be higher.
- Next time you go to bank or your agent calls you, be ready to ask about CAGR of returns and the surrender value of the policy.
