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Friday, 23 April 2010

ULIP v/s Term + PPF combo

Dear Friends, I tried to generate a BI on LIC website for their Money Plus - I plan for the following data but I'm unable to generate the same.

Age 30
Male
Policy term 25Y
Prem. amount 50K yly
Sum assured 15L

For the same person, I generated a quote from LIC Anmol Jeevan Term plan, the prem. in this case comes 5732. Now instead of investing the remaining prem. of 44268 Rs. in a MF, I opted to invest in PPF, one of the most secured investment vehicle. At the end of the term of 25Y, the maturity amount in PPF is 34.95L Rs. i.e. almost 35L Rs. without riding any risk of Eq. market for a common person who don't understand all the financial nitty gritty.

Remember Money Plus -I is a Type 1 Ulip, so the family 'll receive only the higher of Sum assured or the fund value. But in this case for the combo of Term plan +PPF, the family 'll receive Sum assured of full 15L Rs. from the term plan & of course the fund value in PPF.

Now to equalize fully with type - 1 ulip, I opted for a split term cover like this, to save on mortality charges.

5L cover for term 25Y - prem amt. - 1911
5L term 20Y - 1614
5L term 15Y - 1406

In initial years the total prem. outgo is 3525 Rs. per annum, amt invested in PPF is 45069.

After completion of 9years the PPF corpus is already more than 6L Rs. so from 10th year, I stopped paying prem. for 15Y policy & diverted to PPF itself.

So the changed equation from 10th year is Term plan prem. outgo 3525 & PPF contribution 46475.

Again after 14 year the value of PPF is 11.87L Rs. so I stopped paying prem for 20Y policy & diverted this prem. too to PPF.

So the changed equation from 15th year is Term plan prem. outgo 1911 & PPF contribution 48089.

Finally after 17 years as the PPF value is 16.64L Rs. I stopped paying for 25Y policy & full money is going to PPF.

At the end of 25Y term, the PPF value is 36.55L Rs.

Plz. post ur comments.

thanks

Ashal