LIC Money back policy – Is it a real deal for the investors?

by | Jan 8, 2019 | 0 comments

The problem with mixing Investments and Insurance

Me and my friend Vikram help educate friends, family and colleagues on financial literacy through wealthmatix. Thanks to close family friends many of us have invested in LIC (or other) money back policies. It seemed like a good option at that time, there is risk cover and the money is returned back to us at different point in time. There is also a bonus ! to make it sound sweet. But what really is the return and what is the problem in seeing it as insurance + investment product ? Take the below challenge…

I happened to visit LIC with my brother yesterday to close his moneyback policy with 20 yrs investment timeframe. Here are the real numbers.

20k is Sum is insured. (SI).

Yearly premium — 1288


5th yr — 20% of SI (4k)

10th yr — 20% of SI (4k)

15th yr — 20% of SI (4k)

20th yr — 40% of SI (8k) + vested bonus.

The bonus my bro received was 18,580.

Here is a challenge for you.

Can you calculate the returns (CAGR) of the moneyback policy? For solution watch the video

It’s a 5.9% CAGR for 20 yrs. I rest my case, the choice is yours.


Submit a Comment

Your email address will not be published. Required fields are marked *

You might also be interested in..

A new World Order

A new World Order

Until 1944, Sterling used to be the global currency. But after the second world war, America with...

read more

Real Returns from Real Estate

The video is aimed to calculate the real returns from real estate (or CAGR) investment. We often tend to calculate absolute returns rather than the internal rate of return. We avoid running the numbers to find facts which will help us make rational decisions, than emotional decisions.

read more

Let’s Get Started

because in investing, Time is more important than the Timing!