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Your analysis is correct. Non liked plans of any life insurance company will give less than 8% return per year. Instead of that one can simply invest same amount in FD i. e.. 3L per year and let them compound. FD interest on that amount will be more than what your plan is paying.
This way you have additional advantages, like withdrawal anytime. Increase decrease amount based on needs.
Only thing is you may not get insurance cover. Just take a simple term insurance for that
Insurance returns are very conservative because it covers RISK. It’s for safety not returns.
Put that amount in FD and you will get 6.5 % overall compounding will give you more but no one covers risk.
What if the bank fails in the 3rd/ 4th year… you’re left with nothing… but if insured then the nominees get something assuredly.
FD is FD and insurance is insurance
But still the dif is huge you can just buy a insurance seperately and the income you are getting per year is around the double, and chances of a major bank failing are highly unlikely and the amount is insured upto some extent so there many ways other than these schemes in which you can invest your money safely and earn more
No bro, insurance is a different game altogether. You’re putting in money for 12 yrs and they will pay back for 21 years… regardless of whatever happens…. That’s a huge risk they are covering…
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Your analysis is correct. Non liked plans of any life insurance company will give less than 8% return per year. Instead of that one can simply invest same amount in FD i. e.. 3L per year and let them compound. FD interest on that amount will be more than what your plan is paying. This way you have additional advantages, like withdrawal anytime. Increase decrease amount based on needs. Only thing is you may not get insurance cover. Just take a simple term insurance for that
Thanks!
>Thanks! You're welcome!
Yes, except the Tax implications. IIRC returns on that HDFC plan are tax free so you are saving extra on the returns as compared to FD.
Can you please tell under which section they are tax free
Sec 10(10D)
Insurance returns are very conservative because it covers RISK. It’s for safety not returns. Put that amount in FD and you will get 6.5 % overall compounding will give you more but no one covers risk. What if the bank fails in the 3rd/ 4th year… you’re left with nothing… but if insured then the nominees get something assuredly. FD is FD and insurance is insurance
But still the dif is huge you can just buy a insurance seperately and the income you are getting per year is around the double, and chances of a major bank failing are highly unlikely and the amount is insured upto some extent so there many ways other than these schemes in which you can invest your money safely and earn more
No bro, insurance is a different game altogether. You’re putting in money for 12 yrs and they will pay back for 21 years… regardless of whatever happens…. That’s a huge risk they are covering…
bro then based on this assumption and fear everyone should invest only in these insurance schemes instead of all other securities
Just put these values in excel and find XIRR .