It was a policy having a term period of 21 yrs with multiple options for premium payments. I have chosen half-yearly premium payment option and started paying the dues sincerely till the end. This got matured recently.
Being curious I have done a calculation. Idea is to know annual rate of return. I have used XIRR function on the excel sheet to get the answer.
Refer to the table below: Consider all cash outflows represented as '"-x" and one final inflow represented as "83.84 times x". Of course, for you to calculate it, you need to substitute actual values in numbers.
Takeaways:
- The annual rate of return is 6%.
- Rate of return is low, not even comparable to bank FD rates for long term deposits, or a postal deposit.
- No point of comparing with investment plans like MFs
- But this was like an extra protection to my family through Life insurance cover, in case of any eventuality. Understood that it covers some protection till my age of 100 even though the policy is matured now.
- Final Take : This has to be treated separately from investment plans.
