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Getting roughly 5% waiver in Paying LIC Premiums

July 17th, 2008 No comments

Do you have an LIC policy ? I guess you
have atleast a couple of them. What is your payment frequency ? Is it
quarterly or half-yearly ? Do you know if you pay annual premiums, you
stand to get 3% discount on the premium amount ? There is more to it.
If you have an RD for the raising the funds to insurance premium, you
would an interest of 5-6% per year ( equivalent to 2.5% on FD for that
amount ). So effectively you stand to get a waiver of more than 5% on
the total premium paid every year.

Let’s have an example:

Regular
Insurance Premium: 12000/pa
Frequency: quarterly ( 3000×4 ) = 12000/pa
Discount: 0
Effective payment: 12000-0 = 12000/pa

Stylish
Insurance Premium: 12000/pa
Frequency: annual ( 12000×1 ) = 12000/pa
Discount: 3% = 12000*3% = 360/pa
RD: 1000 pm = 1000×12 pa = 12000pa
Interest: 6% recurring ( 2.5% effective pa )
Interest Amount Accured = 12000*2.5% = 300 pa
Effective Payment = 12000 – ( 360 + 300 ) = 11340 pa.

Won’t you be happy to save few extra Rupees ??