This document compares insurance and investment and recommends closing an existing traditional insurance policy and investing the premium savings into a term life insurance policy and mutual funds. It provides an example of an individual who could save over Rs. 500,000 by closing their traditional Rs. 500,000 whole life insurance policy after 20 years and instead investing Rs. 9,000 annually in a term policy and Rs. 16,500 monthly in mutual funds over 17 years. The total returns from insurance and investment under the new plan would be over Rs. 2.5 million, much higher than the under Rs. 1.1 million maturity amount from continuing the traditional policy.

1. Insurance Vs Investment

2. Insurance
• Insurance is meant for life protection for the
dependants
• Insurance should be taken as pure term policy
• Maturity amount from Endowment, money
back, whole life term policies are not
sufficient, say after 20 yrs @ the prevailing
interest rate

3. Term Policy Benefits
• Term policy protects our family for long term
in our absence
• Huge sum assured policy can be obtained at
nominal premium
• Premium will be same through out the
coverage period

4. Protect your family from all RISK –
Term Policy
• Protection against sudden absence

5. Closure of your existing policy
• Check with your advisor for closure of
insurance policy
• Take a term policy
• Then close the existing traditional policy
• Invest part of the premium you have been
paying for your closed insurance policy into
new Mutual funds

6. Example
Insurance policy Traditional
Sum Assured 500000 Term 20 years
Premium 29560 Age 30
Premium paid Surrender value Current loss
After 3 years 87794 36062 51732
After 4 years 116911 70938 45973
After 20 years 591200 Maturity amt < = 1100000

7. Close the old policy & take term policy
for remaining 17 years
• Out of the yearly premium of 29560,pay 9000
for term policy
Insurance policy Term policy
Sum Assured 2500000 Premium 9000
Premium paid
After 17 years 153000 Maturity
amt
Nil

8. Mutual fund for compounding your
MONEY

9. Mutual Funds
• Invest remaining 20000, in a monthly
installment of 1650
• Ex 1 – SBI pharma fund – G
Per month 1650
Expected return 15
Fund value after 17
yrs @ 15%
1374835
Fund return since
inception
22.69
Calculating fund
value @ 22%
2802944
Amount invested 336600

10. Ex 2 - Reliance Equity opportunities
fund – G
Per month 1650
Expected return 15
Fund value after 17
yrs @ 15%
1374835
Fund return since
inception
21.5
Calculating fund
value @ 22%
2529602
Amount invested 336600

11. Total money invested as per new plan
for 17 years
• If continued invested in your old plan
Maturity value
Term Insurance
investment
153000 Nil
Mutual fund
Investment
336600 >2500000
Total Investment 489600 >2500000
Traditional Ins
policy
Maturity value
Invested amount 502520 <1100000

12. Do you want to be a loser or winner
Choose your direction ?
Be a winner

13. yourmoney86@gmail.com