Highest NAV of LIC Wealth plus till date is 15.7585 on is 24/01/2018.
I am feeling cheated with one of the investment plan offered by LIC i.e. Wealth Plus (Plan-801) so must be all of other investors who invested in Wealth Plus.
The unique selling point of Wealth Plus was highest NAV will be considered in policy term of 8 years for which investor pays a one time premium. To illustrate this, Suppose investor buys Wealth Plus plan on March 2010 when recorded NAV was Rs 10 and in 2015 if NAV had gone to Rs 19 and then dropped to Rs 15 in 2018(policy maturity) then the highest NAV will be considered as return on investment made at Rs 10 per unit. This result in effective gain of 90% on your investment. Policy also offered sum assured on Rs 2 Lakh in case of death. This sounds very catchy and attractive but wait let analyze how Nifty 50 performed from March 2010 to March 2018.
How Indian market in general performed in same span as of LIC Wealth Plus?
Nifty 50 recorded on 26/Mar/2010 is 5282 and highest till date 23/Mar/2018 11130. Which results in effective gain of 110% on you invested wealth.
How LIC Wealth Plus performed?
NAV priced at Rs 10 on 23/Mar/2010 and highest NAV recorded till 23/Mar/2018 is Rs 15.7585. Which results in effective gain of 57.76% on you invested wealth. Which is less than half of Nifty 50.
Overall its a negative returns on investment
What you just read is shocking, isn’t it? Nifty 50 performed so well over span of 8 year in which you wealth actually was loosing its worth being invested in LIC policy. Now you must be feeling cheated right? But wait, there more to it. I will now show the investment expense levied by LIC after which you will never think of investing LIC again. I have invested Rs 40000(forty thousand) on 23/Mar/2010 at NAV Rs 10, which is 4000 unit of Wealth Plus plan. When I check on the website I saw only 3185 allotted to me. This means they have charged a investment fee of Rs 8150(eight thousand and fifty) i.e. 20.3 % of total invested wealth. This was really a big shock for me as well.
Now lets calculate the maturity amount = 3185 * 15.76 = 50195 (approx)
What’s the effective wealth gain = 25.48% of invested wealth that to over span of 8 years. If we adjust for inflation, this is not actually wealth gain.
Average Yearly Inflation Rate (2010-2018) at 6.60 % results in amount of Rs 40000 in 2010 equivalent to Rs 67000 in 2018.
If return on your investment does not beat inflation adjustments you are less-richer(poorer) than you were at the time of investment. This is nothing but negative returns.
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