How the real return is worked out
Your first premium stays invested for the whole term, the last one for only a few years, so "money doubled" says little. The right measure is the IRR: the yearly rate at which all your premiums would grow to exactly the maturity amount.
Example: ₹50,000 a year for 15 years (₹7.5 lakh in total), maturing in year 20 with ₹15 lakh, is a real return of only about 5.3% a year. The same premiums in PPF at 7.1% would grow to about ₹19.1 lakh.
Frequently asked questions
What should I enter as maturity amount?
The total you get at the end: sum assured plus bonuses. Bonuses are not guaranteed, so try both projections in your benefit illustration.
Does it handle money-back policies?
No. Payouts during the term are not included, so the real return of a money-back policy will be a little higher than shown.
Is the maturity amount tax-free?
For traditional policies issued on or after 1 April 2023, maturity proceeds are taxable if your total yearly premium exceeds ₹5 lakh, or if the premium is more than 10% of the sum assured. Check with a CA for your policy.
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