Can some one advice me about Kotak money back plan?



recently I have been approached by Kotak representative, and he was advising me to invest in Money back policy. He was suggesting me that I will almost double the money, If I break the policy at the end of 4th year. He showed me the spreadsheet and he said the same copy will be printed in bond sheet.

There where two illustration in the spreadsheet (Benefits at lower rate & Benefits at higher rate)

Below is the illustration which he showed at lower benefit rate (worst case scenario)
————————————————————————————————————————-
Policy amount : 5Lakhs and term for 20 years.
My Age : 31
1st year premium : Rs 35,000 (apx)
2nd year premium : Rs 35,000 (apx)
3rd year premium : Rs 35,000 (apx)
4th year premium : Rs 35,000 (apx)

So total premium I would have paid is : Rs 1,40,000.

According to the Kotak people, If I break it at the end of 4th year, I will get (Accumulation amt + Surrender Value + 30% of total premium from 2nd year)
which is (109,800+ 104,300 + 31500) = 245,600 (min guaranteed).

Can someone please advice whether its true? Is it good to invest in this plan? Is this much returns is possible in 4 years? Is it a safe short term investment ?

2 Replies to “Can some one advice me about Kotak money back plan?”

  1. INSURANCE is an EXPENSE, not an avenue for INVESTMENT. Money Back is a costly policy.

    When it comes to insurance , stick to ONLY PURE TERM COVER.

    For INVESTMENT , there are better avenues. Go for a combination of PPF / SIP IN MUTUAL FUNDS / DIRECT EQUITY.

    Keep INSURANCE & INVESTMENT separate. Most agents will disagree. Reason is obvious.


  2. Dear Vijay,

    it seems tht u hv either misunderstood or hv been misled by the Kotak representative….it is impossible to generate such a return in an endowment plan…also the calculations seem factually incorrect. We quote from kotak’s brochure of said plan :
    “Surrender: On completion of three policy years, the policy acquires a
    Guaranteed Surrender Value provided all due premiums have been paid on
    time. The Guaranteed Surrender Value will be 30% of all premiums paid to
    date, excluding the first year’s premium and extra premiums and rider
    premiums, if any. The value of bonus interest will also be included in the
    surrender value.”
    the above clearly states tht only surrender charges (Rs.31500) + any bonuses (if declared & shud not be more than 5% p.a.)…as such the total amt refunded back to u shud not be more than Rs.40000 as against yr total investment of rs.140000. Being a financial consultant myself, i wud advise u to look into the plan more carefully & ask for written commitment (stating the amt) on letterhead of the co. If u require any more advise, help or suggestions, feel free to contact me at [email protected] with your details .
    Thanks
    Ruchi





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