Avoid this plan with low returns!

Looking for a reliable way to ensure a steady stream of income for your future? The Shriram Life Assured Income Plan might be just what you need. This plan is designed to provide you with assured income, even in your absence, making it an excellent choice for those planning for education expenses, retirement, or simply seeking financial security.

Key Features:

1. Guaranteed Income: Receive assured income payouts for 15 years after the policy term.
2. Flexibility: Choose from various premium payment terms and payout options.
3. Protection: Provides death benefit to secure your family’s future.
4. Tax Benefits: May be eligible for tax benefits under prevailing tax laws.

How It Works:

Let’s take an example of Ram, a 30-year-old businessman:

• Premium Payment Term: 15 years
• Annual Premium: ₹50,000 (plus taxes)
• Assured Income: ₹1,04,500 per annum for 15 years after the policy term
• Total Benefits: ₹15,67,500 over 15 years

It’s important to note that the Shriram Life Assured Income Plan is not an investment product but a savings plan. The Internal Rate of Return (IRR) for this plan is approximately 5.04%, which reflects its nature as a guaranteed savings instrument rather than a high-risk, high-return investment.

Why You Should Think Twice About the Shriram Life Assured Income Plan

Are you considering the Shriram Life Assured Income Plan? Before you make a decision, it’s crucial to understand why this plan might not be the best choice for your financial future.

The Low Returns Problem

The most glaring issue with this plan is its disappointingly low rate of return. With an Internal Rate of Return (IRR) of just 5.04%, this plan barely keeps pace with inflation, let alone helps your money grow.

Let’s break it down:

• Annual Premium: ₹50,000
• Payout: ₹1,04,500 per annum for 15 years after the policy term
• Total Payout: ₹15,67,500 over 15 years

While these numbers might look attractive at first glance, they don’t tell the whole story. When you factor in the time value of money, you’re essentially locking your funds into a low-yield instrument for an extended period.

Why This Plan Doesn’t Make Sense

1. Underwhelming Returns: At 5.04% IRR, you’re likely to find better returns even with some conservative mutual funds or government securities.
2. Lack of Liquidity: Your money is tied up for a long period, limiting your ability to respond to other financial opportunities or emergencies.
3. Inflation Risk: With inflation often exceeding 5% in India, your real returns could be negligible or even negative over time.
4. Opportunity Cost: By choosing this plan, you’re missing out on potentially higher returns from other investment avenues.
5. Misleading Marketing: While marketed as an “Assured Income Plan,” it’s important to recognize that this is essentially a low-yield savings product, not a growth-oriented investment.

Better Alternatives

Instead of locking your money into this low-return plan, consider:

• Diversified mutual funds for potentially higher returns
• A mix of government securities and corporate bonds for a balance of safety and better yields
• Systematic Investment Plans (SIPs) in equity funds for long-term growth
• Public Provident Fund (PPF) for tax-free returns with government backing

Conclusion

While the Shriram Life Assured Income Plan promises guaranteed returns, the reality is that these returns are too low to make a significant positive impact on your financial future. In today’s dynamic financial landscape, it’s crucial to seek options that offer better growth potential while managing risk appropriately.

Before committing to any long-term financial product, always consider your personal financial goals, risk tolerance, and the full range of options available to you. Remember, a truly secure financial future comes from informed decisions and diversified strategies, not from low-yield products that may erode your wealth over time.

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