Let's Talk Money: You've Worked Hard for It, Now Make It Work for You

by Monika Halan

that is the carrot for you – you get a ‘cover’, so your family’s safe; you get a return and you get a tax break. The pista on the jalebi is that the money at maturity is tax-free. The way the policy is sold talks about the returns in terms of whole numbers: You invest Rs 50,000 a year for five years and you get back Rs 5 lakhs after another fifteen years. Or you invest Rs 50,000 a year for fifteen years and you get back Rs 10 lakhs. The whole numbers look big with lots of zeros, but ask the question what the return percentage a year is, and you get shocking answers. The first policy returns 4.15 per cent a year. The second, 3.98 per cent a year.

Ouch