Many a times, we are pondered with questions from investors that we have seen ad in the TV or other media like news papers, hoarding etc and they look very attractive. Should we buy that product, should I take that insurance policy and what not . There are ads which makes you emotional as there is either a father who wants to plan for his daughter or daughter who gives gift to his poor father by investing in that product. There are big celebrities who endorse such products as if they have taken themselves. Do you think Aishwarya takes bath with LUX which cost Rs.10/-.

We at TFL have realized that these ads influences the decision making of investors or buyers of Financial product a great deal. Once the investor is influenced, the agent does rest of the job.

I very well remember there was an Ad long times back of Hamam Soap – “Ab Hamam ek naye Pack mein”. These ads are nothing but new pack for age old thing which is nothing but Debt or Equity with Lots of hidden expenses. Now it is simple that once there are ads, the expenses of the ads are built in the product itself.

Take a look at the recent ad of Met Life “NOW GET A GUARANTEED INCOME EVERY MONTH – Introducing MET MONTHLY INCOME PLAN”

When we looked into the brochure of this product and found the following

For 10 years Investor would pay Rs 35541/- At the end of 10 years, monthly return would be guaranteed at Rs 2500/- per month which is equivalent to Rs 30000/- in a year. The rate of guarantee in this product comes to 1.91% per annum which is more or less half of what you get in your savings bank.Is this called guarantee? Well anyone can provide you this. Are you now interested?? Given below is the brochure of this product for your information.

**Misselling – Met Monthly Income Plan**

We would urge all the readers, don’t be swayed by such ads focus on your financial goals keep your insurance and investment separate. Do share this article with others and save people from the claws of insurance agents and such companies.

So astonishing!!!

You are doing a great job.

Keep it up.

Regards,

Srikanth

Thanks Srikanth.

here iam not getting calculation “For 10 years Investor would pay Rs 35541/- At the end of 10 years, monthly return would be guaranteed at Rs 2500/- per month which is equivalent to Rs 30000/- in a year. The rate of guarantee in this product comes to 1.91% per annum”

could you plz elaborate it.

what my understanding here is if we pay 35,541 per year up to 10 years means it comes around 3,55,410. after 10 years they are going to pay 30,000 per year which is equal to around 8.5 % p.annum so how u got here 1.91 % per annum could u plz elaborate if i missed anything here.

Hi Satya,

Part of this article (and couple of other articles) was lost when we transferred TFL from blogspot to wordpress 🙁

I am not sure about the newer version of this product but we did detailed calculation & it was only 1.91%. I will try to find that if we still have that calculation with us.

Mr.Beniwal, I too claculated on the same basis as Satya & hence have the same query. So please could you upload the calculation part as soon as possible & help us? Thankyou.

The compounded annual rate of return in this case is 6.311%

The calculations are as follows:

time fromDateofPolicy| paid or Received|Net Value

0 35541 35541

1 35541 73325

73325 =35541 + interest on 35541 in prev year + 35541 from prev year

2 35541 113494

3 35541 156197

4 35541 201596

5 35541 249860

6 35541 301169

7 35541 355717

8 35541 413708

9 35541 475358

10 -30000 475358

11 -30000 475358

12 -30000 475358

13 -30000 475358

14 -30000 475358

15 -30000 475358

Sorry for the calculation above. Since the income stops after 15 years from last payment:

The calculations are as follows:

time fromDateofPolicy | paid or Received | Net Value

0 35541 35541

1 35541 71761 =35541 + interest on 35541 in prev year + 35541 from prev year

2 35541 108672

3 35541 146289

4 35541 184624

5 35541 223692

6 35541 263505

7 35541 304079

8 35541 345428

9 35541 387567

10 -30000 364969

11 -30000 341940

12 -30000 318471

13 -30000 294554

14 -30000 270180

15 -30000 245340

16 -30000 220026

17 -30000 194229

18 -30000 167939

19 -30000 141146

20 -30000 113842

21 -30000 86016

22 -30000 57659

23 -30000 28761

24 -30000 -690

And So The compounded annual rate of return in this case is 1.9% for the second calculation

Good Work Hemant

hi there i am doing some research about monthly income plan .. I came across your article which is not a realistic article… if u lost full article why cant u delete this post…@srikanth what on gng on with u..? what way u r appreciating this post.. don’t post your comments blindly without understanding the basic of this topic. If your are not clear pl delete this post…

I am not a met life customer

Well, Metlife Monthly Income Plan is the Endowment Plan and you should avoid it in any circumstances. In fact, a smart investor in India is one who avoids all type of Insurance cum investment products available in India such as ULIPs, Endowment plans, Whole Life Insurance plans, money back plans and pension plans.

Now a days people in India started becoming aware about How bad the ULIPs are and that’s why the insurance companies don’t use ULIP word now a days.

– Met life has given “Monthly Income Plan” name to this policy to FOOL the people. Well, yes. I know that its very blunt way of speaking. But this is the truth.

Basically I am not talking about insurance cum investment type of monthly income plans. I am talking about Monthly Income plan mutual funds which invest 70% of your money in debt and 30% in equity to grow your wealth.

I mean,

– Debt: Income Funds (Which invest up to 100% of your money in debt)

– Hybrid: Debt Oriented Plans

Just Download the Brochure of Metlife Monthly Income Plan

Now, go to Page No. 5 and see the table.

You pay Rs.35,541 every year for 10 years and after that the plan will give you Rs.30,000 income for next 15 years and after that everything is finished. You don’t get anything back after that.

Now, suppose if you invest the same amount of money in some equity diversified mutual fund for 10 years than after 10 years it will become Rs.13.70 lakhs at the rate of 20% per annum.

And from this amount you can generate Rs.1 lakh+ annual income by simply investing it in 8% Bank FDs or Government bonds for not just another 15 years but even after your death your nominees can get benefits of that income.

Suppose if we consider conservative return from the mutual funds say 15% per annum than also it will become Rs.10 lakhs after 10 years and you can easily generate 80,000 per annum from that much capital.

So in my opinion, don’t go for this plan.

And yes, don’t get fooled by fake reviews about this plan on the internet. Now a days, it is very easy to pay someone and write a good review about your product on his/her website or a blog.

Just think logically. It’s not the rocket science. This plan will give you just Rs.30k every year and eat up your entire capital of Rs.10-13 lakhs….

My recommendation is to avoid the met life monthly income plan.

If an investment of 35,541 is made annually in an FD with 8% interest, the value of the investment at the end of 10 year will be 5,56,057.

The detailed calculation is as follows.

Year Investment Interest Amount including interest

(Reinvested subsequent year)

1 35,541 2,843 38,384

2 73,925 5,914 79,839 (73,925 = 35,541 + 38,384)

3 115,380 9,230 124,611

4 160,152 12,812 172,964

5 208,505 16,680 225,185

6 260,726 20,858 281,584

7 317,125 25,370 342,495

8 378,036 30,243 408,279

9 443,820 35,506 479,326

10 514,867 41,189 556,056

The payment of 2,500 starts from 11th year.

As 2,500 is paid on a monthly basis, the average amount to calculate the interest is 15,000 for a year (i.e 2500 for 12 months, 5000 for 11 months …. and 30,000 for 1 month).

So the effective rate of interest = 15000/556056 % = 2.7%

If the annual investment of 35,541 is made on a mutual fund, which gives a higher rate of return, the effective rate given by met life can be as low as 1.5%

On an investment which gives return of

10% – Effective metlife return 2.41%

12% – Effective metlife return 2.15%

15% – Effective metlife return 1.81%

20% – Effective metlife return 1.35%

The simple reversionary bonus is not guaranteed and i couldn’t locate any document which shows the actual % paid till date, although an agent told me it’s about 3%. (no documents shown to prove it)

The 6% & 10% shown in the brochure is only for illustration purpose as per mandatory requirements of life insurance council

It’s better to invest the money in a mutual fund and take a term insurance for the coverage.

If someone finds my calculation is wrong, please notify.

Thanks.

investing in recurring deposit or mf is better

i paid abt 250000 as premium(4 years) monthly income plan,

when i went to metlife for surrender they told i will be getting only 50k..

BULL SHIT…better to invest in bank,Melife-one of the biggest mistack i made in whole life….

Dear Sir,

I have taken a guaranteed sum insurance plan from ICICI Pru Life Insurance about a year at the age of 60 years.

Several facts were not disclosed and only the positive sides were highlighted at the time of taking this policy. I took up matter seriously with ICICI Pru life Insurance for hiding the facts at the time of selling the product.

It is a product of 15 year policy term with 7 year premium paying options.

I have paid only one installment of Rs. 1.0 lac

The sum insured is Rs. 6.79 lacs due to service tax deduction from premium amount.

From the angle of life insurance, I have decided to continue with this policy.

Kindly advise whether it is a right decision to continue with this policy ?

Dear Sir,

I am 35 yrs old with two baby boy – 9 and 2 yrs old. I am earning 7.5 lacs per annum.

Pls guide me on Retirement Plans, which all will be the best option for me to invest into

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