LIC Samridhi Plus Policy Returns Calculations

Returns Calculations from LIC Samridhi Plus Policy with an example
Continuing further from our prevous article on LIC Samridhi Plus Policy: Review Analysis & Details, let see an example with returns calculations.
Early withdrawal or Partial withdrawl is available in LIC Samridhi Plus Policy
Although the policy term is 10 long years, the investors have option to withdraw the investment partially after 5 years. However, there are lot of charges for early and partial exit, which the investors need to take into account.

LIC Samridhi Plus Policy Returns Calculations

What are the benefits of LIC Samridhi Plus Policy?
The policy claims that there is a guarantee of the highest NAV recorded on a daily basis, in the first 100 months of the policy, subject to a minimum of 10.
Now, 100 months means 8 years and 4 months. The policy term is 10 years or 120 months. So how will LIC guarantee the highest NAV?
It's a bit tricky to understand but not that difficult.
Please note that LIC Samridhi Plus Policy is promising you NAV value, not absolute value of any amount and that's where things need to be accounted for the various charges mentioned in this policy.
What you get in the name of highest NAV is the NAV value only, and that is arrived at after deducting the lots of charges as mentioned by LIC. Hence, in essence, you might find that at the end of 10 long years of investment, you might be dreaming about high returns, but because of these lots and lots of charges which get deducted, your End of the day NAV calculations have brought them down significantly.
So whether you are guaranteed "highest" or any other NAV, you need to understand the calculation of NAV and that is arrived at after deducting the charges. Image sourced as screen-shot from LIC Site
Also note that in their logo and all advertisements, there is a big asterisk (*) with the "Highest NAV guarnteed" clause. There is no clear information available on how they will guarantee the NAV, and whether in an attempt to guarantee the highest NAV, will that bring down the NAV value.

There are death benefit and maturity beenfits available in LIC Samridhi Plus Policy.
There is also surrender value as mentioned in the partial or early withdrawal section.

Any example of returns calculations in LIC Samridhi Plus Policy?
Yes, As illustrated in the benefit illustration section, if a 30 year aged person opts for 5 year premium payment option with an annualized premium payment of 20,000 Rs., then assuming a 6% annual interest, the net yield (after deducting numerous charges) comes to around 3.92% only.
If assuming a 10% annual interest, the net yield comes to just 7.9%.
Now that is to be understood - over a long period of 10 long years, if you get only less than 8% net annual returns, then I dont think this kind of policy is actually worth the investment.
Instead, how about taking a direct investment in share market through ETF or Exchange traded fund? (See example with historical calculations: Example of Nifty based ETF