WEALTH MANAGEM

GROUP ASSIGNMENT

GROUP 7:-

1 Arpita Jain PGSF2008

2 Aziz Ur Rehman PGSF2010
3 Simran Gupta PGSF2026
4 Shubham Shubham PGSF2024
MANAGEMENT
ASSIGNMENT
(a) ULIP: This would be the best insurance policy for the person as the person not
only gets the life coverage but also the possibility of earning a higher rate of
return. Since in this case, 10% p.a. is the required rate of return, this would not
be achieved if we consider any other policy.

(b) Term Insurance Policy: This policy is perfect for the given situation as only
death cover is required for the fixed period. The person only needs to pay the
premium every year for a fixed period of time and get full death coverage. This
is also the cheapest way to get insured.

(c) Endowment Policy: It serves both the purpose of life cover and an assured lump
sum amount at maturity. The internal rate of return in this policy is similar to 5-
6% p.a usually. In some cases company keep the internal rate of return fixed.
Example: Bajaj Allianz etc.

(d) Whole Life Insurance Policy: This policy is for the entire life of the person who is
insured. If the person dies a garuneeted cash values and annual premium is
provided to the beneficiaries or nominee.
a).
Working Years 25
Annual income ₹ 1,000,000.00
Annual consumption ₹ 200,000.00
Discount rate 8% p.a.
Annuity ₹ 800,000.00
PVAF 10.6747761885886
PV ₹ 8,539,820.95
Pension ₹ 40,000.00 per month
PV of perpetuity ₹ 500,000.00
Life Insurance Policy ₹ 3,000,000.00
Insurance policy needed ₹ 5,039,820.95
An insurance of Rs. 50 lakh would be appropirate for the person.

b). Major drawbacks of Human Value Approach are as follows:

i) Placing a value on human life is not possible.
ii) calculation is estimating future levels of income.
iii) Estimates of future earnings can be best based on nothing more than a projection based on cur
iv) These changes are expected as an individual progresses in his/her career, and therefore becom
n a projection based on current earnings of the person’s present occupation.
areer, and therefore becomes one of the crucial factors of life value. 
Answer 3
Regular Expenses
Age 54
ROI 0.09
Inflation 0.05
PV of cash inflows PV
Rent Income 650000
PVAF 11.00525
PV of Annuity 7153414
Living expenses 1320000
Real Rate of Return 0.038095
PVAF 22.76405
PV of Annuity 30048552
Other Expenses 350000
PV of Annuity 7967419
School Fee 100000
g% school fee 0.03
Real Rate of Return 0.058252
PVAF 7.421411
PV of Annuity 742141.1
Wife endowment 70000
Policy tenure 10
PVAF 6.417658
PV of Annuity 449236

One Time Expenses

Marriage 2200000
FV of Marriage 3427528
PV of Marriage Amt 940986.9
Personal Loan 1500000

Gap 34494921

Assets
Shares and Debt 1900000
Property 9000000
Gratuity 660000
EPF 650000
Sovergin Bonds 200000
Mutual Funds 450000
Total 12860000
Gross Insurance 21634921
Insurance Cover 2000000
Insurance Needed 19634921
Bajaj Allianz Life POS Goal Suraksha

(a) This is an endowment policy

(b) The basic feature of this policy are as follows:

(i) Maturity benefits of the policy are as follows
Maturity benefits 2,070,000
+
Guaranteed Additions + 1,070,000
3,140,000

(ii) Death Benefits

The death benefits in this policy do not start just after purchasing
it. There is a waiting period of 90 days and after 90 days
death benefits are available.
The assured amount on the death of the person are as follows

Policy Year Amount

1-9 1,000,000
10 1,050,000
11 1,155,000
12 1,260,000
13 1,260,000
14 1,260,000
15 1,260,000

(iii) In case of emergency one could also take loan against the policy. The interest rate would
be 1% more than the internal rate of return. The loan would be against the premium paid
till that date.

(c) ROI 162%

By investing Rs. 12.00 lakhs for 12 years one would get Rs. 31.40 lakhs.

CAGR 7.19%

As compared to the fixed deposit rates i.e., 5% whereas this policy is providing 7.19%
guaranteed annual return.

Hence if someone is looking for a guaranteed secure income. This policy could be a good choice.
(d) The policy is more suited for individuals whose age is between 45-60 years. This is
because they have not many working years left to recover the cost if they would have
invested in the riskier assets. If a person age is between 25-40 years they could
opt for unit link insurance plan (ULIP) or they can use a mix of the term insurance plan and ULIP.
erest rate would
e premium paid

a good choice.
lan and ULIP.