PRJR INFLAPRO CASE STUDY PROJECT REPORT All SOFTWARE of BNV works ON FIREFOX / GOOGLE CHROME / does not work in IE
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APPLICATION OF INFLAPRO
(A CASE STUDY)


with ICICI pension table for a scheme holder
(Mrs. Shanti venkataraman) at age 62

Date: June 1, 2016.author:B N VenkataramanLast updation: February 13 2020 10:41.IST

The printout [size A4 portrait] SCALING required is 85% or below to match out the page numbers given in following INDEX pages
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INDEX

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INDEX contd.. PART II

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APPLICATION OF INFLAPRO
(A CASE STUDY)


with ICICI pension table for a scheme holder
(Mrs. Shanti venkataraman) at age 62

Date: June 1, 2016.author:B N VenkataramanLast updation: February 13 2020 10:41.IST

THE NEED FOR INFLATION PROTECTION SYSTEM

 The inflation in India since independence is of the order of 10%, even though government figures seems to be low based on the price index calculation with base price 100% since 1980. Because of the problem of inflation, the return on investment such as insurance/pension seems to be very much inadequate, that too with investment limitation under the IT exemtion under 80GC/80GCC etc. The Goverment is also spending tax payers money on government pensioners by way of increasing their pension periodically beyond on recommendation of every pay commission the proportion of their superannuation.

 There is an invention of inflapro by the author B N Venkataraman as early as 2010 when the food inflation is itself was more than 10% in India.

 Applying the principle of inflapro to various schemes of pension providers such as LIC, SBI, ICICI, yield to the customer is BETTER without sacrificing or changing existing profit/loss of the providers for a specific parameters such as expected life span (mortality).

 In fact, in a particular scheme of annuity without return of purchase price if chosen by the customer, if the expected mortality age is 85, then if the customer ceases before it say at age 70, then the profit to the pension provider is greater in the inflapro scheme compared to conventional scheme, where as the annuity is continued at 100% beyond the expected life the perpetual loss to pension provider is exactly same as that of conventional schemes, the reason is given in next para. The details of a chart of LIC scheme for option (LICoption vii) for joint life with ROP is shown at part II chart. In this example, the yield in conventional scheme. opt 1,2,3 are conventional and option 4 to 12 are inflation protected options.

(opt1) is 7.08%  (opt4)  9.90%  (opt7) 13.23%  (opt10) 11.26% (option[13]) 21.08%*
(opt2)    9.54%  (opt5) 11.62%  (opt8) 14.55%  (opt11) 12.68% (5 years moratarium)
(opt3)   12.59%  (opt6) 13.81%  (opt9) 16.11%  (opt12) 14.44% (10 yrs moratarium)
*in FD with equivalent interest rate cumulative over the 25 years term giving  
maximum possible yield is calculated just for comaprison.
cumulative option[13] is not available with pension plans
3% inflation protected option without ROP (return of purchase price) 
is already available with LIC JEEVAN AKSHAY IV and VI

 The comparative study of profit/loss estimates under various schemes considered in this case study to the pension provider is shown in table elsewhere.

 If this information comes to you in printout form then one can view this message with links for varios terminologies above in the following site www.bnvenkat.com/bnv_www/PENSION_AJAX/pensioncasestudy.php.


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INFLAPRO
AUTHOR: B N VENKATARAMAN Add: D-1/233 Sector F, Jankipuram, Lucknow 226 021. phone(M):7388270901
Kanpur Add: B N Venkataraman, c/o B V Raghav dept:design, E4 SBRA(Single bed room apartments),
IIT Kanpur, 208 016

Jeevan Akshay IV and then revised VI
LIC is offering following options in their immediate pension schemes
vide these schemes

The terms like annuity etc, are explained subsequently

Option (i) Annuity payable for life at a uniform rate.

Option (ii) Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive.

Option (iii) Annuity for life with return of purchase price on death of the annuitant.
Option (iv) Annuity payable for life increasing at a simple rate of 3% p.a.

Option (v) Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

Option (vi) Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.

Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor.


The above options are conventional ones except the option(iv). BNV's inflapro has a number of options are suggestions with inflation protected returns to customer, and the inflapro is all about calculating the starting amount for a particular inflapro option extended to each of the above conventional options. Even though a inflation protection of 10% per annum is considered in this case study, BNV's said website provides flexible calculations with varying parameters of inflation constant and expected length of life in other words the full term. With expected life span of 85 years for an annuitant of age 60 is 25 years.
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Inflapro's unlimited options

OPTIONS WITH INFLAPRO

Therefore the options that can be made available to customer is unlimited (in the sense plenty). For each of above 9 options (option iv excluded)

There can be further 11 options (or even more with varying moratorium periods), giving rise to 108 options and also with varying degree of 1% to 10% in step of 0.5 percent, there can be as much as 20 options. In all there can be as much as 2160 options plus the existing 3% inflated option without return of purchase price.

In case of existing 3% fixed inflation prortection and even after the full term of say 25 years on survival for further 15 years, The eroding of profit in such a case to the LIC is heavy. In case of 80 years old customer the interest burden to LIC works out more than 21.63% pa for extended years of 15 years throughout.
However, the annuity amount in initial periods are very low, and there is no return of purchase price, the scheme sustains because of premature deaths before the expected life span of 85 years.

However, in the case of proposed inflapro scheme, the author suggests as much as 10% increase per year with return of purchase price as per NAV standing on the account of the customer. The details will be discussed in later pages.

Important: Since the annuity with inflation protection is exponential, the author proposes a terms limit applicable for the inflated annuity year by year, and to shell out only the last annuity amount for further period of survival over and above the full term.

Notes: The amount of pension receivable by annuitant is available in table form in LIC' official website and is taken for study by b n venkataraman and proposing Inflation protected schemes since the year 2010 in the above said inflapro page of the website.

In fact the option (ii) has 4 options of guaranteed 5 years, 10 years, 15 years and 20 years and the table shows the rate for 15 years sheme.

So there are virtually a total of 10 options available with LIC and the table shows rates for ages 30,40,50,60,70, and 80.

As per new JEEVAN AKSHAY VI, the rates are same as that of JA-IV and in VI, there is an addition of 1% incentive, which is varying from time to time and there are websites calculating the pension amount for the parameters given by user.

As per the calculations in this site, for example for an amount of Rs. 423015, after allowing service tax by customer, the purchase price works out to Rs.416764 and corresponding annuity amount is Rs.30778 in the site shown by advisor, however with 1% incentive in the calculation of this site is working out to Rs. 29215 only. So the return on investment for pension i.e. the interest rate based on certain parameters is slightly higher than that present in this case study with purchase price of Rs. 423015 is 28,220 and to be prcise it is 28,219.99, for option (vii) above for a customer of age 60.

*The customer in consideration is of age 62 and the returns are slighty better than that for age 60. whereas the returns of ICICI is still poorer compared to customer of less age of LIC.

Notes (ICICI):

As per the letter to a customer from ICICI prulife, there are 5 options for annuity,

*the customer in consideration is of age 62 and the returns are slighty better than that for age 60. whereas the returns of ICICI is still poorer compared to customer of less age of LIC.
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WHAT IS SUPERANNUATION BENEFIT IN INDIA AND HOW IT IS TAXED?

November 16, 2015 by Shri Basavaraj Tonagatti reproduced from an informative website click to view site by a Certified Financial Planner by qualification and currently living in Bangalore.

Does your employer offer you superannuation benefit? Whether you know how it works and what are the tax benefits? Many employees not aware or never bothered. Because the contribution is not from their own pocket. Let us discuss more about this benefit.

Superannuation

features of this benefit of Superannuation

There are two types of superannuation benefits. One is called defined benefit-Under this, the benefits at retirement or pension are already known to an employee and it is fixed. Therefore, the risk of generating such defined benefit is purely on an employer (usually based on a formula linked to salary, years of service). The second one is called defined contribution-Under this, the contributions by employers is only known and fixed. However, the end benefits of retirement are not guaranteed. In such type of benefits, the risk is with an employee as he doesn’t know how much he will get at retirement.

The contribution to this benefit is purely by an employer. So nothing will be payable from your own pocket.

Usually an employer buys the product from insurance companies like LIC’s New Group Superannuation Cash Accumulation Plan and continues to contribute there.

The company pays 15% of your Basic+DA. This 15% is not fixed, but a maximum limit is 15%. Therefore, based on company rules, it may change from category of employees. However, there must be same contribution for a category of employer. For example, if a manager level category offered 15% superannuation, then all managers are eligible for 15% superannuation benefit. No single manager will be allowed to receive less than or more than that mark.

This contribution is invested by the managing company as per the guidelines set in the policy.

Once you attain a retirement age then you have two options. One is to withdraw 1/3 of such accumulated amount and 2/3 must be converted as a pension. The second option is to buy the pension product fully without commuting anything. Any such commutation is tax-free for an employee.

The returns of the funds may differ as each employer has the option to select the superannuation providing insurance company like LIC or ICICI. In LIC, this superannuation plan is an endowment type of product where returns will be not that much attractive. However, ICICI offers both ULIP and Endowment superannuation plans.

If an employee resigns, then he has an option to transfer his amount to the new employer (provided both trusts are approved). If the new employer does not have superannuation scheme, then he can withdraw the amount in the account (which is taxed accordingly) or retain the amount in the fund till the retirement age.

Once the superannuation trust is formed, then employer can’t stop contribution in the middle. The employer can stop the contribution only when the trust is wound up.

Type of annuity options available

It purely depends on the annuity provider. However, the common pension options are as below.

What tax benefits of superannuation?

For taxation purposes, there are two types of superannuation. One is approved superannuation and another is not approved. This approval will be from IT Dept. The approved fund means a fund, which is approved and continues to be approved by the Commissioner in accordance with the rules set out in Part B of the Fourth Schedule of the IT Act. You can ask your employer about the status of superannuation.

Employer

Employer’s contribution to an approved superannuation fund is allowed as expenditure deduction for business under Section 36 (1) (iv), subject to limits set out in Rule 87 and 88 of the Income-tax Rules, 1962.

Income received by the trustees on behalf of an approved superannuation fund is exempt under Section 10 (25) (III). Usually, companies form a trust to avail tax benefits on the contributions made to the superannuation benefit.

Employee

Employee contribution (In case employee voluntarily opted, which is only possible in case of defined contribution, but not in the case of defined benefit) for an approved superannuation fund is eligible for deduction under Section 80C, subject to the limits set in Section 80CCE. Any commutation of the annuity is exempt from tax. Benefits payable on death or injury are exempt from tax. The employer’s contribution in excess of Rs 100,000 is treated as a perquisite in the hands of the employee under. Pension or Annuity will be treated as salary income and taxed accordingly.

Note-This whole of above information under under this section of Superannuation is generic purpose. Some features may depend on the insurance company your employer opted for superannuation.

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GENERAL TERMS

Annuity/pension

Annuity plan can be purchased by paying a lump sum amount. The plan provides for annuity payments of a stated amount throughout the life time of the annuitant. The annuity in monthly mode is also known as pension.

Frequency

The frequency of availing annuity can be either Monthly or Quarterly or Half yearly or Yearly. The return as percentage of capital is highest if availed yearly. because the interest rates monthly/quarterly/half yearly have cumulative effect. For a known rate of one type of frequency can be computed to other frequency by the formula of compound interest. click here for conversions trial. For example:
Interest rate 8% | frequency: Monthly is equivalent to the following results:
	Result Yearly:     8.29995% .approx. 8.3%
	Result Halfyearly: 8.13452% .approx. 8.13%
	Result Quarterly:  8.05345% .approx. 8.05%
	Result MOnthly:    8%       .approx. 8% 

Purchase price

The capital amount used for purchase of an annuity plan is called the purchase price. It is also refered as principal, superannuation fund, premium. The premium in this case is one time lump sum. One may take some time under various plans such as public provident fund, etc. over a period of time to build this fund. It could be employer contribution or self contribution periodically to build the fund until retirement.

Immediate annuity(pension)

The annuity usually starts at the very beginning on the purchase of the plan. The purchase date is the date of maturity of the superannuation fund, that is the date of retirement. If the annuity plan is purchased by individual then one can pay lump sum amount and annuity starts immediately. Of course there is some call back period of generally 15 days to formally agree to the annuity plan and the service provider like LIC, SBI, ICICI prulife, HDFClife etc may take a little less than one month to process and deliver the first annuity(pension).

Age/Entry age

The age on the date of purchase of the annuity plan is the age/entry age that is being used to decide the rate of pension. LIC provides Many providers allow age from 40 to 80 to purchase the immediate annuity plan. LIC allow age from 30 to 85. The rate of pension increases with the age. For example a person of age 30 entering the plan will get Rs. 7190 per year for an option of life annuity, whereas a person of age 80 will get Rs.17880 per year for life.

Bonus

Generally the minimum purchase price is Rs. 100000. The rates of pension for the investment is given in tabular form according the age of the annuitant at the time of purchase. The plan does not have any bonus. In case of LIC scheme added an incentive for purchase price over Rs.2.5 lacs. and that incentive is decided at the time of purchase itself and added to the pension rate.

RETURN OF PURCHASE PRICE

LIC and other private players providing the annuity plan, offer an option with return of purchase price on death of annuitant in one option with lower rate among all variants. They also offer an option with return of purchase price on death of last survivor among the spouse in case of joint life policy, and the rate of pension is the least among all options, for a given age. The ROP is payable to the nominee. This ROP is referred to as surrender value (on death) in tables of inflapro in this case study.

No Surrender value

There is no surrender value in any option of the annuity schemes/options. As stated in preceding paragraph the ROP is referred to as surrender value (on death) in the inflapro charts and tables. That should be applicable on death of annuitant or last survivor as the case may be. This is also referred to as maturity value in input parameters while filling the custom user menu.

No Withdrawals

There is no withdrawal facility in these plans. No partial withdrawal also not permissible. The providers allow partial withdrawal in case of PPF, or any other scheme if applicable while building the superannuation fund. Many employer trusts do not allow even that. On superannuation, before the purchase of annuity plan, one may be permitted to withdraw to a maximum of one third of fund. But after purchase of annuity plan there is absolutely no withdrawal or surrender or winding up of the policy. Only death can decide return of purchase price to the nominee.

Conventinal pension

The pension for the annuitant is static at a fixed rate for the entire term of life. However LIC has an option (iv) with a much lesser starting amount as pension and increases it year by year at a simple interest rate of 3%. Conventional pension is like Equated monthly instalment on loans for a term period. The difference between loan and this plan is that the gain to the provider increases if the death of annuitant occurs before caculated expected life span, and the provider pays from its pockets to the annuitant until death.

Government pension

The government pays pension to its employees on retirement and as a welfare scheme with tax payer burden, increases the amount at instance of every pay commission. There is no correlation to the superannuation fund it had.

Yield

Yield is a measure of aggregate payout and an average over the number of years as percentage. In case of inflapro, the payouts in intial years of the term is low, allowing the remaining part of interest accrued to grow with the principal. The accumulated sum is also returned to the customer. So the yield is higher. In case of cumulative option the payout is zero throughout, and total interest accrued is allowed to grow, so the yield in that option is the maximum. The cumulative option is applicable for fixed deposits and not in pension schemes. Therefore this option is shown as 13th option in inflapro tables, just for comaparison to ensure that yield in other options are lower than that and the calculations seem to be right.

Tax benefit

There is no tax benefit on the annuity earned from these schemes. One should not confuse it with the tax benefit obtained while building the superannuation fund before the purchase of annuity scheme. Also refer virtual tax saving in case of inflapro options.

Inflapro and its application on pension

In inflapro system, the lender gets lesser amount than the interest amount for the period, and this difference between the interst calculated and the payout is accumulated to the balance and further interest is applied on the cumulative amount. Thus the net asset value increase in the beginning, The payout for next year is increased by inflation constant say 10%. The proportion of balance accumation is less than the first year, however the NAV still increases. Around the time of half term, the NAV is maximum thereafter, the interest on the balance is less than the payout at the inflation rate, then the borrower starts returning the part of accumated amount and by the end of the term the borrower would have returned the capital and interest. The inflapro by the author calculates the starting amount for return on investment for a given fixed period of time for a given rate of interest on a principal. without sacrifycing the interest burden. The starting amount is increased by inflation protection percentage varying from say 1% to 10%. EMI on loan makes the total repayment of capital and interest by the end of period and the outstanding loan will be nil at the end of the period. However EMI allows the future value, which need not be nil. The future value can be paid back as a lump sum. Likewise, INFLAPRO also calculate the repayment of the capital and interest in toto at the end of the specific period. Like EMI calculation, inflapro also provides for calculation with future value, The yield is much higher than the 1,783.conventional diminishing balance or EMI method of calculation.


FUTURE VALUE in inflapro system

The inflapro system provides flexible future value, either fixed like conventional one or such as interest on last balance is same as the last pension payout. Look at the audit table shown elsewhere, under an proposed inflapro option (7) extended to the existing option of joint life annuity with ROP, The conventional pension is Rs. 7010 constant per year for customer of entry age 60. Against this the start pension is only Rs. 1,825.66 and the last pension payout is Rs.17,982.37 and the last balance at NAV of (23.5155) is Rs. 2,35,155.88. This balance is sufficient to give an interest equivalent at the same rate of interest as Rs. 17,982.37 which is equal to the last pension payout. As the proposed inflapro pension scheme cannot run viably with prolonged inflation the term years are calculated as 25 in this case of age 60 and after the full term, if any of the joint life survives, the person is eligible to get further pension Rs. 17,982. This is certainly far far better compared to static conventional pension of Rs. 7010. The return of purchase price is also as per NAV and the nominee of customer on death receives over Rs. 2.50 lacs which is also far better than the conventional ROP of Rs. 1 lac only. All these achieved without sacrificing the interest rate on which the pension is payable to customer.

VIRTUAL tax saving in inflapro

There is tax saving in the inflapro schemes to the customer, because the pension earning in the initial years are very low and the tax proportion is also very low if applicable. There is periodical increase in tax slab limits almost every year and the increased earning in pension is also in proportion to the inflation and thereby one saves the tax virtually. If the pension provider, shows the interest accrual as pension payable in corresponding year, like bank deposits then there is no extra mileage out of this scheme.

The existing 3% inflation protected scheme of LIC says it is the pension payout only and allows the virtual tax saving clause.

Conventional options and Extended option 1

Conventional LIC options rewritten in short
   (ROP is return of purchase price):

  1.   LIFE ANNUITY
  2.   GUARNTEED 5 OR 10 OR DEFAULT 15 OR 20 YRS AND FURTHER LIFE ANNUITY
  3.   LIFE ANNUITY WITH ROP ON DEATH OF ANNUITANT
  4.   LIFE ANNUITY WITH 3% INCREASE EVERY YEAR
  5.   LIFE ANNUITY CONTINUED WITH 50% ON DEATH TO SPOUSE
  6.   LIFE ANNUITY CONTINUED WITH 100% ON DEATH TO SPOUSE
  7.   JOINT LIFE LIFE ANNUITY UNTIL DEATH OF LAST SURVIVOR AND WITH ROP ON DEATH OF LAST SURVIVOR

To prepare inflapro option chart for a given LIC option, follow the following steps.

    It is important to note that the software developed by the author works satisfactorily with proper page print in FIREFOX browsers only. It works in google chrome also but print page will not be satisfactory, as the chrome does not have formating to take page break given by programmer to take into effect. The software does not work in IE. The author has not tried in other browsers.
  1. visit the site www.bnvenkat.com
  2. Look for the link INFLAPRO for LIC pension and click
  3. click here to skip the above two stepsn and go the concerned web page
  4. One has the choice to change the purchase price by inputing on the input box provided on RHS of the page, for PP of 100000 leave it as such shown at the time of page loading
  5. Look at left hand side and concentrate on the table of rates shown
  6. One has the choice to change the life span expectancy. For the time being leave it at default 85 years
  7. One has the choice of changing the inflation constant. For the time being leave it at default 10%. This click to change inflation rate will take you to top of page and on change or submit it brings you back to the LIC page where you left earlier and the new inflation figure will take effect and will be shown in LIC page too
  8. In the table of rates, look for the age of annuitant 30, 40. 50 ... 80 and go to appropriate age of your choice and LIC option (i) to (vii)
  9. You will find the rate of pension (by default it is for PP of Rs.100000, in case of your changed input, the rate is shown in simple proportion without added rate for LIC incentive and click it
  10. Now this will fill up the table of rate of pension in appropriate page and you will be taken to that page. The amount shown in colum of option 1 is with incentive of 1% over the basic rate
  11. For LIC option (iv) look at the chart of rate of pension at column of option 4
  12. The columns showing various inflapro option are all clickable links and can view the audit table of the respective option on clicking any number on that column
  13. One can scroll up and down of page to see as much information on that site page.
  14. The left hand side and Right hand side of LIC and other pages may show up and down in case of NON full screen of shorter width
  15. If the tables does not show up calculated or not taking effect of clicks try reloading the page once or twice
  16. The site is for general public and no login required for standand rates provided. However for custom option one requires login or logup for new registration and at present only 3 custom based calculations permitted.
  17. For the already provided links of LIC, SBI, ICICI pages available options and rates, the number of attempts and hits are unlimited.
Sample chart with 13 options are shown in this page at here unlike the above steps this sample chart does not have clickable columns for audit table, but have links for column of option 1, 4, 7, 10 only. These are pre-calculated chart/tables unlike above steps.

Conventional option 1,2,3 and Inflapro extended options 4 to 12

The basics for proposed inflapro options, are defining full term with inflation protection and further pension on survival byond fixed term without further inflation protection.

To arrive at full term consider an life expectancy span of say 85 years and subtract the entry age subject to minimum gurantee terms and special consideration to entry age of 80 of policy holder.

It is unreasonable to have expectancy of 100 years as this will not give rise to any speculation by customer and also it will make LIC (pension provider) to have high profit margin. (in other words it can offer high rate of return).

The default considered in the calculations of the author in all his websites is 85

However the user and service provider has option to choose from 70 to 100.

With this 85 the full term years are shown in the side table
Calculation full term for extended options figures in years
(..)(1)(2)(3)(4)(5)(6)(sample)
Entry age30405060708062
Expected life85858585859585
Normal Full term55453525151523
Full term for special case option(ii) guaranteed 20yrs55453525202023
Moratorium M1 is 5 years for full term of 20 years and above and 3 years for full term of 15 years
Moratorium M2 is 10 years for full term of 20 years and above and 7 years for full term of 15 years

    In sample case of entry age of 60 years in option (vii) with ROP the conventional pension amount per lac is Rs. 7010 and the calculated interest rate is 7.53844% pa
  1. Inflapro extended option 1 is identical to conventional option 1
    Further pension on survival beyond full term is same conventional amount and no difference between conv. and infla.
    In the sample case of entry age 60 years the rate of pension in LIC option(vii) extopt (1) is same Rs. 7010 throughout life whether within full term or survival beyond full term
    the pension is same Rs. 7010 per lac and ROP will be Rs.1,00,000.
  2. Inflapro extended option 2 is similar to conventional option 1 with a difference that pension starts after a period of M1*(5 years)(* see above side table) moratorium
    Further pension on survival beyond full term is same conventional amount (same constant pension of the full term.

    In the sample case of entry age 60 years the rate of pension in LIC option(vii) conventional amount of Rs. 7010 extopt (2) the pension starts from sixth year beginning throughout life whether within full term or survival beyond full term
    the pension is same Rs. 10082 per lac and the ROP will be Rs. 1,33,738.
  3. Inflapro extended option 3 is similar to conventional option 1 with a difference that pension starts after a period of M2*(10 years) (* see above side table) moratorium
    The interest applied during moratorium for accumulation purposes is same as 7.53844% pa for the sample case
    Further pension on survival beyond full term is same conventional amount (same constant pension of the full term.

    In the sample case of entry age 60 years the rate of pension in LIC option(vii) conventional amount of Rs. 7010 extopt (2) the pension starts from eleventh year beginning throughout life whether within full term or survival beyond full term
    the pension is same Rs. 14,500 per lac and the ROP will be Rs. 1,92,341.

    All the above 3 options are conventional ones and existing profit margin in the above cases should be considered as bench mark for the profit margins of other inflapro options.
    In sample case of entry age of 60 years in option (vii) with ROP the conventional pension amount per lac is Rs. 7010 and the calculated interest rate is 7.53844% pa

  1. Inflapro extended option 4 is comparable to conventional option 1

    • In case of lic opt(iii) and (vii), Further pension on survival beyond full term is same conventional amount and no difference between conv. and infla, beyond full term. and in case of premature cease of pension before full term also, there is no increase/decrease in profit component to LIC (service provider) in extended opt 4 as the lesser payout is compensated by varying NAV
      because in all inflapro options the payout during early years are quite low compared to the conventional payout.
      The ROP will be as per NAV. There is no increase or decrease in profit component of LIC (service provider) in the case of LIC options with ROP i.e LICopt (iii) and (vii) in any of the ext.opt(4 to 12).
    • In case of lic opt(i) (ii) (v) and (vi), Further pension on survival beyond full term is last inflapro pension amount and that is same as the conventional amount beyond full term, therefore there is no increase/decrease in profit margin beyond the full term say survival over 85 years. In case of premature cease of pension before full term, there is more increased profit component to LIC (service provider) than even the one mentioned in the previous para for options with ROP in this extended option 4 compared to conventional ones
      because in all inflapro options the payout during early years are quite low compared to the conventional payout.

      However among these four non ROP options the option (iv) with ext.opt 4 has more edge on the profit to LIC as only 50% of pension that would have to be paid is given to spouse annuitant on death of the annuitant.
    • In case of LIC opt (iv) and this extended option 4:

      The payouts are identical with 3% annual increase during the full term and hence the profit margin is same as conventional one.

      The payout for extended option beyond the full term is constant as the last pension and in the proposed system as a general rule for inflapro systems the inflation protection stops at full term unlike LIC's conventional one to continue 3% increase. Therefore for this option (iv) extended 4 the profit margin to LIC increases beyond say 85 years age
    In the sample case of entry age 60 years the rate of pension in LIC option(vii) extopt (4) is starting at Rs. 2,483 increases at the rate of 10% every year (in second year it is Rs. 2,731 and so on) and by age 84 the last year of full term the pension amount is amazing Rs. 24,454 after which on survival the pension will be same as conventional life Rs. 7010 throughout life thereafter
    on survival beyond full term the pension is same Rs. 7010 per lac and ROP will be as per varying NAV within the full term and NAV after full term is 10.00 i.e. Rs.1,00,000.

    THERE IS NO INCREASE OR DECREASE IN PROFIT COMPONENT OF LIC (SERVICE PROVIDER) IN THE CASE OF LIC OPTIONS WITH ROP FOR ALL EXTENDED OPTIONS COMPARED TO CONVENTIONAL ONE.
  2. Inflapro extended option 5 is comparable to conventional option 2 with moratorium M1*(5 years).

    • Increase/decrease in profit margin rule is same as that of extended option (4) discussed above.
    • In case of LIC opt (iii) and (vii) i.e. with ROP there is no increase/decrease in profit margin within the full term
      and neither increase or decrease beyond full term as discussed in ext.opt(4) above.
    • In case of LIC opt (i) (ii) (v) (vi) there is increase in profit margin for premature cease within full term
      and there is no increase/decrease in profit margin beyond full term as discussed in ext.opt(4) above.
    • In case of LIC opt (iv) ext.opt(5) with 3% inflation protection to annuitant, there is no increase/decrease in profit margin
      But there is increase in profit margin to LIC for survival beyond full term i.e. surviving over 85/95 years as the case may be as discussed in ext.opt-4 above.
    In the sample case of entry age 60 years the rate of pension in LIC option(vii) extopt (4) is starting at Rs. 4,407 increases at the rate of 10% every year (in second year it is Rs. 4,847 and so on) and by age 84 the last year of full term the pension amount is amazing Rs. 26,950 after which on survival the pension will be same as conventional life Rs. 10,082 proportional to 7010(ref.opt 1) per lac throughout life thereafter beyond full term
    and ROP will be Rs.1,33,739 same as conventional one of extended option 2 discussed above.

    THERE IS NO INCREASE OR DECREASE IN PROFIT COMPONENT OF LIC (SERVICE PROVIDER) IN THE CASE OF LIC OPTIONS WITH ROP FOR ANY OF EXTENDED OPTION COMPARED TO CONVENTIONAL ONE.
    • It is suggested that in case of with ROP or without ROP with MORATORIUM options, in any conventional option or extended option 5 and 6, for death of annuitant or the last survivor as the case may be the ROP be applied as per the principal of NAV. and the purchase of policy be effected from the date immediately after the moratorium period. That is to allow the fund to grow as per interest rate applicable as per age and option during the moratorium period without fund switches that was available during the building up of the superannuation fund.
  3. Inflapro extended option 6 is comparable to conventional option 3 with moratorium M2*(10 years).

    • Increase/decrease in profit margin rule is same as that of extended option (4) discussed above.
    • In case of LIC opt (iii) and (vii) i.e. with ROP there is no increase/decrease in profit margin within the full term
      and neither increase or decrease beyond full term as discussed in ext.opt(4) above.
    • In case of LIC opt (i) (ii) (v) (vi) there is increase in profit margin for premature cease within full term
      and there is no increase/decrease in profit margin beyond full term as discussed in ext.opt(4) above.
    • In case of LIC opt (iv) ext.opt(6) with 3% inflation protection to annuitant, there is no increase/decrease in profit margin
      But there is increase in profit margin to LIC for survival beyond full term i.e. surviving over 85/95 years as the case may be as discussed in ext.opt-4 above.
    In the sample case of entry age 60 years the rate of pension in LIC option(vii) extopt (4) is starting at Rs. 7,775 increases at the rate of 10% every year (in second year it is Rs. 8,553 and so on) and by age 84 the last year of full term the pension amount is amazing Rs. 29,528 after which on survival the pension will be same as conventional life Rs. 14,500 proportional to 7010(ref.opt 1) per lac throughout life thereafter beyond full term
    and ROP will be Rs.1,92,341 same as conventional one of extended option 3 discussed above.

    THERE IS NO INCREASE OR DECREASE IN PROFIT COMPONENT OF LIC (SERVICE PROVIDER) IN THE CASE OF LIC OPTIONS WITH ROP FOR ANY OF EXTENDED OPTION COMPARED TO CONVENTIONAL ONE.
    • It is suggested that in case of with ROP or without ROP with MORATORIUM options, in any conventional option or extended option 5 and 6, for death of annuitant or the last survivor as the case may be the ROP be applied as per the principal of NAV. and the purchase of policy be effected from the date immediately after the moratorium period. That is to allow the fund to grow as per interest rate applicable as per age and option during the moratorium period without fund switches that was available during the building up of the superannuation fund.

PROFIT MARGIN CHART FOR ALL CASES OF EXT.OPTION 4 FOR VARIOUS LIC OPTIONS

A proft margin chart of extended option 4 of the inflapro, for all 7 options from LIC opt(i) to (vii) for entry age sample 60 are given in the subsequent pages, to view click here. The assumption for LIC option (v) is that the annuitant ceases at a particular age and spouse annuitant dies 10 years thereafter. In all cases of survival beyond the full term will have fixed annuity that may be conventional amount or last pension amount or half last pension amount as the case may be and inflation protection ends at the full term.

The mortality is considered for all ages right from age 61 to 100 for this entry age of 60.

SOLICITATION Vs Extended option 7 and sister options 8 and 9

Before continuing with details of option 7 to 12 of the inflapro to be applied to those options, the author wants to discuss about the pension as the subject matter of solicitation.

We know that insurance is the subject matter of solicitation, the pension plans also started to be the matter of solicitation, without any return of purchase amount to the nominee.

Thus the gamble for the customer. If the customer lives for long he enjoys more return on the investment otherwise it is profit for the service provider.

However, later there is less return in proportion to the without ROP version and the service provider started giving the return of purchase price.

The same gamble is continued in extended option 4 of inflapro of the author in LIC options (i) (ii) (iv) (v) and (vi).

However even though the calculations are provided option (iii) and (vii) there is no gamble and the ROP has to be based on the NAV of the account of the annuitant and the NAV of ROP compensates the apparent loss to customer. There is no increase/decrease in profit margin in options with ROP and in all other cases there is increase for premature deaths before the full term considered in the inflapro.

In the case of extended option 4 for these ROP options the balance money worked out at the end of full term on the account after all payments is only the same purchase amount 100000 per lac or NAV 10.00.

That balance of NAV 10.00 can give only a pension of the conventional amount say for example 7010 for option(vii) of entry age 60.

This money of 7010 is too less beyond the full term comapared to last pension of the full term under the same inflapro scheme say Rs. 24,454 and the sum is too less under the condition of continued inflation.

The sister extended option 5 and 6 are the same side of the coin of option 4 discussed here.

So the author devised a scheme in the inflapro to sustain at least the last pension for the years beyond the full term finding a suitable balance at the end of the term so as to give a payout at least equivalent to the last inflapro pension drawn.

The NAV of ROP also increases considerably in extended option 7.

The last inflapro pension of say (Rs.17,565) which is less than that in extended option 4 is far far superior than the conventional amount of Rs. 7010.

Thus the birth of option 7 and sister options 8 and 9. IN THIS EXTENDED OPTION 7 THERE IS ALWAYS RETURN OF PURCHASE PRICE THAT TOO ON THE BASIS OF NAV. Therefore the option 7 should be applied for existing LIC option of (iii) and (vii) ROP only.

Even though one can specify the interest rate and generate the calculations, one can apply for other options of high rate of return on investment. But that is not logical. So the extended option 7 and the sister options 8 and 9 be applied for the options of annuity with ROP only.

IT IS A FAIR GAME AND NO GAMBLE NOR SOLICITATION FOR THE ANNUITANTS AND THERE IS NO LOSS / NO GAIN FOR BOTH CUSTOMER AND LIC (SERVICE PROVIDER) OVER THE COMMITTED INTEREST BURDEN OF FIXED INTEREST AMOUNT IN THIS OPTION LIKE CONVENTIONAL OPTIONS OF ANNUITY WITH ROP.

The yield is considerably higher (maximum among conventional as well as other inflapro options) because the annuitant is agreeing to save more money for later years to have inflation protection by sacrificing quantum of pension in early years.

Take the cases of extreme entry ages of 30 as well as 80 and have the knowledge of the inflapro of the author with an inflation protection of 10% per annum.

For entry age of 30 with Rs.100000 purchase price in (iii) with ROP the conventional amount is Rs. 6,890 per year per lac for the full term of 55 years. In inflapro option 7, the first pension amout at 30 is only Rs. 617 continues with a rise of 10% every year, the last pension at the full term is Rs. 1,06,203 and the ROP based on NAV is 15,41,434 an NAV of 154.1433. This is certainly very good proposition to fight the sustained inflation instead of receiving the paltry 6,890 pension or ROP of 100000 on NAV of 10.0000

The calculations and audit table of the author prove the point that there is no extra burden to LIC in executing this scheme.

Extended option 10 and sister options 11 and 12

The extended option 10 is also similar to option 7 with a difference that one can draw more pension during the full term and leave less balance at the end of full term so that the balance is sufficient to foot half the last inflapro pension of the full term.

IT IS A FAIR GAME AND NO GAMBLE NOR SOLICITATION FOR THE ANNUITANTS AND THERE IS NO LOSS / NO GAIN FOR BOTH CUSTOMER AND LIC (SERVICE PROVIDER) OVER THE COMMITTED INTEREST BURDEN OF FIXED INTEREST AMOUNT IN THIS OPTION LIKE CONVENTIONAL OPTIONS OF ANNUITY WITH ROP.

SMART OPTION EITHER CONVENTIONAL OR EXTENDED ONES WITH ROP

The moral of the story is to propose to LIC to permit rescheduling to switch over to any other option or allow the person to get more rate of pension as per his/her age at that time in the same option also. The LIC can charge a token money out of the outstanding balance (i.e. ROP) for the service/document preparation along with service tax as applicable for fresh purchase.

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INFLATION TABLE SINCE THE YEAR 1957

show inflation table
hide this

Annual inflation of commodities from
the experience of middle class
common man
from the memory lane
commodity19572010inflation
pa
Paddy50.001200.006.18%
Til oil3.00180.008.03%
Soap0.3020.008.25%
Gold (8gm soverin)75.0014780.0010.48%
Rural House rent20.003500.0010.24%
Urban House rent200.0020000.009.08%
One time a day monthly meal in Lunch home20.00900.007.45%
Petrol/litre 0.9055.008.07%
clerical salary30.0012000.0011.97%
Officer salary180.0050000.0011.20%
Part time sevant maid5.00700.009.77%
monthly veg budget3.00600.0010.51%
milk0.1832.0010.27%
Ghee4.00240.008.03%
Enter your known commodity / yr / prices here
then move cursor away from that field to another column.
PreYr CurYr See % for your eyes
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ICICI PENSION INCOME ESTIMATE
Table for annuity for Age 62
and five options

ICICI PRULIFE LETTER TO A CUSTOMER AGE 62

view ICICI prulife letter
click to view ICICI prulife letter to a customer age 62

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pension AS INTEREST% age 62
(expectedlife 85yrs)

CALCULATED RETURN AS INTEREST RATES (EXPECTEDLIFE 85YRS)

BNV's CALCULATED INTEREST FOR VARIOUS ICICI prulife Options
as per age=62 and expected life upto 85

age

opttion

description

Yearly

HalfYearly

Quarterly

Monthly

Purchase Price=Rs.423014.80

62

1

Life annuity without return of purchase amount

6.92447% pa

6.3099% pa

5.96584% pa

5.6676% pa

2

Life annuity with return of purchase amount

7.26537% pa

6.78404% pa

6.522% pa

6.30096% pa

3(a)

Life annuity guaranteed for 5 years and life thereafter without return of purchase amount

6.87863% pa

6.27252% pa

5.93152% pa

5.63508% pa

3(b)

Life annuity guaranteed for 10 years and life thereafter without return of purchase amount

6.76609% pa

6.17354% pa

5.84056% pa

5.5494% pa

3(c)

Life annuity guaranteed for 15 years and life thereafter without return of purchase amount

6.61355% pa

6.03798% pa

5.71184% pa

5.42628% pa

4

Joint life last survivor without return of purchase amount

4.86632% pa

4.42282% pa

4.13084% pa

3.77868% pa

5

Joint life last survivor with return of purchase amount

7.27705% pa

6.80072% pa

6.52496% pa

6.24936% pa


Comparatively Interest burden for LIC for life expectancy 85yrs

LIC.Age

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

gauranteed
5 yrs

gauranteed
10 yrs

gauranteed
15 yrs

30

7.59856%

7.56164%

7.41082%

8.3335%

7.46317%

7.32771%

7.37632%

40

7.82472%

7.73502%

7.46864%

8.50153%

7.56824%

7.32389%

7.42266%

50

8.26596%

8.00716%

7.57488%

8.84524%

7.74738%

7.27968%

7.49434%

60

9.01487%

8.88065%

6.76609%

8.17538%

7.7626%

9.42403%

7.94856%

7.01594%

7.647%

70

10.22264%

6.21418%

8.1141%

10.13314%

7.5389%

5.3638%

7.96101%

80*) exp.age95)

20.09608%

7.32301%

8.37394%

20.22579%

14.54059%

10.67402%

8.14948%



Inference for
ICICI scheme Age 62(Purchase Price=Rs.423014.80)
LIC scheme age 60(Purchase Price=Rs.416764.00) without considering incentive
LIC option ICICI option scheme desc. intt. form ICICI as % intt. form LIC as % remarks
(i) 1 Life annuity without return of purchase amount yearly 6.92447% pa 9.01487% pa LIC fares better approx. by 2.1%
(ii).5 3(a) Life annuity guaranteed for 5 years and life thereafter without return of purchase amount yearly 6.87863% pa 8.88065% pa LIC fares better approx. by 2.0%
(ii).10 3(a) Life annuity guaranteed for 10 years and life thereafter without return of purchase amount yearly 6.76609% pa 8.58147% pa LIC fares better approx. by 1.82%
(ii).15 3(c) Life annuity guaranteed for 15 years and life thereafter without return of purchase amount yearly 6.61355% pa 8.17538% pa LIC fares better approx. by 1.56%
(iii) 2 Life annuity with return of purchase amount yearly 7.26537% pa 7.7626% pa LIC fares better approx. by 0.30%
(iv) nil LIC Option (iv): Annuity payable for life increasing at a simple rate of 3% p.a. yearly not applicable 9.42403% pa LIC 3%Inflation protected scheme not available with others
(v) nil LIC Option (v): Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant. yearly not applicable 7.94856% pa LIC stands out witn more options to customers
(vi) 4 Joint life last survivor without return of purchase amount yearly 4.86632% pa 5.3638% pa LIC fares better approx. by 0.50%
(vii) 5 Joint life last survivor with return of purchase amount on death of last survivor yearly 7.27705% pa 7.647% pa LIC fares better approx. by 0.37%
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pension AS INTEREST% age 62
(expectedlife 100yrs)

Calculated RETURN AS INTEREST RATES (expectedlife 100yrs)


BNV's CALCULATED INTEREST FOR VARIOUS ICICI prulife Options
as per age=62 and expected life upto 100

age

opttion

description

Yearly

HalfYearly

Quarterly

Monthly

Purchase Price=Rs.423014.80

62

1

Life annuity without return of purchase amount

8.55276% pa

7.92708% pa

7.58976% pa

7.31136% pa

2

Life annuity with return of purchase amount

7.17598% pa

6.74122% pa

6.50108% pa

6.29412% pa

3(a)

Life annuity guaranteed for 5 years and life thereafter without return of purchase amount

8.51451% pa

7.8963% pa

7.56168% pa

7.28484% pa

3(b)

Life annuity guaranteed for 10 years and life thereafter without return of purchase amount

8.42074% pa

7.81488% pa

7.48748% pa

7.21536% pa

3(c)

Life annuity guaranteed for 15 years and life thereafter without return of purchase amount

8.29389% pa

7.7036% pa

7.38256% pa

7.11564% pa

4

Joint life last survivor without return of purchase amount

6.8604% pa

6.39564% pa

6.11212% pa

5.80116% pa

5

Joint life last survivor with return of purchase amount

7.1876% pa

6.75786% pa

6.50404% pa

6.24252% pa


Comparatively
Max interest burden for LIC for life expectancy 100yrs

LIC.Age

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

30

7.70066%

7.66498%

7.40357%

8.55495%

7.56988%

7.43919%

7.36902%

40

8.03483%

7.94992%

7.45354%

8.89183%

7.79226%

7.56188%

7.40749%

50

8.71354%

8.47631%

7.54225%

9.56804%

8.239%

7.81386%

7.46165%

60

10.06984%

9.34102%

7.6863%

10.92111%

9.14554%

8.34827%

7.57101%

70

13.37963%

10.25985%

7.89874%

14.12617%

11.27378%

9.61776%

7.74836%

80*(exp.age100)

21.20976%

9.62223%

8.25645%

21.63249%

16.09225%

12.60059%

8.0344%

The interest burden for LIC is over 10% for ages 70 and above and maximum is 21.63249% and a good speculation for customers. Higher the interest rate lesser the profit margin or even loss for LIC (service provider)




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pension AS INTEREST% age 62
(expectedlife 72yrs)

Calculated RETURN AS INTEREST RATES (expectedlife 72yrs-i.e.-10 years from start)



BNV's CALCULATED INTEREST FOR VARIOUS ICICI prulife Options
as per age=62 and expected life upto 72(10years from now)

age opttion description Yearly HalfYearly Quarterly Monthly
Purchase Price=Rs.423014.80
62
1Life annuity without return of purchase amount-4.05165% pa-4.36354% pa-4.61844% pa-4.91916% pa
iiLife annuity with return of purchase amount7.13634% pa6.72138% pa6.49114% pa6.29074% pa
3(a)Life annuity guaranteed for 5 years and life there-after without return of purchase amount-4.12106% pa-4.42316% pa-4.67472% pa-4.97364% pa
3(b)Life annuity guaranteed for 10 years and life thereafter without return of purchase amount-4.29162% pa -4.58116% pa-4.8238% pa-5.1168% pa
3(c)Life annuity guaranteed for 15 years and life thereafter without return of purchase amount2.8342% pa 2.36072% pa2.06276% pa1.77192% pa
4Joint life last survivor without return of purchase amount-7.20426% pa-7.4159% pa-7.66984% pa-8.12556% pa
5Joint life last survivor with return of purchase amount7.14801% pa6.73805% pa6.49406% pa6.23914% pa

Comparatively
Interest burden for LIC for life expectancy 70yrs
LIC.Age (i)(ii)(iii)(iv)(v)(vi)(vii)

30

7.23971%

7.19979%

7.43299%

7.7088%

7.09318%

6.94626%

7.39853%

40

6.96875%

6.86654%

7.51779%

7.20173%

6.67607%

6.39606%

7.47178%

50

5.85578%

5.53141%

7.69696%

5.61721%

5.20431%

4.61167%

7.61578%

60

-1.46282%

4.27109%

8.17813%

-2.97656%

-3.10789%

-4.56792%

8.0574%

70*
exp.age80
85 for (ii)

4.47145%

6.21418%

8.35957%

3.50154%

1.23212%

-1.41723%

8.2023%

80*
exp.age90
95 for (ii)

16.08563%

7.32301%

8.62644%

15.53883%

9.61033%

5.01295%

8.3959%


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Part I conclusion

PART I CONCLUSION

	From the above charts of interest burden to ICICI prulife/ LIC can be compared:
	for example for the pension policy holder
	of entry age 62 (i.e age at the time of starting the annuity/ deposit of purchase price)
	and (in case of LIC the rate considered at entry age of 60 which is applicable for age 62)
	The expected life upto 85 years  
	is:
												
	option (vii)
	of LIC/
	option (5)
	of ICICI
	scheme:
	Joint life annuity
	with return of
	purchase price
						ICICI int%		LIC int%
	
	pension per lac
	per year				   Rs.6671		   Rs. 7010 		yearly
	
	Interest burden/
	Return on investment	  7.27705% pa	   7.647% pa
	
	   In addition there is 1% incentive in LIC Scheme for purchase price over Rs.2.5 lacs
	                       with incentive of LIC the comparison looks like:
						ICICI int%		LIC int%
	
	pension for purchase price
	of Rs,  4,23,015.00
	per year				   Rs.28,220		   Rs. 29,949.87 	yearly
	pension per lac
	per year				   Rs.6671		   Rs. 7080 	yearly
	
	Interest burden/
	Return on investment	   7.27705% pa	    7.72801% pa
	
	
	   In all cases of comparison between ICICI prulife  and  LIC pension LIC fares better and 
	gives more benefit to customer.
	
	  However in this case study only the option of joint life immediate annuity  with return of 
	purchase price is highlighted.
	
	  Also with the investment over Rs. 2.50 lacs, in this case of Rs.4,23,015.00 the benefit to 
	customer is of the order of Rs. 2500 in case of yearly pension  and  about  Rs.170 in case 
	of monthly pension over the rates of ICICI.
	
	
	
	

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PART II


LIC pension schemes are better than others with more benefit to customer.

Therefore only LIC options are taken for analysis and suggestion for

adopting inflapro options;


PART II


AUDIT CHART FOR SELECTED INFLAPRO OPTIONS
FOR ICICI & LIC schemes
shown in following pages

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TABLE OF RUN BALANCE (AUDIT TABLE) - ICICI - 5- (inflapro-1)

Principal:423015.00   Rate of Intt:7.27705    Compounding mode:Yearly compounded
ICICI prulife ANNUITY SCHEME 5
entry age=62
Joint life last survivor with return of purchase amount


Option 1 - Conventional-the pension starts at first year and continues with the static pension for the entire period of term
Having maturity value

Term: 23 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 62 4,23,015.00 28,219.99 28,729.43 4,23,524.44 10.0120
year 2(1)/AGE 63 4,23,524.44 28,219.99 28,766.50 4,24,070.95 10.0249
year 3(1)/AGE 64 4,24,070.95 28,219.99 28,806.27 4,24,657.23 10.0388
year 4(1)/AGE 65 4,24,657.23 28,219.99 28,848.94 4,25,286.18 10.0536
year 5(1)/AGE 66 4,25,286.18 28,219.99 28,894.71 4,25,960.90 10.0696
year 6(1)/AGE 67 4,25,960.90 28,219.99 28,943.80 4,26,684.71 10.0867
year 7(1)/AGE 68 4,26,684.71 28,219.99 28,996.48 4,27,461.20 10.1051
year 8(1)/AGE 69 4,27,461.20 28,219.99 29,052.98 4,28,294.19 10.1247
year 9(1)/AGE 70 4,28,294.19 28,219.99 29,113.60 4,29,187.80 10.1459
year 10(1)/AGE 71 4,29,187.80 28,219.99 29,178.63 4,30,146.44 10.1685
~ ~ continued (click here to see full)     ~       ~       ~  
year 22(1)/AGE 83 4,46,618.58 28,219.99 30,447.07 4,48,845.66 10.6106
year 23(1)/AGE 84 4,48,845.66 28,219.99 30,609.14 4,51,234.81 10.6671
Adjustment +0.18 10.0000
Further pension(on survival) 28,219.99
Surrender val(on death) 4,23,015.00

MoratoriumNil years
InflationProtectionNIL
Yield6.67% pa
start-Amt(after Moratorium)Rs.28,219.99
(start-amt per lac after Moratorium): (Rs.6,671.15 )
(conventional immediate payout per lac): (Rs.6,671.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 1 - Conventional-the pension starts at first year at Rs.28,219.99 Yearly compounded and continues with the static pension for the entire period




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TABLE OF RUN BALANCE (AUDIT TABLE) - ICICI - 5- (inflapro-4)

Principal:423015.00   Rate of Intt:7.27705    Compounding mode:Yearly compounded
ICICI prulife ANNUITY SCHEME 5
entry age=62
Joint life last survivor with return of purchase amount


Option 4 - Inflapro - pension starts at first year, increases every year, further pension if any will be static after term
Having maturity value

Term: 23 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 62 4,23,015.00 10,849.47 29,993.49 4,42,159.02 10.4525
year 2(1)/AGE 63 4,42,159.02 11,934.42 31,307.66 4,61,532.26 10.9105
year 3(1)/AGE 64 4,61,532.26 13,127.86 32,630.61 4,81,035.01 11.3715
year 4(1)/AGE 65 4,81,035.01 14,440.65 33,954.30 5,00,548.66 11.8328
year 5(1)/AGE 66 5,00,548.66 15,884.72 35,269.24 5,19,933.18 12.2911
year 6(1)/AGE 67 5,19,933.18 17,473.19 36,564.26 5,39,024.25 12.7424
year 7(1)/AGE 68 5,39,024.25 19,220.51 37,826.38 5,57,630.12 13.1822
year 8(1)/AGE 69 5,57,630.12 21,142.56 39,040.47 5,75,528.03 13.6053
year 9(1)/AGE 70 5,75,528.03 23,256.82 40,189.05 5,92,460.26 14.0056
year 10(1)/AGE 71 5,92,460.26 25,582.50 41,251.98 6,08,129.74 14.3760
~ ~ continued (click here to see full)     ~       ~       ~  
year 22(1)/AGE 83 5,54,708.25 80,288.86 34,523.74 5,08,943.13 12.0313
year 23(1)/AGE 84 5,08,943.13 88,317.75 30,609.12 4,51,234.50 10.6671
Adjustment +0.49 10.0000
Further pension(on survival) 28,219.99
Surrender val(on death) 4,23,015.00

MoratoriumNil years
InflationProtection10% every year
Yield8.87% pa
start-Amt(after Moratorium)Rs.10,849.47
(start-amt per lac after Moratorium): (Rs.2,564.79 )
(conventional immediate payout per lac): (Rs.6,671.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 4 - Inflapro - pension starts at first year at Rs.10,849.47 Yearly compounded and increases @ simple rate of 10% every year for a period of 23 years years further pension static at conventional amount on survival of annuitant beyond 85 years whichever earlier and further pension if any will be static as per conventional amount Rs.28,219.99 after that period for life



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TABLE OF RUN BALANCE (AUDIT TABLE) - ICICI - 5- (inflapro-7)

Principal:423015.00   Rate of Intt:7.27705    Compounding mode:Yearly compounded
ICICI prulife ANNUITY SCHEME 5
entry age=62
Joint life last survivor with return of purchase amount


Option 7 - Inflapro - pension starts at first year, increases every year, further pension static after term will full as last pension amt
Having maturity value

Term: 23 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 62 4,23,015.00 7,751.05 30,218.97 4,45,482.92 10.5311
year 2(1)/AGE 63 4,45,482.92 8,526.16 31,797.56 4,68,754.32 11.0812
year 3(1)/AGE 64 4,68,754.32 9,378.78 33,428.99 4,92,804.53 11.6498
year 4(1)/AGE 65 4,92,804.53 10,316.66 35,110.88 5,17,598.75 12.2359
year 5(1)/AGE 66 5,17,598.75 11,348.33 36,840.10 5,43,090.52 12.8385
year 6(1)/AGE 67 5,43,090.52 12,483.16 38,612.56 5,69,219.92 13.4562
year 7(1)/AGE 68 5,69,219.92 13,731.48 40,423.17 5,95,911.61 14.0872
year 8(1)/AGE 69 5,95,911.61 15,104.63 42,265.61 6,23,072.59 14.7293
year 9(1)/AGE 70 6,23,072.59 16,615.09 44,132.22 6,50,589.72 15.3798
year 10(1)/AGE 71 6,50,589.72 18,276.60 46,013.74 6,78,326.86 16.0355
~ ~ continued (click here to see full)     ~       ~       ~  
year 22(1)/AGE 83 9,24,410.11 57,359.82 63,095.68 9,30,145.97 21.9884
year 23(1)/AGE 84 9,30,145.97 63,095.80 63,095.67 9,30,145.84 21.9884
Adjustment +1.86 20.4969
Further pension(on survival) 63,095.80
Surrender val(on death) 8,67,051.90

MoratoriumNil years
InflationProtection10% every year
Yield10.90% pa
start-Amt(after Moratorium)Rs.7,751.05
(start-amt per lac after Moratorium): (Rs.1,832.33 )
(conventional immediate payout per lac): (Rs.6,671.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 7 - Inflapro - pension starts at first year at Rs.7,751.05 Yearly compounded , increases @ simple rate of 10% every year for a period of 23 years years further pension static at 100% of last pension amount on survival of annuitant beyond 85 years or period of of 23 years years whichever later on survival Rs.63,095.80 for life. The return of purchase price will be as per NAV max of 20.4969



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TABLE OF RUN BALANCE (AUDIT TABLE)- LIC (vii) - inflapro:(1)

Principal:423015.00   Rate of Intt:7.72801    Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25


Option 1 - Conventional-the pension starts at first year and continues with the static pension for the entire period of term
Having maturity value

Term: 25 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 60 4,23,015.00 29,949.87 30,376.11 4,23,441.24 10.0100
year 2(1)/AGE 61 4,23,441.24 29,949.87 30,409.05 4,23,900.42 10.0209
year 3(1)/AGE 62 4,23,900.42 29,949.87 30,444.54 4,24,395.09 10.0326
year 4(1)/AGE 63 4,24,395.09 29,949.87 30,482.77 4,24,927.99 10.0452
year 5(1)/AGE 64 4,24,927.99 29,949.87 30,523.95 4,25,502.07 10.0587
year 6(1)/AGE 65 4,25,502.07 29,949.87 30,568.31 4,26,120.51 10.0734
year 7(1)/AGE 66 4,26,120.51 29,949.87 30,616.11 4,26,786.75 10.0891
year 8(1)/AGE 67 4,26,786.75 29,949.87 30,667.59 4,27,504.47 10.1061
year 9(1)/AGE 68 4,27,504.47 29,949.87 30,723.06 4,28,277.66 10.1244
year 10(1)/AGE 69 4,28,277.66 29,949.87 30,782.81 4,29,110.60 10.1440
~ ~ continued (click here to see full)     ~       ~       ~  
year 24(1)/AGE 83 4,48,059.06 29,949.87 32,311.52 4,50,420.71 10.6478
year 25(1)/AGE 84 4,50,420.71 29,949.87 32,494.03 4,52,964.87 10.7080
Adjustment 0.00 10.0000
Further pension(on survival) 29,949.87
Surrender val(on death) 4,23,015.00

MoratoriumNil years
InflationProtectionNIL
Yield7.08% pa
start-Amt(after Moratorium)Rs.29,949.87
(start-amt per lac after Moratorium): (Rs.7,080.09 )
(conventional immediate payout per lac): (Rs.7,010.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 1 - Conventional-the pension starts at first year at Rs.29,949.87 Yearly compounded and continues with the static pension for the entire period for life with a provision of of the conventional annuity payable to spouse during his/ her life time on death of annuitant. with return of purchase price on the death of last survivor



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TABLE OF RUN BALANCE (AUDIT TABLE)- LIC (vii) - inflapro:(4)

Principal:423015.00   Rate of Intt:7.72801    Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25


Option 4 - Inflapro - pension starts at first year, increases every year, further pension if any will be static after term
Having maturity value

Term: 25 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 60 4,23,015.00 10,854.99 31,851.77 4,44,011.78 10.4963
year 2(1)/AGE 61 4,44,011.78 11,940.49 33,390.51 4,65,461.80 11.0034
year 3(1)/AGE 62 4,65,461.80 13,134.54 34,955.90 4,87,283.16 11.5192
year 4(1)/AGE 63 4,87,283.16 14,447.99 36,540.75 5,09,375.92 12.0415
year 5(1)/AGE 64 5,09,375.92 15,892.79 38,136.43 5,31,619.56 12.5673
year 6(1)/AGE 65 5,31,619.56 17,482.07 39,732.60 5,53,870.09 13.0933
year 7(1)/AGE 66 5,53,870.09 19,230.28 41,317.02 5,75,956.83 13.6155
year 8(1)/AGE 67 5,75,956.83 21,153.31 42,875.27 5,97,678.79 14.1290
year 9(1)/AGE 68 5,97,678.79 23,268.64 44,390.47 6,18,800.62 14.6283
year 10(1)/AGE 69 6,18,800.62 25,595.50 45,842.95 6,39,048.07 15.1069
~ ~ continued (click here to see full)     ~       ~       ~  
year 24(1)/AGE 83 5,86,756.42 97,198.90 37,833.05 5,27,390.57 12.4674
year 25(1)/AGE 84 5,27,390.57 1,06,918.79 32,494.10 4,52,965.88 10.7080
Adjustment -1.01 10.0000
Further pension(on survival) 29,949.87
Surrender val(on death) 4,23,015.00

MoratoriumNil years
InflationProtection10% every year
Yield10.09% pa
start-Amt(after Moratorium)Rs.10,854.99
(start-amt per lac after Moratorium): (Rs.2,566.10 )
(conventional immediate payout per lac): (Rs.7,010.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 4 - Inflapro - pension starts at first year at Rs.10,854.99 Yearly compounded and increases @ simple rate of 10% every year for a period of 25 years years for life with a provision of of the conventional annuity payable to spouse during his/ her life time on death of annuitant. with return of purchase price on the death of last survivor In case of premature death return of purchase price is as per nav to a MAX of 17.0784 further pension static at conventional amount on survival of annuitant beyond 85 years whichever earlier and further pension if any will be static as per conventional amount Rs.29,949.87 after that period for life



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TABLE OF RUN BALANCE (AUDIT TABLE)- LIC (vii) - inflapro:(7)

Principal:423015.00   Rate of Intt:7.72801    Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25


Option 7 - Inflapro - pension starts at first year, increases every year, further pension static after term will full as last pension amt
Having maturity value

Term: 25 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 60 4,23,015.00 7,857.84 32,083.39 4,47,240.55 10.5726
year 2(1)/AGE 61 4,47,240.55 8,643.62 33,894.81 4,72,491.74 11.1696
year 3(1)/AGE 62 4,72,491.74 9,507.98 35,779.43 4,98,763.19 11.7906
year 4(1)/AGE 63 4,98,763.19 10,458.78 37,736.21 5,26,040.62 12.4355
year 5(1)/AGE 64 5,26,040.62 11,504.66 39,763.39 5,54,299.35 13.1035
year 6(1)/AGE 65 5,54,299.35 12,655.13 41,858.32 5,83,502.54 13.7938
year 7(1)/AGE 66 5,83,502.54 13,920.64 44,017.35 6,13,599.25 14.5053
year 8(1)/AGE 67 6,13,599.25 15,312.70 46,235.64 6,44,522.19 15.2363
year 9(1)/AGE 68 6,44,522.19 16,843.97 48,507.04 6,76,185.26 15.9849
year 10(1)/AGE 69 6,76,185.26 18,528.37 50,823.79 7,08,480.68 16.7483
~ ~ continued (click here to see full)     ~       ~       ~  
year 24(1)/AGE 83 10,71,881.80 70,361.46 77,397.59 10,78,917.93 25.5054
year 25(1)/AGE 84 10,78,917.93 77,397.61 77,397.59 10,78,917.91 25.5054
Adjustment +0.27 23.6757
Further pension(on survival) 77,397.61
Surrender val(on death) 10,01,520.57

MoratoriumNil years
InflationProtection10% every year
Yield12.77% pa
start-Amt(after Moratorium)Rs.7,857.84
(start-amt per lac after Moratorium): (Rs.1,857.57 )
(conventional immediate payout per lac): (Rs.7,010.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 7 - Inflapro - pension starts at first year at Rs.7,857.84 Yearly compounded , increases @ simple rate of 10% every year for a period of 25 years years for life with a provision of 100% of the last annuity payable to spouse during his/ her life time on death of annuitant. with return of purchase price on the death of last survivor further pension static at 100% of last pension amount on survival of annuitant beyond 85 years or period of of 25 years years whichever later on survival Rs.77,397.61 for life. The return of purchase price will be as per NAV max of 23.6757



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Audit table for Suggestion of
100% to spouse/50% after term on survival
ROP as per NAV

TABLE OF RUN BALANCE (AUDIT TABLE)- LIC (vii) - inflapro:(10)

Principal:423015.00   Rate of Intt:7.72801    Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25


Option 10 - Inflapro - pension starts at first year, increases every year, further pension static after term will half as last pension amt
Having maturity value

Term: 25 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 60 4,23,015.00 9,801.83 31,933.16 4,45,146.33 10.5231
year 2(1)/AGE 61 4,45,146.33 10,782.01 33,567.72 4,67,932.04 11.0618
year 3(1)/AGE 62 4,67,932.04 11,860.21 35,245.28 4,91,317.11 11.6146
year 4(1)/AGE 63 4,91,317.11 13,046.23 36,960.82 5,15,231.70 12.1799
year 5(1)/AGE 64 5,15,231.70 14,350.85 38,708.12 5,39,588.97 12.7557
year 6(1)/AGE 65 5,39,588.97 15,785.94 40,479.55 5,64,282.58 13.3395
year 7(1)/AGE 66 5,64,282.58 17,364.53 42,265.88 5,89,183.93 13.9282
year 8(1)/AGE 67 5,89,183.93 19,100.98 44,056.07 6,14,139.02 14.5181
year 9(1)/AGE 68 6,14,139.02 21,011.08 45,836.99 6,38,964.93 15.1050
year 10(1)/AGE 69 6,38,964.93 23,112.19 47,593.16 6,63,445.90 15.6837
year 11(1)/AGE 70 6,63,445.90 25,423.41 49,306.44 6,87,328.93 16.2483
~ ~ continued (click here to see full)     ~       ~       ~  
year 24(1)/AGE 83 7,57,224.02 87,768.52 51,735.59 7,21,191.09 17.0488
year 25(1)/AGE 84 7,21,191.09 96,545.37 48,272.68 6,72,918.40 15.9076
Adjustment +0.09 14.7665
Further pension(on survival) 48,272.69
Surrender val(on death) 6,24,645.80

MoratoriumNil years
InflationProtection10% every year
Yield11.02% pa
start-Amt(after Moratorium)Rs.9,801.83
(start-amt per lac after Moratorium): (Rs.2,317.13 )
(conventional immediate payout per lac): (Rs.7,010.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 10 - Inflapro - pension starts at first year at Rs.9,801.83 Yearly compounded and increases @ simple rate of 10% every year for a period of 25 years years for life with a provision of 50% of the last annuity payable to spouse during his/ her life time on death of annuitant. with return of purchase price on the death of last survivor further pension static at 50% of last pension amount on survival of annuitant beyond 85 years or period of of 25 years years whichever later on survival, half the last pension i.e. Rs.48,272.69 for life. The return of purchase price will be as per NAV max of 14.7665



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CHART OF PROPOSED TABLE OF PENSION IN RUPEES AGE=60 TERM=25

for audit tables option 1 option 4 option 7 option 10 are
clickable at respective columns of the chart.

click to see the INFLAPRO chart
of this page in new tab/window


PROPOSED TABLE OF PENSION in RUPEES age=60 term=25
Principal:423015.00Rate of Intt:7.72801 Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25

Term: 25 years Moratorium-(option2,5,8,11): 5 years Moratorium-(option3,6,9,12): 10 years

Year VARIOUS OPTIONS ******AT INFLATION OF 10% AND INTEREST RATE OF7.72801
Yearly compounded
CONVENTIONAL INFLAPRO Cumulative
Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Option 7 Option 8 Option 9 Option 10 Option 11 Option 12 Option 13
year 1/AGE 6129949.87 - - 10854.99 - - 7857.84 - - 9801.83 - - -
year 2/AGE 6229949.87 - - 11940.49 - - 8643.62 - - 10782.01 - - -
year 3/AGE 6329949.87 - - 13134.54 - - 9507.98 - - 11860.21 - - -
year 4/AGE 6429949.87 - - 14447.99 - - 10458.78 - - 13046.23 - - -
year 5/AGE 6529949.87 - - 15892.79 - - 11504.66 - - 14350.85 - - -
year 6/AGE 6629949.87 43127.39 - 17482.07 18952.85 - 12655.13 14012.67 - 15785.94 17955.86 - -
year 7/AGE 6729949.87 43127.39 - 19230.28 20848.14 - 13920.64 15413.94 - 17364.53 19751.45 - -
year 8/AGE 6829949.87 43127.39 - 21153.31 22932.95 - 15312.70 16955.33 - 19100.98 21726.60 - -
year 9/AGE 6929949.87 43127.39 - 23268.64 25226.25 - 16843.97 18650.86 - 21011.08 23899.26 - -
year 10/AGE 7029949.87 43127.39 - 25595.50 27748.88 - 18528.37 20515.95 - 23112.19 26289.19 - -
year 11/AGE 7129949.87 43127.39 61727.01 28155.05 30523.77 33204.23 20381.21 22567.55 25617.94 25423.41 28918.11 34124.83 -
year 12/AGE 7229949.87 43127.39 61727.01 30970.56 33576.15 36524.65 22419.33 24824.31 28179.73 27965.75 31809.92 37537.31 -
year 13/AGE 7329949.87 43127.39 61727.01 34067.62 36933.77 40177.12 24661.26 27306.74 30997.70 30762.33 34990.91 41291.04 -
year 14/AGE 7429949.87 43127.39 61727.01 37474.38 40627.15 44194.83 27127.39 30037.41 34097.47 33838.56 38490.00 45420.14 -
year 15/AGE 7529949.87 43127.39 61727.01 41221.82 44689.87 48614.31 29840.13 33041.15 37507.22 37222.42 42339.00 49962.15 -
year 16/AGE 7629949.87 43127.39 61727.01 45344.00 49158.86 53475.74 32824.14 36345.27 41257.94 40944.66 46572.90 54958.37 -
year 17/AGE 7729949.87 43127.39 61727.01 49878.40 54074.75 58823.31 36106.55 39979.80 45383.73 45039.13 51230.19 60454.21 -
year 18/AGE 7829949.87 43127.39 61727.01 54866.24 59482.23 64705.64 39717.21 43977.78 49922.10 49543.04 56353.21 66499.63 -
year 19/AGE 7929949.87 43127.39 61727.01 60352.86 65430.45 71176.20 43688.93 48375.56 54914.31 54497.34 61988.53 73149.59 -
year 20/AGE 8029949.87 43127.39 61727.01 66388.15 71973.50 78293.82 48057.82 53213.12 60405.74 59947.07 68187.38 80464.55 -
year 21/AGE 8129949.87 43127.39 61727.01 73026.97 79170.85 86123.20 52863.60 58534.43 66446.31 65941.78 75006.12 88511.01 -
year 22/AGE 8229949.87 43127.39 61727.01 80329.67 87087.94 94735.52 58149.96 64387.87 73090.94 72535.96 82506.73 97362.11 -
year 23/AGE 8329949.87 43127.39 61727.01 88362.64 95796.73 104209.07 63964.96 70826.66 80400.03 79789.56 90757.40 107098.32 -
year 24/AGE 8429949.87 43127.39 61727.01 97198.90 105376.40 114629.98 70361.46 77909.33 88440.03 87768.52 99833.14 117808.15 -
year 25/AGE 8529949.87 43127.39 61727.01 106918.79 115914.04 126092.98 77397.61 85700.26 97284.03 96545.37 109816.45 129588.97 2720017.53
Adjustment0.00 +0.14 -0.10 -1.01 +0.08 +0.04 +0.27 +0.28 +0.03 +0.09 +0.70 -0.14 -
Further Pension29949.87 43127.39 61727.01 29949.87 43127.39 61727.01 77397.61 85700.26 97284.03 48272.69 54908.23 64794.49 -
OR surrender423015.00 613760.53 890516.85 423015.00 613760.53 890516.85 1001520.57 1108956.38 1258849.69 624645.80 710509.30 838436.93 -
Yield7.08% 9.96% 13.17% 10.09% 12.06% 14.39% 12.77% 14.07% 15.60% 11.02% 12.44% 14.18% 21.72%

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MASTER RATES TABLE LIC . HTML

LIC PENSION SCHEMES AKSHAY IV  purchase price=100000 plus sevice tax
Age     (i)       (ii)       (III)       (IV)       (V)       (VI)       (VII)  
The option iv is aleredy 3% inflation protected
030 7190 7160 6890 5250 7080 6970 6860
040 7510 7440 6930 5610 7310 7120 6890
050 8140 7950 7000 6280 7760 7420 6930
060 9350 8790 7110 7530 8640 8030 7010
070 12080 9830 7260 10220 10560 9370 7130
080 17880 10440 7480 15890 14600 12340 7290
Extended option 4 (proposed) rates below are per lac
060Ext.opt (1-4) 3583 (2-4) 3249 (3-4) 2580.86 (4-4) 7530 (5-4)3162 (6-4) 2820 (7-4) 2531.64
Extended option 7 (proposed) rates below are per lac
060Ext.opt (1-7)NA | (2-7)NA | (3-7) 1871.28 (4-7)NA | (5-7)NA | (6-7)NA | (7-7) 1825.66
INFLAPRO LIC for clickable links of above table



Comparatively Interest burden for LIC for life expectancy 85yrs

LIC.Age

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

gauranteed
5 yrs

gauranteed
10 yrs

gauranteed
15 yrs

30

7.59856%

7.56164%

7.41082%

8.3335%

7.46317%

7.32771%

7.37632%

40

7.82472%

7.73502%

7.46864%

8.50153%

7.56824%

7.32389%

7.42266%

50

8.26596%

8.00716%

7.57488%

8.84524%

7.74738%

7.27968%

7.49434%

60

9.01487%

8.88065%

6.76609%

8.17538%

7.7626%

9.42403%

7.94856%

7.01594%

7.647%

70

10.22264%

6.21418%

8.1141%

10.13314%

7.5389%

5.3638%

7.96101%

80*) exp.age95)

20.09608%

7.32301%

8.37394%

20.22579%

14.54059%

10.67402%

8.14948%

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SUGGESTED START-AMT AND END-PMT PERLAC FOR LIC AND INFLAPRO OPTION-4


Suggested start-amt and end-pmt perlac for LIC for life expectancy 85yrs
and inflapro option-4, for option(iii) & (vii) retun of purch.price=100000 per lac
for option (i)(ii)(iv)(v) & (vi) return of purch.price=0
on death of annuitant or last survivor within the term(refer col.2*)

Survival pension after the full term will be static conventional amount(also ref table below)
LICfull term (i)(ii)(iii)(iv)(v)(vi)(vii)
entry
age
yearsincrease:
10% pa
increase:
10% pa
increase:
10% pa
increase:
3% pa
increase:
10% pa
increase:
10% pa
increase:
10% pa
---start:endstart:endstart:endstart:endstart:endstart:endstart:end

30

conventional/beyond

55

942.90 :

162059.00

7190 | 7190

932.45 :

160263.43

7160 | 7160

872.01 :

149872.94

6890 | 6890

5250.00 :

25904.15

7788 | 7788

905.00 :

155546.39

7080 | 3540

849.28 :

145968.34

6970 | 6970

862.52 :

148243.94

6860 | 6860


40

conventional/beyond

45

1384.95 :

91773.40

7510 | 7510

1356.00 :

89854.34

7440 | 7440

1219.33 :

80797.37

6930 | 6930

5610.00 :

20596.88

8040 | 8040

1303.30 :

86362.38

7310 | 3655

1174.24 :

77810.12

7120 | 7120

1204.87 :

79840.87

6890 | 6890


50

conventional/beyond

35

2152.99 :

55003.85

8140 | 8140

2058.59 :

52592.33

7950 | 7950

1748.71 :

44675.41

7000 | 7000

6280.00 :

17156.38

8568 | 8568

1966.65 :

50243.56

7760 | 3880

1643.23 :

41980.82

7420 | 7420

1719.59 :

43931.72

6930 | 6930


60

conventional/beyond

25

3583.13 :

35292.84

9350 | 9350

3248.87 :

32000.65

8790 | 8790

2580.86 :

25420.96

7110 | 7110

7530.00 :

15306.95

9625 | 9625

3161.95 :

31144.56

8640 | 4320

2819.82 :

27774.51

8030 | 8030

2531.64 :

24936.00

7010 | 7010


70

conventional/beyond

15

6761.44 :

25676.54

12080 | 12080

5157.95 :

19587.32

9830 | 9830

3929.80 :

14923.44

7260 | 7260

10220.00 :

15458.66

12029 | 12029

5662.99 :

21505.19

10560 | 5280

4847.41 :

18408.07

9370 | 9370

3849.89 :

14619.97

7130 | 7130


80*
exp.age 95
conventional/beyond

15

11482.81 :

43605.97

17880 | 17880

5578.95 :

21186.10

10440 | 10440

4065.88 :

15440.23

7480 | 7480

15890.00 :

24035.04

17956 | 17956

8714.94 :

33094.94

14600 | 7300

6955.50 :

26413.54

12340 | 12340

3948.30 :

14993.67

7290 | 7290


Suggested conventional amount perlac for LIC for life expectancy 85yrs for the table above
for survival beyond the full term (col 2)
increase per year for suvival beyond full term= 0%
The rates beyond term is same as conventional Master rates as given previously
LIC.Agefull term (i)(ii)(iii)(iv)(v)(half-amt)(vi)(vii)
30557190716068905250354069706860
40457510744069305610365571206890
50358140795070006280388074206930
60259350879071107530432080307010
7015120809830726010220528093707130
80*
exp.age 95
1517880104407480158907300123407290

SUGGESTED START-AMT AND END-PMT PERLAC FOR LIC AND INFLAPRO OPTION-7


Suggested start-amt and end-pmt perlac for LIC for life expectancy 85yrs
and inflapro option-7, for LICoption(iii) & (vii) retun of purch.price=As Per NAV
for LICoption (i)(ii)(iv)(v) & (vi) this extended scheme is not suggested to be applied
This scheme be applied only to the existing annuity scheme with return of Purchase Price (ROP) only.
LICfull term (i)(ii)(iii)(iv)(v)(vi)(vii)
entry
age
yearsincrease:
10% pa
increase:
10% pa
increase:
10% pa
increase:
3% pa
increase:
10% pa
increase:
10% pa
increase:
10% pa
---start:endstart:endstart:endstart:endstart:endstart:endstart:end

30

conventional/beyond

55

620.69 :

106679.78

6890 | 106680

612.03 :

105192.30

6860 | 105192


40

conventional/beyond

45

862.98 :

57184.85

6930 | 57185

849.63 :

56300.79

6890 | 56301


50

conventional/beyond

35

1240.62 :

31695.02

7000 | 31695

1213.51 :

31002.63

6930 | 31003


60

conventional/beyond

25

1871.28 :

18431.68

7110 | 18432

1825.66 :

17982.37

7010 | 17982


70

conventional/beyond

15

3060.19 :

11621.06

7260 | 11621

2987.05 :

11343.35

7130 | 11343


80*
exp.age 95
conventional/beyond

15

3185.43 :

12096.69

7480 | 12097

3077.15 :

11685.53

7290 | 11686


Suggested Maximum ROP perlac for LIC for life expectancy 85yrs for the table above
of inflapro-option-7 with Return of Purchase Price as per NAV. The Maximum permissible ROP is given in this table.
LIC/agefull term (i)(ii)(iii)(iv)(v)(vi)(vii)

30

55

1439513.85

1426081.03

40

45

765666.17

758498.84

50

35

418422.73

413680.59

60

25

237442.09

235155.88

70

15

143220.57

142486.32

80*
exp.age 95

15

144456.37

143389.88




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AUDIT TABLE INFLAPRO OPT 7 RECOMMENDED FAIR SHEME HIGH YIELD NO LOSS/NO GAIN

The following table shows the table of calculation how the pension payout is generated with the same rate of interest applicable to a conventional static payout of Rs.7010 to a customer of entry age 60 on a purchase price of Rs.100000 fully tallied and audit proof. To view full table click here

TABLE OF RUN BALANCE (AUDIT TABLE) LICOPT(vii) - extended/inflapro opt(7)

Principal:100000.00   Rate of Intt:7.647    Compounding mode:Yearly compounded
LIC JEEVAN AKSHAY IV SCHEME OPTION vii entry age=60
Option (vii) Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor. No.of Years=25


Option 7 - Inflapro - pension starts at first year, increases every year, further pension static after term will full as last pension amt
Having maturity value

Term: 25 years      Moratorium=NIL


Year B/F Payout Interest C/O/Balance NAV(FV:10)
year 1(1)/AGE 60 1,00,000.00 1,825.66 7,507.39 1,05,681.73 10.5681
year 2(1)/AGE 61 1,05,681.73 2,008.23 7,927.91 1,11,601.41 11.1601
year 3(1)/AGE 62 1,11,601.41 2,209.05 8,365.23 1,17,757.59 11.7757
year 4(1)/AGE 63 1,17,757.59 2,429.96 8,819.10 1,24,146.73 12.4146
year 5(1)/AGE 64 1,24,146.73 2,672.96 9,289.10 1,30,762.87 13.0762
year 6(1)/AGE 65 1,30,762.87 2,940.26 9,774.59 1,37,597.20 13.7597
year 7(1)/AGE 66 1,37,597.20 3,234.29 10,274.73 1,44,637.64 14.4637
year 8(1)/AGE 67 1,44,637.64 3,557.72 10,788.38 1,51,868.30 15.1868
year 9(1)/AGE 68 1,51,868.30 3,913.49 11,314.10 1,59,268.91 15.9268
year 10(1)/AGE 69 1,59,268.91 4,304.84 11,850.10 1,66,814.17 16.6814
~ ~ continued (click here to see full)     ~       ~       ~  
year 24(1)/AGE 83 2,51,502.08 16,347.61 17,982.26 2,53,136.73 25.3136
year 25(1)/AGE 84 2,53,136.73 17,982.37 17,982.25 2,53,136.61 25.3136
Adjustment +1.64 23.5155
Further pension(on survival) 17,982.37
Surrender val(on death) 2,35,155.88

MoratoriumNil years
InflationProtection10% every year
Yield12.58% pa
start-Amt(after Moratorium)Rs.1,825.66
(start-amt per lac after Moratorium): (Rs.1,825.66 )
(conventional immediate payout per lac): (Rs.7,010.00 Yearly compounded )

Suggested INFLAPRO OPTIONS:

Option 7 - Inflapro - pension starts at first year at Rs.1,825.66 Yearly compounded , increases @ simple rate of 10% every year for a period of 25 years years for life with a provision of 100% of the last annuity payable to spouse during his/ her life time on death of annuitant. with return of purchase price on the death of last survivor further pension static at 100% of last pension amount on survival of annuitant beyond 85 years or period of of 25 years years whichever later on survival Rs.17,982.37 for life. The return of purchase price will be as per NAV max of 23.5155

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SUMMARY OF OF INCREASE/DECRESE IN PROFIT MARGIN FOR LICOPT (I) TO (VII) EXT.OPT 4

Summary of of increase/decrese in profit margin for LICopt (i) to (vii) ext.opt 4

click the respective table/column to view full calculation for LICoption (i) to (vii) extended option 4 of inflapro

Conventional
opt(i)
intt=9.01487%
infla=0%
AgeProfit
Index

60+0.99
61+0.98
62+0.96
63+0.95
64+0.93
65+0.91
66+0.89
67+0.87
68+0.85
69+0.82
70+0.79
71+0.76
72+0.73
73+0.69
74+0.65
75+0.61
 
76+0.56
77+0.51
78+0.46
79+0.40
80+0.33
81+0.26
82+0.18
83+0.09
84+0.00

85-0.10
86-0.21
87-0.33
88-0.47
89-0.61
90-0.77
91-0.94
92-1.12
93-1.33
94-1.55
95-1.79
96-2.05
97-2.34
98-2.65
99-3.00
100-3.37
licopt(i)
ext.opt(4)
intt=9.01487%
infla=10%
AgeProfit
inc/dec

60+0.06
61+0.13
62+0.19
63+0.26
64+0.33
65+0.40
66+0.47
67+0.53
68+0.60
69+0.66
70+0.73
71+0.78
72+0.83
73+0.87
74+0.91
75+0.93
 
76+0.93
77+0.92
78+0.89
79+0.83
80+0.75
81+0.63
82+0.47
83+0.26
84+0.00

85+0.00
86+0.00
87+0.00
88+0.00
89+0.00
90+0.00
91+0.00
92+0.00
93+0.00
94+0.00
95+0.00
96+0.00
97+0.00
98+0.00
99+0.00
100+0.00
licopt(ii)
ext.opt(4)
intt=8.17538%
infla=10%
AgeProfit
inc/dec

60+0.06
61+0.12
62+0.18
63+0.25
64+0.31
65+0.37
66+0.44
67+0.50
68+0.56
69+0.62
70+0.67
71+0.72
72+0.77
73+0.80
74+0.83
75+0.85
 
76+0.85
77+0.84
78+0.81
79+0.75
80+0.67
81+0.56
82+0.42
83+0.23
84+0.00

85+0.00
86+0.00
87+0.00
88+0.00
89+0.00
90+0.00
91+0.00
92+0.00
93+0.00
94+0.00
95+0.00
96+0.00
97+0.00
98+0.00
99+0.00
100+0.00
licopt(iii)
ext.opt(4)
intt=7.7626%
infla=10%
AgeProfit
inc/dec

600.00
610.00
620.00
63-0.00
64-0.00
65-0.00
66-0.00
67-0.00
68-0.00
690.00
70-0.00
71-0.00
720.00
73-0.00
74-0.00
750.00
 
760.00
770.00
78-0.00
790.00
80-0.00
810.00
820.00
83-0.00
840.00

850.00
860.00
870.00
880.00
890.00
900.00
910.00
920.00
930.00
940.00
950.00
960.00
970.00
980.00
990.00
1000.00
licopt(iv)
ext.opt(4)
intt=9.42403%
infla=3%
AgeProfit
inc/dec

60+0.00
61+0.00
62+0.00
63+0.00
64+0.00
65+0.00
66+0.00
67+0.00
68+0.00
69+0.00
70+0.00
71+0.00
72+0.00
73+0.00
74+0.00
75+0.00
 
76+0.00
77+0.00
78+0.00
79+0.00
80+0.00
81+0.00
82+0.00
83+0.00
84+0.00

85+0.00
86+0.00
87+0.00
88+0.00
89+0.00
90+0.00
91+0.00
92+0.00
93+0.00
94+0.00
95+0.00
96+0.00
97+0.00
98+0.00
99+0.00
100+0.00
licopt(v)
ext.opt(4)
intt=7.94856%
infla=10%
AgeProfit
inc/dec

60+0.06
61+0.12
62+0.18
63+0.24
64+0.31
65+0.37
66+0.43
67+0.49
68+0.55
69+0.61
70+0.66
71+0.71
72+0.75
73+0.79
74+0.81
75+0.83

halving
76+0.87
77+0.91
78+0.94
79+0.96
80+0.98
81+0.99
82+0.99
83+0.98
84+0.95

85+0.98
86+1.01
87+1.05
88+1.08
89+1.12
90+1.16
91+1.21
92+1.26
93+1.31
94+1.37
95+1.43
96+1.50
97+1.57
98+1.65
99+1.74
100+1.83
assumptions for
special case of
(v)
death of annuitant
at age 75 and
50% thereof to spouse
inflapro continued
licopt(vi)
ext.opt(4)
intt=7.01594%
infla=10%
AgeProfit
inc/dec

60+0.06
61+0.11
62+0.17
63+0.23
64+0.29
65+0.34
66+0.40
67+0.45
68+0.51
69+0.56
70+0.60
71+0.65
72+0.68
73+0.71
74+0.73
75+0.75
 
76+0.75
77+0.73
78+0.70
79+0.65
80+0.58
81+0.48
82+0.36
83+0.20
84+0.00

85+0.00
86+0.00
87+0.00
88+0.00
89+0.00
90+0.00
91+0.00
92+0.00
93+0.00
94+0.00
95+0.00
96+0.00
97+0.00
98+0.00
99+0.00
100+0.00
licopt(vii)
ext.opt(4)
intt=7.647%
infla=10%
AgeProfit
inc/dec

600.00
610.00
620.00
630.00
640.00
650.00
660.00
670.00
680.00
69-0.00
70-0.00
71-0.00
720.00
73-0.00
74-0.00
75-0.00
 
760.00
77-0.00
780.00
790.00
80-0.00
810.00
82-0.00
830.00
840.00

850.00
860.00
870.00
880.00
890.00
900.00
910.00
920.00
930.00
940.00
950.00
960.00
970.00
980.00
990.00
1000.00

end of profit table
The above table gives net increase/decrease corresponding to the death of at particular age of an annuitant of entry age 60. The Profit index as well as increase decrease in index in inflapro system are zero exactly at the end of full term of (25) years in this case. and also same after the end of full term, In early years, there is increase in all cases except (iv) wherein already a form of 3% inflapro is already in existence. The leftmost table gives fairly the profit index for LIC for the committed rates on return on investment, for conventional option (i). The next columns indicate the increase or decrease in case of profit index corresponding to respective profit margin on existing options such as for option (i) ext.opt. 4 is the inc/dec is corresponding conventional scheme of the same option (i). Similarly option (ii) ext.opt 4 corresponds to the conventional scheme of option (ii) and so on. In case of life annuity without ROP, the pension beyond full term is kept at the same level as the existing schemes, so that there is no decrease. In fact, the LIC (service provider) may consider giving the last pension of full term as continued pension for such schemes, to add more speculation to the customers at a decrease in profit margin to compensate the increase in the early years of the inflapro scheme. However it is warned that such decrease would be 3 to 4 times the existing one of conventional schemes. Such a gambling for elder people over 85 years may worth taking such risk, to attract customers.
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STATE BANK OF INDIA SCHEME MONTHLY RS.1000

State Bank of India also offers pension schemes of attractive rates and the author has a little data for equivalent option (i) of LIC. SBI gives the same sort of pension and they call the purchase price as ONE TIME PREMIUM. The following table gives the premium for getting a pension of Rupees one thousand per month. The author has provision to calculate the interest percentage of the schemes and also the inflapro calculations and chart in the same website, www.bnvenkat.com. The following table also indicate the calculated interest rate for monthly compounded rate for sample case of age 60 and also for age 60. sbi maximum interest on option 1 for 80 years equivalent of lic option 1: 14.15232% pa monthly compounded is equal to 19.2062% pa annually compounded and is quite comparable to LIC schemes under the same condition assumption of parameters.
					CALCULATIONS BASED ON SAME PARAMETERS ON SAME TYPE OF
					          SCHEME FROM sbi icici AND lic
	SBI PENSION SCHEMES
	Age	    Annuity scheme (i)  
	40	Rs.1000 pm Premium 166760
	50	Rs.1000 pm Premium 152650
	60	Rs.1000 pm Premium 136526	Rate of Interest:7.46964   
						mode:MONTHLY is: 
						equivalent to YEARLY 7.73075% .or. 7.73% pa
	70	Rs.1000 pm Premium 107822
	80	Rs.1000 pm Premium 75395
	45	Rs.1000 pm Premium 160405
	55	Rs.1000 pm Premium 147703
	65	Rs.1000 pm Premium 123659
	75	Rs.1000 pm Premium 91099
	42	Rs.1000 pm Premium 164319
	52	Rs.1000 pm Premium 153773
	62	Rs.1000 pm Premium 131720  	Rate of Interest:7.54044   
						mode:MONTHLY is: 
						equivalent to YEARLY 7.80658% .or. 7.81% pa
	72	Rs.1000 pm Premium 101029
	48	Rs.1000 pm Premium 156456
	58	Rs.1000 pm Premium 141299
	68	Rs.1000 pm Premium 114546
	78	Rs.1000 pm Premium 81476
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ICICI PRULIFE Vs OTHERS

For age 62:

	ICICI Rs.2,732.97  (M)on Premium of 423015  Rate of Interest:5.6676  MONTHLY is: 
							   equivalent to YEARLY 5.81717% .or. 5.82% pa
						
	ICICI Rs.34,870.99 (Y)on Premium of 423015  Rate of Interest:6.92447 YEARLY  is: 
							   equivalent to YEARLY 6.92447% .or. 6.92% pa

	For age 60: 
	LIC   Rs.9,350.00  (Y)on Premium of 100000  Rate of Interest:9.01487 YEARLY  is:
							   equivalent to YEARLY 9.01487% .or. 9.01% pa
							   
	LIC   Rs.39,947.43 (Y)on Premium of 423015  Rate of Interest:9.15404 YEARLY  is: 
							   equivalent to YEARLY 9.15404% .or. 9.15% pa

	SBI   Rs. 3211.47 (M)on Premium of 423015 Rate of Interest:7.54044   
							   mode:MONTHLY is: 
							   equivalent to YEARLY 7.80658% .or. 7.81% pa

	ICICI pension is of low rate of interest 6.92%, SBI better 7.81%, and LIC best 9.15%
	
	for same schemes under same conditions of entry age, expected life span etc.

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CUSTOM MENU

htmlPRJR-->

INFLAPRO APPLICATION-PENSION-CASESTUDY

CHARTS FOR CUSTOM PARAMETER

(INFLAPRO is the calculation to know the starting payment for a given principal term rate inflation constant
http://www.bnv.bvraghav.com/projects/pension/ to know about INFLAPRO)

Registration/LOGIN/password Required

Customer id
Password

COMPOUNDING






term (1 to 60yrs) term(at click)
5 | 10 | 15 | 20 | 23 | 25 | 30 | 35 | 40 | 45 | 50 | 55 |


shownext

immediate pension/payout option:   custom inf small prorata yes/no

     showNewRegn
new registration       forgot password      change password

Principal-amt Rs.


click desired inflation constant below:10% pa

0%  1%  2%  3%  4%  5%  6%  7%  8%  9%  10%  


Enter Choice of interest rate %pa:


edu loan (yes/no) general loan (yes/no)

Further pension(yes/no) Further (half pension/half repayment)(yes/no) maturityval(yes/no) check submit this box for custom options
Auto check/validate parameters

custom lic:   refer lic page for options   Entryage:For custom choice

sample ?


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RESULT-CUSTOM MENU

space for result
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ACKNOWLEDGEMENT-AVINASH

Acknowledgement:
Following information was derived from the net surfing by official LIC advisor

Shri AVINASH KUMAR-Director in Gennext Financial And Insurance Services and the information site Pension Calculator for Jeevan Akshay VI Plan (189) | LIC Pension ...

Age:60,option(10 of JA:VI): Annuity during his/ her life time on death of Policy holder. The purchase price will be returned on the death of last survivor.

Purchase price: Rs.416764.00 age:60 LIC Jeevan Akshay VI (at conventional amount per lac is Rs.7010)
Total Amount to be paid including service tax (single time): Rs 423014.45

After payment of Rs 423014.45, the pension as per following table will start immediately and anyone of four payment modes may be selected.


With ROP 100% ( Rs.416764.00)
Pension ModeAmountper lacper lac with incentive
Yearly3077870107275.86
Half Yearly1501434303549.28
Quarterly742416981755.02
Monthly2442562577.28
The above figure with current incentive is higher than what had been calculated in this case study.
especially the amount Rs. 30778 Vs Rs. 29949.87 refer here
Rates for LIC option(ii) Guaranteed (5 years)9260 (10 years) 9060 (15 years) 8790 (20 years) 8480 for age 60
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MISCELLANEOUS

Verification GOOGLE Spreadsheet

Sample calculated Interest verification on Google drive GOOGLE SPREADSHEET . This sample verifies the calculation of interest by the author and the spreadsheet. There are calculator functions available in major spreadsheet applications such as EMI amount, rate, pending amount after part payment etc for conventional schemes.
OpenOfficeCalc - Display formulas used instead of results. To enable this option under OpenOffice Calc: From an opened spreadsheet, click on Tools > Options > OpenOffice.org Calc > View. In the "Display" Section, check "Formulas". If you want to display the formulas in the cells, for example in the form =SUM(A1:B5), proceed as follows: Choose Tools - Options' - LibreOffice Calc - View'. In the Display area mark the Formulas box. Click OK.Jun 20, 2016
For Microsoft Excel or other spread sheets including the above
use Google search and search for the following and learn
display formula in [Microsoft EXCEL] 
dispaly formula in [open office ods]
dispaly formula in [libre office ods]
etc

MISCELLANEOUS-CONCLUDING PARAGRAPH

The author has provided web based interactive solution/calculator to find start-amout for given principal, term, rate, inflation constant, for inflation protection to customer.
India has higher interest rate than developed countries and as our economy grows, interest rate is expected to come down and that will force banks in country to lower interest rate on customers’ deposits like FD and RD. if the rate comes below 7% and keeps decreasing in the future, then Jeevan Akshay VI will be definitely a better option which provides guaranteed return at same rate for life time
Inflapro is the calculator to find the starting amount for an annuity/return on investment based on variable-amount periodic payments based on an annual inflation protection and a constant interest rate for a given period with or without a future value (that is return of purchase price).
Sample Inflapro calculator will be provided in this page shortly. For the time being there are two sites of the author for doing elaborate calculations with audit proof tables. The calculator is provided in preceding pages (as of August 31, 2016).
Suggest the annuity providers to view this case study and also the above sites and implement the suggestions as soon as possible. As Inflapro is a general scheme, it can be applied on varied applications not only on annuity, but also in loan segments such as Education Loan, Home Loan, Insurance premium, Recurring Deposit, Dividents of Debentures, Preference shares etc.
The existing websites of the author

giving inflapro solutions are : http://www.bnvenkat.com    |     http://www.bnv.bvraghav.com


eop