Aviva Dhan Vriddhi

The Aviva Dhan Vriddhi is aimed at giving you a target corpus at a point of time in the future based on regular contributions from today. This corpus can be used, for example, for your child’s education of marriage. The idea is fair, but we find that the returns in this plan are extremely poor – only about 2-3%.

The Dhan Vriddhi plan is not market-linked. This means your returns are fixed and known in advance. You decide a target corpus; and your premiums are calculated based on your age and this target corpus. You pay these premiums annually based on the term you choose. At the end of the term, the corpus is handed over to you on survival. There is a life cover in case of an eventuality to the owner during the policy.

We believe that this return of less than 3% makes it a poor choice. We advocate separating your insurance need from your investments instead. A simple term insurance cover can give you this life insurance at less than 1/100th of the premium you pay in Dhan Vriddhi. As for the investment, any mutual fund or fixed deposit can give you a corpus that is several multiples of what you will get here.

In short – avoid the Aviva Dhan Vriddhi.

 

Product features:

Parameter

Value

Fintotal Comment

Entry age

13 - 55 years

 

Policy term

10 – 25 years

 

Premium payment term

5 years less than policy term

 

Riders available

Accidental Death Benefit

If you want this feature, you would rather take it with your main term life insurance policy, rather than Dhan Vriddhi

Minimum premium

Rs 5,000 per year

 

Minimum sum assured

Rs 50,000

 

 

Payments you receive

20% of sum assured at the end of 5th, 10th, 15th and 20th years

A lump-sum corpus at the end of the term

The returns on this work out to be extremely poor; ranging from 1.5% to 3% at the outside

 

 

Illustration:

Let us assume you want to save Rs.30 lakh for your child’s education 20 years from today. Let’s say your child is just born and you are aged 30 today. Thus, your plan would have:

  • Entry age: 30 years
  • Term: 20 years
  • Sum assured: Rs.30 lakh

At this age, your annual premium works out to Rs.2,81,010. You need to pay this amount every year for the next 15 years.

You will get payments of Rs.6 lakh each, at the end of 5th, 10th and 15th years. At the end of 20 years, you get Rs.54 lakh. This is somewhat different from what you planned for – but given the inflation in the interim, this would be worth less than the Rs.30 lakh that you planned today.

Do not worry if you are unable to figure out whether this is good or bad! We have done the mathematics: the return works out to a pathetic 3.1%. If your sum assured is lower, your returns are even worse.

There is a life insurance cover for your corpus of Rs.30 lakh. But remember, you can get this much cover in the market using the much cheaper term insurance plan. Your annual premium there will work out to less than Rs.4,000!

In summary, the Aviva Dhan Vriddhi plan gives you very poor returns. We advise you to avoid it.

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