Govt Life Insurance APGLI and TSGLI – Why it is good to modify by Government?

First I should thank Mr. Rajandra prasad Garu(http://www.andhrateachers.in/) who posted my article about APGLI and TSGLI maturity and interest rate on his website. Now in this article, I will tell you why Andhra Pradesh and Telangana Government have to modify APGLI/TSGLI(govt life insurance).

apgli and tsgli government should modity
apgli and tsgli

As a result of his help, my article is coming in google first page if somebody searching for APGLI OR TSGLI maturity.

In addition, I have requested a few more website owners too to post my article about maturity in Andhra Pradesh and Telanaga Life Insurance in their sites.

Maybe they are not serious about good happening to Government Employees of Andhra Pradesh and Telangana.

Use this online calculator to know APGLI/TSGLI retirement maturity amount. Click here to calculate.

How APGLI and TSGLI formed?

Though LIC of India is there to sell Life Insurance Policies in India.

Government Employees of A.P are not taking life insurance from LIC those early days.

Employees used to demand the Government some compensation whenever there is a death among employees.

Not only this, Few employees are not saving their salary for their future, and financially weak.

To protect employee family in case of death and to encourage savings, the Government decided to do something.

But Government knows, If Government does not launch a scheme which is a mandatory scheme to save, few employees will save or protect their families at all.

From this thought process, A.P state(before the division of Telangana) launched  Andhra Pradesh Government Life Insurance Life Insurance.

APGLI/TSGLI- Which kind of policy is this?

This is Endowment type policy like Jeevan Anand in Lic Of India.

Endowment Policy means the premium charged in this policy contains both protection component and a savings component.

If you are paying Rs.6,000 for a term of 20 years, Insurance coverage will be around Rs.100,000 in this policy.

Out of the premium, approximately Rs.300  for the purpose of giving insurance coverage will be deducted every year.

This Rs.300 is not refundable, and the balance Rs.5,700 will be invested bonds for purpose of generating bonus to this policy subscribers.

This Rs.300 insurance protection amount will be deducted based on the mortality rate of Government Employees in different ages.

APGLI and TSGLI maturity and  Interest rate…

This policy is Endowment policy. That means it has both protection(to give death claim in case of death of the govt employee) component and investment(to give maturity at the time of retirement) component.

One day in a discussion with a Police Officer at East Godavari Head Quarter, He said that they are getting 11.5% of the state government provided life insurance.

Being a Sebi Ria and Certified Financial Planner, I know this policy will not give 11.5% interest on the premiums paid.

Many Government Employees of both states believing that this policy is giving 10% or 11.5% interest on the premiums paid.

If you visit APGLI OR TSGLI office, there also the answer is this policy will give more than 10% interest.

But that is not true about APGLI/TSGLI interest rate…

I wrote a detailed article about APGLI interest rate( read this).

In that article, I have proved that government employees may get 6% interest only from the premiums paid.

Which is almost half of what they are assuming(11.5 interest)?

Why This 6% interest is not enough?

This 6% interest rate also may not sustain in future as it depends on the interest earned from the investment component by the Government.

Government after deducting APGLI or TSGLI office expenses etc will declare the bonus every now and then.

Not only this, If you compare the inflation rate from 30  to 35 years.

Inflation is around 7% last 35 years which 1% higher than the interest you may be receiving from APGLI OR TSGLI.

You need to understand how inflation eats your purchasing power money. Read this article to know about Inflation. Click here to read.

Always remember present APGLI/TSGLI will never give more return than inflation. As it is not an investment product.

What is the loss if I increase my APGLI and TSGLI subscription over and above mandatory Limit?

Government employees are increasing this policy subscription over and above the mandatory limit prescribed by the Government think that it is good and it will give more than 10% interest.

Example…

Never try to increase your present APGLI/TSGLI subscription over and above the mandatory limit. It will destroy your wealth significantly.

If you have increased you APGLI/TSGLI premium Rs.1000 per month over and above the mandatory limit, and you are going to pay this extra premium for 30 to 35 years, then you may lose Rs.23,00,000 lakh of wealth( read this article).

Hence, It is not good to increase your APGLI/TSGLI premium over and above the mandatory limit prescribed by the Government.

Present APGLI/TSGLI Insurance Coverage is not enough to protect your dependents…

There are two methods to be considered while taking the life Insurance Policy 1. Human Life Value or Income Replacement Method 2. Need-based analysis or Expenses Replacement Method.

Human Life Value(read this article) method Calculation will tell you the Life Insurance Cover that you should take based on your future earning potential.

i.e If you die tomorrow, the wealth that can be generated by you till your retirement is lost.

This Human Life Value Calculation will make sure that you will leave wealth to your dependents to your full potential even if you die before retirement.

Need-based or Expenses replace method explains the life insurance needed to be taken to take care of your Financial Goals like child education, child marriage, spouse living expenses( after your death, your spouse may live long) etc.

Under Need-based analysis(read this) sometimes you do not need to take any life insurance policy in your name.

So, under both methods sometimes you need to take life insurance coverage(policy) in crores.

But, APGLI/TSGLI does provide you take a life insurance policy in crores. As it is not a Term Life Insurance Policy.

Term Insurance Policy means it provides only pure risk. There will be no maturity in this policy.

I will write an article about the term insurance policy very soon.

Few employees will argue that one of their family members will get a job in case of sudden death to the Govt. Employee. But every family financial situation is unique.

There may be the situation, all the members of the family are minors and not eligible to do a job.

These kind scenarios may be possible in families. Hence till the time, anyone gets the job How can they survive without income?

The government has to do following changes to APGLI/TSGLI…

As the insurance coverage provided in this policy is not sufficient to the Government Employees. The government may consider the following scenarios.

Scenario 1)

The government should Discontinue present APGLI/TSGLI policy completely and should start to provide increasing term insurance or fixed-term insurance to the Govt. Employees.

Fixed term insurance means the insurance cover and the remain same in entire policy, While in increasing term insurance policy insurance coverage and premium will be increased based on the income(salary) growth.

But in this scenario savings component is not there. As term insurance covers only pure insurance to the lives of the employees.

The government can consider increasing the insurance coverage at the time PRC or every year depending on the salary growth.

apgli and tsgli
apgli and tsgli
Example…

If 21 years old person got a job, and the retirement age is 60 years, and the Gross Salary is per year Rs.2,00,000.

The Employee is eligible to take at least 20 lakh term life insurance, the premium may be around Rs.2,000 per year.

The Government can increase this life insurance by increasing premium every year depending on the salary growth every year.

If the salary growth rate is 8% every year, then life insurance coverage provided every year is given in below table. But premium will be decided by the Government based on the mortality rates of Government Employees at different ages and office expenses.

The premium will be increased every year as insurance coverage is increasing every year.

YearInsurance Cover
12000000
22160000
32332800
42519424
52720978
62938656
73173749
83427649
93701860
103998009
114317850
124663278
135036340
145439247
155874387
166344338
176851885
187400036
197992039
208631402
219321914
2210067667
2310873081
2411742927
2512682361
2613696950
2714792706
2815976123
2917254213
3018634550
3120125314
3221735339
3323474166
3425352099
3527380267
3629570689
3731936344
3834491251
3937250551

The above table is for increasing term life insurance policy.

The Government if wants to give only term insurance policy for the first year( i.e fixed-term insurance). Then 20 lakh life insurance will be available under fixed-term life insurance for the Employee which is also good insurance coverage for the employee instead of just 2 lakh coverage under present APGLI/TSGLI.

Scenario 2)

In addition to the above-fixed term insurance policy Government should offer previous GPF to the Government Employees or Tier – 2 CPS subscription or should tie up with Employee Provident Department Department (EPFO).

If the subscription to any one of the above said savings options 1st year is Rs.4,000 at age 21, in 2nd year subscription is 6000 and  if this 6000 subscription is increased every by 8%(assuming salary growth every year is 8%) and if the interest or return generated from this saving every year is 7.6%(Present Public provident fund interest assumed).

The maturity value will be as shown in the below table.
YearPremiumInterestYear investedMaturity
140007.60%3969621
260007.60%3897055
364807.60%3797416
469987.60%3697778
575587.60%3598141
681637.60%3498506
788167.60%3398872
895217.60%3299240
9102837.60%3199609
10111067.60%3099979
11119947.60%29100351
12129547.60%28100724
13139907.60%27101098
14151097.60%26101474
15163187.60%25101851
16176237.60%24102230
17190337.60%23102610
18205567.60%22102991
19222007.60%21103374
20239767.60%20103759
21258947.60%19104144
22279667.60%18104532
23302037.60%17104920
24326197.60%16105310
25352297.60%15105702
26380477.60%14106095
27410917.60%13106489
28443787.60%12106885
29479287.60%11107282
30517637.60%10107681
31559047.60%9108081
32603767.60%8108483
33652067.60%7108886
34704227.60%6109291
35760567.60%5109697
36821417.60%4110105
37887127.60%3110515
38958097.60%2110925
391034747.60%1111338
Maturity amount at retirement is arrived in above table if followed my strategy.
What will be the maturity amount in Present APGLI/TSGLI

Let’s assume that a person got a job at age 21 years, his salary per annum is Rs.2,00,000 and mandatory apgli subscription is Rs.6,000 for first year.

Also, assume that this subscription will be increased by 8%( assuming salary growth 8%) and interest rate from APGLI/TSGLI is 6%( which I have already proved in earlier articles).

 the maturity amount will be as given below…
year Premium Interest no. of year invested Future value at retirement
1 6000 6.00% 39 ₹ 58,221.04
2 6480 6.00% 38 ₹ 59,319.56
3 6998.4 6.00% 37 ₹ 60,438.79
4 7558.272 6.00% 36 ₹ 61,579.15
5 8162.93376 6.00% 35 ₹ 62,741.02
6 8815.968461 6.00% 34 ₹ 63,924.81
7 9521.245938 6.00% 33 ₹ 65,130.94
8 10282.94561 6.00% 32 ₹ 66,359.82
9 11105.58126 6.00% 31 ₹ 67,611.90
10 11994.02776 6.00% 30 ₹ 68,887.59
11 12953.54998 6.00% 29 ₹ 70,187.36
12 13989.83398 6.00% 28 ₹ 71,511.65
13
15109.0207
6.00% 27 ₹ 72,860.92
14 16317.74236 6.00% 26 ₹ 74,235.66
15 17623.16175 6.00% 25 ₹ 75,636.33
16 19033.01469 6.00% 24 ₹ 77,063.43
17 20555.65586 6.00% 23 ₹ 78,517.46
18 22200.10833 6.00% 22 ₹ 79,998.92
19 23976.117 6.00% 21 ₹ 81,508.33
20 25894.20635 6.00% 20 ₹ 83,046.23
21 27965.74286 6.00% 19 ₹ 84,613.14
22 30203.00229 6.00% 18 ₹ 86,209.61
23 32619.24248 6.00% 17 ₹ 87,836.21
24 35228.78187 6.00% 16 ₹ 89,493.50
25 38047.08442 6.00% 15 ₹ 91,182.05
26
41090.85118
6.00% 14 ₹ 92,902.47
27 44378.11927 6.00% 13 ₹ 94,655.34
28 47928.36881 6.00% 12 ₹ 96,441.29
29 51762.63832 6.00% 11 ₹ 98,260.94
30 55903.64938 6.00% 10 ₹ 1,00,114.92
31 60375.94133 6.00% 9 ₹ 1,02,003.88
32 65206.01664 6.00% 8 ₹ 1,03,928.48
33 70422.49797 6.00% 7 ₹ 1,05,889.40
34 76056.29781 6.00% 6 ₹ 1,07,887.31
35 82140.80164 6.00% 5 ₹ 1,09,922.92
36 88712.06577 6.00% 4 ₹ 1,11,996.94
37 95809.03103 6.00% 3 ₹ 1,14,110.09
38 103473.7535 6.00% 2 ₹ 1,16,263.11
39 111751.6538 6.00% 1 ₹ 1,18,456.75
Maturity amount at retirement if you invest in existing apgli/tsgli
₹ 33,10,949.28
Conclusion…

Here, If you compare the above table with scenario 2) table,  In scenario 2) savings you are getting higher maturity value.

Hence if Government plans to give for the first year 20 lakh insurance by charging Rs.2000 and gathers Rs.4,000 towards GPF/CPS ties-2, 2nd year Rs.6,000 and then after increase subscription by 8% towards GPF/CPF tier-2, then Government Employees are getting extra Rs.7,00,000 as maturity.

Not only extra maturity as they are insured for more insurance i.e for 20 lakh, but their families will also receive 20 lakh in case of death of the employee.

If the Government feels that they can not run own term life insurance policy to the Government Employees like APGLI/TSGLI, then Government can tie up with LIC OF INDIA or with any other private Life Insurance Company to provide Group term life insurance to the Government Employees.

You may feel all this is bull shit But for your information some private companies like TCS, Infosys etc providing  Group Term Life Insurance to their employees in lakh and sometimes in crores.

As a result of this private employees family members are getting higher death claim amount in case if the employee dies.

But at the same time, State Government Employees families are receiving very less amount as death claim when compared to private companies. All this is because APGLI/TSGLI is an Endowment Policy.

Ask Both Governments to do these changes to APGLI/TSGLI…

Therefore, If all you want a higher maturity amount and higher insurance coverage from your hard earned money, then demand Andhra Pradesh and Telangana Governments about advised changes which I have given in this article.

So, ask Andhra Pradesh govt life insurance to do the above changes for all state government employees of Andhra Pradesh and Telangana.

Download apgli form. Click here to download.

Read the article about Investment Future value Calculation. Click here the link to read.

Also, read the article about NPS new tax rules(2019)… Click here to read…

Also, to download the apgli application form. Click here to download.

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