INFLAPRO APPLICATIONS
(Education Loan/General loan)

General loan:

• The General loan will have fixed term period and in conventional method, the loan be repaid with both principal and interest. The default or over due instalments will fetch penalty.
• In inflapro option one can select the option with further loan outstanding and continuation of further repayment after the term or go for lumpsum settlement after the term. over due instalments will attract penalty. However After term, lumpsum settlement as per inflapro calculation will not attract penalty.

Education Loan

• Education loan is similar to the General loan but for the difference, that the loan disbursement is equally divided during the moratorium period and the interest during moratorium is calculated on Simple interest basis.
• Education loan is compounded quarterly. The are two menus for education Loan. In the specialise menu for education loan one has to enter the quarterly rate such as 10.5 even if the payment mode is monthly or half yearly or yearly. But in custom menu (common for pension/loan) one has to enter 10.92072 if annual payment corresponding to 10.5 quarterly. So also it is different for other periods. (to calculate with software somewhere elso provided in my website).

Input parameters

• The input parameters are principal, inflation %, interest %, term, frequency of repayment viz. monthly, Quarterly, Half yearly or yearly, moratorium (i.e study period) period of 3 years for 10 year loan repayment, or additional 1 year moratorium. In custome menu of www.bnvenkat.com all these parameters are changeable.
  Other parameters are Further repayment of loan, half the last repayment instalment and the lumpsum after term settlement (yes/no). there are advanced options to select an starting amount under an inflapro option in the custome menu (it is normally hidden and can be activated to show). Also there is a slot for immediate pension/payment (as the case me) option (yes/no).

Input parameters-Immedate payment option

• If immediate payment option is selected the payment instalment starts immediately on the policy date, otherwise in normal case the payment starts at the end of the period of the first year. i.e. In monthly option the the payment starts on the 1st of the first month of first year in case of immediate option. otherwise the payment starts on 28th of the first month of the first year. and in the case of immediate payment of the annual scheme starts at the 1st day of the policy year and next instalment falls on the 1st day of next policy year.
  This immediate payment is different from pension scheme with LIC. Where in they call immediate pension for paying the first instalment after one month or year, as the case may be and they call opposite to immediate payment in their terminology is deferred payment.
  The differ period is the moritorium period in our terminology.

INFLAPRO APPLICATIONS
(Pension schemes)

Pension schemes

• In case of pension schemes, there is menu for LIC pension scheme Jeevan Akshay IV (before 2017) and Jeevan Akshay VI with the table for age 20 to 80.
  SBI select option equivalent to LIC option 1.
  Also some ICICI options. However I have taken LIC's options as a standard
  Also in 2017 I have added up PMVVY (LIC's Prime Minister Vaya Vandana Yojna) schemes. You can see the results for the principal of your choice and look at all other 11 inflapro options equivalents.
• One can also use custom menu as discussed in loan options. Here there is also at the bottom of menu LIC option number. Such options are 1 to 7.
• There is also a provision to fix your choice of starting pension and to calculate the principal needed in that Inflapro option. This requires live demonstration to understand the concept.
  for example if you get ₹ 4200.38 annually in inflapro option 7 of a particular LIC option 7, and you want the starting figure to be 50000 annually then one can feed this figure 50000 in appropriate place holder and selecting inflapro option 7.
  The concept is nothing but a prorating. If one lakh principal gives 4200.38 what is the principal needed for giving 50000. A simple mathematical pro rating. However by by giving your choice in the slot, it calculates appropriately nearest to paise and with leasr round off at the end of the term.
  For this within the custom menu one has to unhide the respective form
  and enter inflapro option (1 to 12). and at bottom place holer there is a box for LIC option, wherein one has to enter 7 (option 1-7).

LIC option 1-7

• LIC option 1: Life time annuity without return of Purchase price
  
• LIC option 2. Life time annuity without return of purchase price with
  guaranteed minimum span of 5, 10, 15, 20 years. In out tabulation it is considered for minimum period of 15 years.
• LIC Option 3: Life time annuity with return of purchase price.
• LIC Option 4: Life time annuity with increase of 3% annuity every year on simple interest basis.
  This is a kind of my concept of inflapro, but based on simple interest.
• LIC Option 5: Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
• LIC Option (6) Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
• LIC Option (7) 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.
• Also there is a provision for LIC's PMVVY scheme with desired principal amount. For ₹ 1000 pm pension the principal required is ₹ 150000.

Interest rate at PMVVY

• LIC -PMVVY scheme: The interest rate for PMVVY is 8% p.m. or 8.30% per year
  
• At present there is restriction on maximum amount of investment in PMVVY
  It is ₹ 1500000 or equivalent to pension of ₹ 10000 p.m.

Interest rate in other LIC's pension schemes

• Max intt. rate : The calculated maximum interest rate in LIC's other
  pension schemes work out to 6.640% that too for 80 years man opting for Return of Purchase price to survivor on death.
• In other insurance companies the interest rate works out to be lesser than LIC's rate of interest.

INFLAPRO APPLICATIONS
(Compensation for farm Land acquisition)

Farm Land acquisition

• There is a software program in this web, to scientifically calculate the compensation amount to farm land acquisition by Government/others for development purposes. The farmers lose their livelihood for generations.
  The link is available in the home page of the site also given below here.
  https://www.bnvenkat.com/bnv_www/PENSION_AJAX/pensionfdpmtAutoinvoker.php
• This above link page is password protected. One can register with email id and get password. However all the calculations for a user is restricted to only a limit of 3 calculations. So initially even before new registration one visit the sample calculations provided at LIC link, bank loan etc.
  There is a automated link, at the bottom of the above link page and named as L acqui
  Please click at the L acqui link and find the output particulars and graphs.
  Just above each graph there is also Audit-Table. One can click the audit table to find the audit table how the closing balance is derived over the span of 70 years.
  For the convenience of this page viewers I am giving below the result link of sample calculation of it. Please visit and analyse the impact of inflation and fair compensation for such a deal
  

https://www.bnvenkat.com/bnv_www/PENSION_AJAX/pensionfdpmtAutoinvoker.php? princ=1000000&intt=8.30&bankQ=0&banflag=1&factor=1&edu=0&term=70&mora=0&fv=full& extend=500000&inflaset=6%2C8%2C10&cust=aa& password=5283bbf18eaac42d7e8111163dcda75e

Analyses of Farm Land acquisition

• The above link gives result, graph, and audit table with inflation protection of
  6%, 8%, and 10% respectively. Let us do a brief analysis of the output and its inference.
• Page#:3
  input and outputs:
  Princ=₹ 8,05,56,678.87
  EQI Uniform rate with ROP=₹61,71,991.92
  CONVENTIONAL_ROP=₹8,05,56,678.87
  TERM=70 years
  immediate payout option=Yes
  Moratorium=0 years
  StartgPension=₹ 5,00,000.42
  Inflation Protection=10% pa
  Rate of Interest=8.30%
  Frequency:Yearly
  Last 70th year pension = ₹35,89,76,197.53
  Further pension/payout/repayment as the case may be= same as last ₹35,89,76,197.53
  INFLAPRO_ROP:₹432,50,14,428.07
  eduflag 0 :: Education loan flag false.
  continued..
• The farm land per acre is giving a maximum return in kerala and is about ₹ 5 lac pa
  So a starting pension amount for the 1st year and with 10% inflation per year is given as input. Interest rate on the principal is take as 8.30% and term of 70years considered as it is affecting livelihood of genereations. Further pension is considered as the same as last. Frequency input also given as annual. This works out to ₹ 39906.38 per month in the first year.
  i.e The fair compensation is ₹ 5 lac per year or ₹ 39906.38 per month and to give inflation protection of 10%. In such a case the outputs
  Princ=₹ 8,05,56,678.87 means that the principal equivalent of compensation or outright compensation and final settlement at the time of take over means around ₹ 8.06 crore. Otherwise the pension option with inflapro.
  EQI uniform rate of around ₹ 64.72 lac indicates that this is the annuity one would receive for 79 years uniformly without inflapro. i.e. conventional equivalent return for the above principal if not settled outright. Conventional ROP (return of Purchase price ) is same as principal ₹ 8.06 crore.
  last pension ie. at 70th year the works out to ₹ 35.90 crore.
  Final settlement at the end of 70th year is ₹ 432.50 crore or an annual pension at uniform rate of
  ₹ 35.90 crore indefinitely until final settlement in any subsequent year.
  Click the link mentioned above and go to last page of the output and click auditTable to see the entire
  auditable calculation for 70 years.
• Page#:2
  input and outputs:
  Princ=₹ 3,68,30,486.21
  EQI Uniform rate with ROP=₹28,21,832.61 CONVENTIONAL_ROP=₹3,68,30,486.21
  TERM=70 years
  immediate payout option=Yes
  Moratorium=0 years
  StartgPension=₹ 5,00,000.44
  Inflation Protection=8% pa
  Rate of Interest=8.30%
  Frequency:Yearly
  Last 70th year pension = ₹10,12,06,759.45
  Further pension/payout/repayment as the case may be= same as last ₹10,12,06,759.45
  INFLAPRO_ROP:₹121,93,58,547.59
  eduflag 0
  
• For the starting amount of ₹ 5.00 lac per year or ₹ 39906.38 pm in first year
  the last annuity is ₹ 10.12 crore at 8% inflation
  Further post term annuity same as last is ₹ 10.12 crore or Final ROP is ₹ 121.94 crore. This is far less compared to same figures of ₹ 35.90 crore and ₹ 432.50 crore in 10% inflation case discussed above
• Page#:1
  input and outputs:
  Princ=₹ 1,96,73,699.88
  EQI Uniform rate with ROP=₹15,07,335.19
  CONVENTIONAL_ROP=₹1,96,73,699.88
  TERM=70 years
  immediate payout option=Yes
  Moratorium=0 years
  StartgPension=₹ 4,99,999.75
  Inflation Protection=6% pa
  Rate of Interest=8.30%
  Frequency:Yearly
  Last 70th year pension = ₹2,78,65,990.91
  Further pension/payout/repayment as the case may be= same as last ₹2,78,65,990.91
  INFLAPRO_ROP:₹33,57,34,830.24
  eduflag 0
  
• For the starting amount of ₹ 5.00 lac per year or ₹ 39906.38 pm in first year
  the last annuity is ₹ 2.78 crore at 6% inflation
  Further post term annuity same as last is ₹ 2.79 crore or Final ROP: ₹ 33.57 crore
  This is far less compared to same figures of ₹ 10.12 crore or Final ROP is ₹ 121.94 crore. at 8% inflation and
  also is far more less compared to same figures of ₹ 35.90 crore and ₹ 432.50 crore in 10% inflation case discussed above
• There is so much difference in the compensation and the rate of inflation has a crucial role.
  One has to arrive at a judial rate of inflation anywhere in between 6% and 10%. to Go by guideline of
  past performane of food inflation of over 6% and dairy product inflation of 8% in past 60 years, the better would be around 6.667%.
  The above corresponding figure at 70 years work out to ₹ 4.30 crore annuity or final settlement of ₹ 51.76 crore at the end of 70 years after providing inflapro pension/annuity all along, starting at Rs. 5.00 lac in first year of land acquisition.
  page#x:Inputs and outputs:
  Princ=₹ 2,38,23,477.56
  EQI Uniform rate with ROP=₹18,25,277.72
  StartgPension=₹ 4,99,999.79
  Inflation Protection=6.667% pa
  Rate of Interest=8.30%
  Last 70th year pension = ₹4,29,58,132.90
  Further pension/payout/repayment as the case may be= same as last ₹4,29,58,132.9
  INFLAPRO_ROP:₹51,75,67,866.27
  Read the outputs in same fashion as that was given in 10% inflation case.

INFLAPRO APPLICATIONS
(Insurance, Shares, MF etc.)

Other applications

• Other applications to follow are inflapro Insurance of Rs. one crore endowment plan not a term plan
  Preferential shares and debentures
  Mutual fund
  Insuranc commission
  A special note about FD and its complexities
  
• About all these brief note will be supplied in next session to follow.

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