25 October 2024

Photon Interactions with External Gravitational Fields: True Cause of Gravitational Lensing.

Soumendra Nath Thakur
25-10-2024

Abstract:

This study investigates the fundamental equations governing photon behaviour in external gravitational fields due to electromagnetic-gravitational interaction, emphasizing their energy, momentum, and wavelength relationships. Building upon the pioneering contributions of Max Planck and Louis de Broglie, the analysis highlights key equations such as E = hf, ρ = h/λ, and ℓp/tp = c, which elucidate the wave-particle duality and energy conservation principles applicable to photons. The conservation of photon energy in gravitational fields, expressed by Eg = E, underscores the symmetrical nature of photon interactions as they traverse strong gravitational environments.

The observed phenomena of redshift and blueshift are interpreted within this framework, alongside a reinterpretation of gravitational lensing as a consequence of the momentum exchange between photons and the curvature of external gravitational fields. This perspective challenges conventional understandings and suggests that established theories may require refinement. The study advocates for the integration of alternative frameworks, such as quantum gravity and flat spacetime models, to address discrepancies between observed photon behaviour and current gravitational theories. By exploring these interactions, this research aims to enhance our understanding of the fundamental laws governing the universe, contributing to ongoing efforts toward a unified theory that reconciles quantum mechanics and gravity.

Keywords: Photon energy, momentum, wavelength, gravitational fields, quantum mechanics, Planck's constant, wave-particle duality, redshift, blueshift, quantum gravity, gravitational lensing, astrophysics, cosmology,

Soumendra Nath Thakur
Tagore's Electronic Lab, W.B, India
ORCiD: 0000-0003-1871-7803
Correspondence:
postmasterenator@gmail.com
postmasterenator@telitnetwork.in

Funding
No specific funding was received for this work.
Potential competing interests
No potential competing interests to declare.

Introduction:

This study investigates the interactions of photons with external gravitational fields, exploring how these electromagnetic-gravitational interactions can be understood through the lens of quantum mechanics and electromagnetic theory. The analysis delves into fundamental relationships between photon energy, momentum, and wavelength, illuminating their implications for astrophysical phenomena, particularly gravitational lensing.

The findings suggest a reinterpretation of gravitational lensing as a result of the momentum exchange between photons and the curvature of external gravitational fields, rather than the traditional view of relativistic curvature in spacetime. This perspective offers new insights into how photons behave in the vicinity of massive celestial bodies, challenging established notions and highlighting the necessity for a comprehensive understanding of these interactions.

By examining the behaviour of photon, representing light, under the influence of gravitational forces, this study contributes to a broader scientific discourse that seeks to reconcile the principles of quantum mechanics with classical concepts of gravity. Through this exploration, we aim to enhance our understanding of the underlying mechanisms that govern the interactions of light and gravity, paving the way for future research in the quest to unify these fundamental aspects of the universe.

The following equations provide a conceptual framework for understanding the interaction of photons with gravitational fields. These equations reflect fundamental relationships between photon energy, momentum, and wavelength, with significant implications for fields such as astrophysics and cosmology. The equations primarily draw upon the pioneering work of Max Planck (1900) and Louis de Broglie (1924), as well as later developments in gravitational physics and quantum field theory.

Key quantities such as photon energy (E), frequency (f), momentum (ρ), and wavelength (λ) are central to these discussions. Additionally, the Planck length (ℓp) and Planck time (tp) play critical roles in connecting quantum mechanics with gravity at the smallest scales, where quantum gravity theories are actively being explored. These equations help describe photon behaviour in the context of external gravitational fields, such as those near massive celestial bodies, and provide insight into the limitations of general relativity in extreme environments.

Method:

The investigation of photon interactions with external gravitational fields employed a multi-faceted methodological approach that combined theoretical analysis, mathematical derivations, and conceptual modelling. The key components of the methodology are outlined below:

1. Theoretical Framework

The foundation of the analysis was established by reviewing existing literature on quantum mechanics and gravitational physics. This involved synthesizing fundamental theories and equations related to photon energy, momentum, and gravitational interactions, particularly focusing on the works of Max Planck and Louis de Broglie.

2. Mathematical Derivations

The study included the derivation and application of relevant equations to model the behaviour of photons in external gravitational fields. The following equations were pivotal in the analysis:

• Energy-Frequency Relation: E = hf
• Momentum-Wavelength Relation: ρ = h/λ
• Planck Scale Relation: ℓp/tp = c
• Energy Conservation in Gravitational Fields: Eg = E

These equations were explored to elucidate the connections between photon energy, frequency, momentum, and wavelength, providing a comprehensive framework for understanding how these quantities interact with gravitational influences.

3. Conceptual Modelling

A conceptual model was developed to visualize the interaction of photons with external gravitational fields. This model illustrated key phenomena such as redshift and blueshift, highlighting the symmetrical gain and loss of energy as photons traverse different gravitational environments. The model depicted the photon's trajectory around a strong gravitational body, emphasizing how momentum and energy exchange occur, particularly focusing on the reinterpretation of gravitational lensing as a result of momentum exchange with the curvature of external gravitational fields.

4. Comparative Analysis

To assess the implications of the findings, the study engaged in a comparative analysis of the presented equations against conventional interpretations of gravitational interactions. This involved identifying discrepancies in photon behaviour as they approach and recede from gravitational wells, as well as examining the broader implications of these discrepancies in relation to alternative theories, including quantum gravity and flat spacetime models.

5. Interpretation and Discussion

The results derived from the mathematical analysis and conceptual modelling were interpreted within the context of current scientific understanding. This involved discussing the significance of the observed phenomena, evaluating the limitations of conventional gravitational theories, and considering the potential for alternative theoretical frameworks to provide a more comprehensive explanation of photon interactions in external gravitational fields.

6. Conclusion Synthesis

The method culminated in synthesizing the findings into a coherent narrative that articulated the implications of the study for future research in astrophysics and cosmology. The conclusions drawn emphasized the need for ongoing exploration of photon behaviour in extreme gravitational environments, thereby contributing to the pursuit of a unified understanding of quantum mechanics and gravity.

By integrating theoretical insights, mathematical rigor, and conceptual clarity, this methodology effectively illuminated the complex interactions between photons and gravitational fields, paving the way for future investigations in this intriguing area of research.

Mathematical Presentation:

Equations and Their Applicability:

Planck's Energy-Frequency Relation:

E=hf

This equation, introduced by Max Planck in 1900, expresses the direct proportionality between the energy (E) of a photon and its frequency (f), with h representing Planck’s constant. This relation is foundational to quantum mechanics and is critical for understanding energy exchange in electromagnetic radiation.

Applicability: This equation applies to all forms of light and electromagnetic radiation, making it crucial for studying photon energy in various contexts, including blackbody radiation, spectroscopy, and cosmological observations.

2. Photon Momentum-Wavelength Relation:

ρ = h/λ

The equation ρ = h/λ represents the momentum-wavelength relationship for photons, describing the momentum (ρ) of a photon in terms of its wavelength (λ). This relationship is derived from Louis de Broglie’s hypothesis, extending quantum mechanics to all particles and demonstrating that both matter and light exhibit wave-like properties.

Applicability: This relation is vital in quantum mechanics and relativistic physics, particularly for understanding how light interacts with particles and gravitational fields, as well as how its wavelength changes in processes such as red shifting and blue shifting.

Significance: This equation is significant for understanding the dual nature of light and other particles, enabling calculations related to photon behaviour in various contexts, including quantum optics and interactions with gravitational influences.

3. Planck Scale Relation:

ℓp/tp = c

This equation relates Planck length (ℓp) and Planck time (tp) to the speed of light (c), encapsulating the shortest measurable scales in the universe where quantum gravitational effects become significant.

Applicability: This equation is important in quantum gravity theories, which aim to unify quantum mechanics and gravitational concepts. It serves as a bridge to understanding how spacetime behaves at very small scales, such as near singularities or during the universe's earliest moments.

4. Energy Conservation in Gravitational Fields:

Eg = E

This equation represents the conservation of photon energy (Eg) as it interacts with an external gravitational field, stating that the inherent energy of the photon remains unchanged despite external gravitational influences. This principle is critical for understanding phenomena such as redshift and blueshift while maintaining energy symmetry in photon interactions.

Applicability: This equation is useful in astrophysics, particularly in studying light’s behaviour in strong gravitational fields, such as near black holes or during cosmological expansion. It challenges conventional interpretations of gravitational interactions, suggesting a reinterpretation of gravitational lensing in terms of momentum exchange with the curvature of external gravitational fields.

Scientific Significance:

These equations form the foundation for analysing photon interactions with gravitational fields, emphasizing the energy and momentum exchanges due to electromagnetic-gravitational coupling. By exploring these interactions, scientists gain deeper insight into phenomena such as gravitational lensing, cosmic redshift, and the potential limitations of existing gravitational theories. The relationships between E = hf, ρ = h/λ, and ℓp/tp = c are particularly critical for future developments in quantum gravity and the quest for a unified theory of the fundamental forces in nature.

The Equations Used in the Study:

1. Photon Energy and Momentum:

E = hf ; ρ = h/λ ; ℓp/tp = c

Where E is the photon energy, f is the frequency, ρ is the momentum, λ is the wavelength, and ℓp/tp refers to the ratio of Planck length to Planck time.

2. Photon Energy and Gravitational Influence:

Eg = E + ΔE = E − ΔE ; E = Eg

This equation reflects the inherent photon energy (E) and its interaction with the gravitational field of its source, resulting in a net energy change (ΔE) but maintaining energy symmetry.

3. Momentum Exchange in Gravitational Interaction:

Eg = E + Δρ = E − Δρ = E ; h/Δλ = h/−Δλ

This equation describes the momentum exchange (Δρ) as the photon undergoes a shift in wavelength (Δλ) during its trajectory through a strong gravitational field, highlighting the symmetrical nature of the interaction.

4. Symmetry in Energy and Momentum Exchange:

Eg = E ; Δρ = −Δρ ; ℓp/tp = c

This final equation expresses the balanced, symmetrical exchange of momentum and energy in the photon's interaction with the gravitational field, reinforcing the photon’s inherent energy conservation despite external influences.

Conceptual Foundation of the Study:

A photon, representing light, carries inherent energy denoted as E. As the photon ascends from the gravitational well of its emission source, it loses part of this energy, resulting in a redshift (increase in wavelength, Δλ>0). However, the photon’s behaviour changes significantly when it encounters a strong external gravitational field.

As the photon approaches a strong external gravitational body, it undergoes a blueshift (decrease in wavelength, Δλ<0) due to its interaction with the external gravitational field. This shift occurs as a result of electromagnetic-gravitational interaction, causing the photon to follow an arc-shaped trajectory. During this process, the photon’s momentum increases, described by the relation Δρ = h/Δλ, where h is Planck’s constant. This momentum gain reflects the gravitational influence on the photon's trajectory.

Completing half of the arc path (1/2 arc) around the gravitational body, the blueshift transitions into a redshift (Δλ>0) as the photon begins to lose momentum (Δρ=h/Δλ). This process indicates a symmetrical momentum exchange, where the photon experiences a balanced gain and loss of external energy (Eg), preserving symmetry in its overall energy behaviour.

Importantly, while the photon undergoes these external changes in wavelength, momentum, and energy during its trajectory around the gravitational body, it retains its inherent energy (E). The only exception occurs when the photon loses energy (ΔE) while escaping the gravitational well of its source. Thus, despite these external interactions, the photon’s inherent energy remains conserved, except for the loss associated with its initial emission.

After bypassing the gravitational field, the photon resumes its original trajectory, maintaining its inherent energy (E) and continuing unaffected by further gravitational influences.

Conclusion: The observed symmetry, where photons gain energy as they approach an external gravitational well and lose energy as they recede, could provide critical insights into refining our understanding of spacetime and gravity. This phenomenon challenges the predictions of general relativity, suggesting that the theory may be incomplete or require revision. The symmetrical behaviour of photon energy and momentum around strong gravitational fields aligns with alternative models, such as quantum gravity and flat spacetime theories, which might offer a more comprehensive explanation for these interactions.

This discrepancy between observed photon behaviour and general relativity invites further exploration and refinement of our theoretical frameworks. By engaging with alternative perspectives, we can advance our understanding of the universe’s underlying principles, contributing to a more complete and unified description of reality.

Discussion:

The study of photon interactions with gravitational fields offers profound opportunities to deepen our understanding of the fundamental principles governing light and gravity. By emphasizing momentum exchange and the curvature of external gravitational fields, this research challenges conventional interpretations rooted in general relativity and proposes an alternative perspective on gravitational lensing.

Reinterpretation of Gravitational Lensing
Traditional explanations of gravitational lensing have relied on spacetime curvature as described by general relativity, suggesting that massive objects bend light rays due to the warping of spacetime. Our findings highlight that interactions between photons and gravitational fields can be understood through momentum exchange, offering a nuanced understanding of this phenomenon.

The equations presented reveal that photon interactions with gravitational influences lead to shifts in energy and momentum, rather than being solely consequences of spatial curvature. This reinterpretation emphasizes the symmetrical nature of photon behaviour as they traverse gravitational environments, illustrating that while external forces affect their trajectory, the intrinsic properties of photons remain conserved.

Energy and Momentum Conservation
The conservation of energy in gravitational fields, articulated through the equation Eg = E, is central to our analysis. This principle asserts that despite interactions with external gravitational forces, the inherent energy of photons is preserved. Our reinterpretation of redshift and blueshift aligns with this framework, suggesting that observed changes in photon energy result from momentum exchange rather than changes in the intrinsic energy of the photon. This perspective provides a fresh lens for interpreting cosmological observations.

Implications for Quantum Gravity
The implications of this study extend to the quest for a unified theory that reconciles quantum mechanics with gravitational physics. By emphasizing momentum exchange in photon interactions, this research contributes to ongoing discussions in quantum gravity and the nature of spacetime at small scales.

Exploring these interactions reveals potential discrepancies between observed photon behaviour and predictions made by traditional gravitational theories. This study advocates integrating quantum gravity models, suggesting that understanding photon behaviour in strong external gravitational fields may require revising established notions about the interplay between light and gravity.

Future Research Directions
The findings open new avenues for future research in astrophysics and cosmology. Investigating the implications of photon momentum exchange in various gravitational environments—such as near black holes and during the universe's expansion—could yield valuable insights into the fundamental laws governing our universe. Additionally, experimental validation of the proposed momentum exchange mechanisms through observational data could provide further support for this framework.

Future studies could explore the implications for gravitational wave detection, cosmic inflation theories, and the behaviour of light in extreme astrophysical scenarios. By examining the intersections of quantum mechanics, gravity, and photon behaviour, researchers may uncover a more unified understanding of the forces shaping our universe.

In conclusion, this study challenges conventional interpretations of gravitational lensing by framing it within the context of momentum exchange and curvature in external gravitational fields. By emphasizing the conservation of photon energy and momentum, we provide a new perspective on light's interactions with gravitational influences, enriching the dialogue surrounding quantum mechanics and gravity. The ongoing pursuit of a unified theory remains an essential endeavour for the scientific community.

Conclusion:

The study offers a novel approach to understanding the interactions of photons within gravitational environments, diverging from conventional frameworks rooted in general relativity. By emphasizing the principles of momentum exchange and the energy conservation of photons as they traverse external gravitational fields, this research reinterprets phenomena such as redshift, blueshift, and gravitational lensing, shedding new light on their underlying mechanisms.

The findings underscore a crucial symmetry in photon behaviour: as photons approach an external gravitational well, they gain energy, while they lose energy as they recede. This behaviour invites a reconsideration of established theories, suggesting that general relativity may not fully account for the complexities involved in photon interactions with gravity. The preservation of a photon's inherent energy despite external influences challenges traditional interpretations, advocating for a deeper exploration of alternative models such as quantum gravity and flat spacetime theories.

Moreover, the implications of this study extend to the broader scientific discourse on the unification of quantum mechanics and gravitational physics. By integrating concepts of momentum exchange into our understanding of light's behaviour, we may unlock new insights into fundamental astrophysical phenomena and the nature of spacetime itself.

This research encourages future investigations into the behaviour of photons in various gravitational scenarios, particularly in extreme environments such as near black holes and during the universe's expansion. These avenues hold the potential to bridge gaps in current theories and contribute to the ongoing quest for a unified framework that reconciles the principles governing light and gravity.

In summary, by presenting an alternative perspective on photon interactions with external gravitational fields, this study aims to enrich the scientific dialogue surrounding these fundamental concepts, ultimately guiding us toward a more comprehensive understanding of the universe.

References: 

[1] Planck, M. (1914). The theory of heat radiation (Morton Masius, Trans.) [Book]. P. Blakiston’s Son & Co. https://www.gutenberg.org/files/40030/40030-pdf.pdf
[2] Dingle, H. (1941). Matter and Light: The New Physics. By Louis de Broglie. Translated by W. H. Johnston, B.A. (London: George Allen ’ Unwin, Ltd.1939. Pp. 300. Price 12s. 6d. net.). Philosophy, 16(62), 210–211. https://doi.org/10.1017/s0031819100002370
[3] Relativity: the Special and General Theory by Albert Einstein. (2023, May 2). Project Gutenberg. https://www.gutenberg.org/ebooks/30155
[4] Brown, L. M. (2006). Paul A.M. Dirac’s The Principles of Quantum Mechanics. Physics in Perspective, 8(4), 381–407. https://doi.org/10.1007/s00016-006-0276-4
[5] Feynman, R. P. (n.d.). QED: The Strange Theory of Light and matter. https://assets.press.princeton.edu/chapters/i2352.pdf
[6] Atomic Theory and the description of nature. (n.d.-c). Google Books. https://books.google.co.in/books/about/Atomic_Theory_and_the_Description_of_Nat.html?id=u15Do6kVtL8C
[7] Understanding Photon Interactions: Source Gravitational Wells vs. External Fields.(2024) ResearchGate https://doi.org/10.13140/RG.2.2.14433.48487
[8] Thakur, S. N. (2023). The dynamics of photon momentum exchange and curvature in gravitational fields Definitions https://doi.org/10.32388/r625zn[3] Thakur, S. N. (2023). Photon paths bend due to momentum exchange, not intrinsic spacetime curvature. Definitions https://doi.org/10.32388/81iiae[4] Thakur, S. N. (2024). Direct Influence of Gravitational Field on Object Motion invalidates Spacetime Distortion. Qeios.com.https://doi.org/10.32388/bfmiau
[9] Thakur, S. N., & Bhattacharjee, D. (2023).Cosmic Speed beyond Light: Gravitational and Cosmic Redshift. Preprints.org.https://doi.org/10.20944/preprints202310.0153.v 
[10] Thakur, S. N., Bhattacharjee, D., & Frederick, O. (2023). Photon Interactions in Gravity and Antigravity: Conservation, Dark Energy, and Redshift Effects. Preprints.org. https://doi.org/10.20944/preprints202309.2086.v1
[11] Thakur, S. N. (2024). Distinguishing Photon Interactions: Source Well vs. External Fields. Qeios. https://doi.org/10.32388/mhabs9
[12] Exploring Symmetry in Photon Momentum Changes: Insights into Redshift and Blueshift Phenomena in Gravitational Fields. (n.d.). https://easychair.org/publications/preprint/DpdQ

21 October 2024

Assessing the Financial Impact of Insurance Premiums: A Comparative Analysis of Payouts and Alternative Investment Returns

Soumendra Nath Thakur
21-10-2024

Abstract:

This study provides a comprehensive analysis of the financial impact of an insurance policy with a 15-year term, specifically focusing on the relationship between premium contributions and insurer payouts, as well as comparing these to alternative investment options like fixed deposits. The policy in question involves a 7-year premium payment period, followed by a 9-year gap before payouts commence, with the insurer providing 126.94% of the annual premium as payouts for the final 7 years, alongside a Rs. 14,000 bonus. The findings reveal that the insurance policy primarily serves to return the premiums paid, with modest gains only occurring in the final two years.

A comparative analysis with fixed deposits at a 7.1% interest rate shows that investing the total premiums paid would result in significantly higher returns. By the end of the 15-year term, the cumulative payout from the policy, including the bonus, falls short of what could have been earned from a fixed deposit. While the policyholder would receive a total of Rs. 34,972 from the insurer’s payouts, a fixed deposit investment would yield Rs. 21,089.66 more by the same maturity date.

Ultimately, the study concludes that the financial growth offered by this insurance policy is minimal. The primary benefit is the life insurance coverage provided, rather than substantial financial returns. The research highlights that alternative investment options, such as fixed deposits or Public Provident Fund (PPF), offer better financial growth and greater protection against inflation. Therefore, for those seeking financial growth, these alternatives are more attractive than the insurance policy under analysis.

Keywords: Insurance premiums, financial returns, fixed deposits, Alternative investments, Inflation impact, Smart Income Plus, IRDAI,

Description:

The insurance premium payment term is 7 years, during which annual premium payments of Rs. 18,434 (including applicable taxes) are made. After the final premium payment in the 7th year, there is a 2-year gap before the insurer begins annual payouts to the insured. For the remaining 7 years of the total 15-year insurance coverage, the insurer will pay out an amount equivalent to 126.94% of the respective annual premiums paid, along with an additional bonus Rs.14,000+. The final payout will occur in the 15th year (Maturity Date: 15-Sep-2031).

Policy Details:

• Policy No. C******205
• Policy Issue Date: 15/09/2016
• Maturity Date: 15/09/2031
• Policy Term: 15 Years
• Premium Paying Term: 7 Years
• Policy Status: Active Paid Up
• Annual Premium Amount: Rs. 18,434
• Total Premiums Paid to Date: Rs. 129,038
• Last Premium Amount (including Tax): Rs. 18,405 on 12-09-2022
• Last Premium Due Date: 15-09-2022
• Last Premium Payment Date: 15-09-2022
• Maturity Date: 15-Sep-2031
• Policy Option: Regular Income

• From the Policy Issue Date (15/09/2016) to the last premium due date (15-09-2022), the next premium gaps will be on 15-09-2023 and 15-09-2024. This timeline accounts for a total of 9 years (7 years of premium payments plus 2-year gap).

• As of now, there has been no payout from the insurer on 15-09-2024. Given the maturity date of 15/09/2031, it appears the insurer may begin the first payout on 15-09-2025, continuing with 7 annual payouts until the maturity date, including the bonus amount.

• This implies that the first payout will occur after 9 years from the policy issue date (15/09/2016).

Therefore, the difference lies in the context and interpretation of the percentage increase:

1. Percentage Calculation: When we say that Rs. 23,400 is 126.94% of Rs. 18,434, this reflects a straightforward percentage calculation without considering the time factor or interest rate. It simply shows how much Rs. 23,400 exceeds Rs. 18,434 in percentage terms.

2. Simple Interest Rate:  In contrast, when considering the annual simple interest rate for the same principal payment of Rs. 18,434 over 9 years, which leads to a payout of Rs. 23,400, the rate calculated is approximately 2.99% per annum. This reflects a different method of calculating interest that does not account for compounding effects.

3. Compound Interest Calculation: Additionally, the calculation of the annual compound interest rate—where the principal payment of Rs. 18,434 grows to a total payout of Rs. 23,400  over 9 years—results in an interest rate of approximately 2.66% per annum. This calculation accounts for the effect of compounding over time, emphasizing how interest accumulates.

In summary:

 • The first statement focuses on the percentage representation of Rs. 23,400 relative to Rs. 18,434 without regard to time or interest.

• The second and third statements explore the growth of the principal amount over time through different interest calculation methods—simple and compound—highlighting how the nature of interest calculations impacts the resulting rates."

Mira, aged 47 years opts for Insurance Plan for a Policy Term of 15 years and Premium Payment Term of 7 years and Pays an annualised premium of Rs. 18,434 p.a., Receives Guaranteed Annual Payout for 7 years commencing from the end of 9th policy year.

At the end of 9th Policy Year, he received Guaranteed Payouts of 126.94% of annualised premiums is Rs. 23,400 each, for the next 7 years.

The 26.94% gain on each premiums of Rs.18,434 in completion of 9 years (Gain = Rs. 23,400 - Rs. 18,434) is Rs. 4,996, and so for 7 premiums the total gain (4,996 x 7) is Rs. 34,972. Therefore, total premiums paid in 7 years is Rs. 1,29,038 and total payouts in 7 years will be Rs. 1,63,800 excluding bonus of Rs. 14,000+

Payout period:

To calculate the percentage of simple gains for each annual premium over the payout period, we first need to clarify the information and assumptions:

1. Annual Premium Amount: The insured pays an annual premium of Rs. 18,434 for 7 years.
2. Total Premiums Paid: Rs. 18,434 × 7 = Rs. 1,29,038.
3. Final Payout Amount: Rs. 23,400 per year for 7 years starting after 9 years from the first premium payment.
4. Total Payout Period: 7 years (payout years).
5. Total Gain from Each Annual Premium: Rs. 23,400 - Rs. 18,434 = Rs. 4,966 per year.

Calculate Simple Gain Percentage

The percentage gain for each annual premium can be calculated as follows:

Percentage Gain = (Gain/Premium Paid) × 100

Using the numbers:

• Gain = Rs. 4,966 (Total gain per premium)
• Premium Paid = Rs. 18,434
Percentage Gain = (4,966/18,434) × 100 ≈ 26.96%
 

Summary Table

Payout     Annual_Payouts      Annual_%Gain      Total_Balance  %Gain on Rs. 18,434 (7yrs)

1                  23,400                    26.96%                   23,400                    26.96%
2                  23,400                    26.96%                   46,800                    26.96%
3                  23,400                    26.96%                   70,200                    26.96%
4                  23,400                    26.96%                   93,600                    26.96%
5                  23,400                    26.96%                   1,17,000                 26.96%
6                  23,400                    26.96%                   1,40,400                 26.96%
7                  23,400                    26.96%                   1,63,800                 26.96%

Explanation:

Annual_Payouts: This column shows the fixed annual payout amount that the insurer provides after the initial 9 years.
Annual_%Gain: The percentage gain for each annual payout is calculated, reflecting a consistent gain of approximately 26.96% relative to the annual premium paid.
Total_Balance (Rs.): This column reflects the cumulative total of payouts received after each payout year, indicating how much the insured has accumulated over the years.
%Gain on Rs. 18,434  (7yrs): This percentage highlights the gain from the annual payouts based on the initial premium amount of Rs. 18,434.

Premiums Paid and Payout Table:

                                                                                                                Balance with

Years    Dates    Pemiums(Rs)  PayOut(Rs)  Bonus  Total_Balance   Interst (7.1%).  Inflaton@7%

1        15-09-2016    18,434    0                      0        18,434              18434.00            --
2        15-09-2017    18,434    0                      0        36,868              39485.63           1290.38
3        15-09-2018    18,434    0                      0        55,302              61846.07           2580.76
4        15-09-2019    18,434    0                      0        73,736              85515.33           3871.14
5        15-09-2020    18,434    0                      0        92,170              110493.40         5161.52
6        15-09-2021    18,434    0                      0        110,604           136780.28         6451.90
7        15-09-2022    18,434    0                      0        129,038           164375.98         7742.28
8        15-09-2023    0              0                      0        129,038           173537.68         9032.66
9        15-09-2024    0              0                      0        129,038           182699.37         9032.66
10      15-09-2025    0             23,400            0        105,638           166799.67         9032.66
11      15-09-2026    0             23,400            0        82,238             149238.57         7394.66
12      15-09-2027    0             23,400            0        58,838             130016.07         5756.66
13      15-09-2028    0             23,400            0        35,438             109132.17         4118.66
14      15-09-2029    0             23,400            0        12,038             86586.86           2480.66
15      15-09-2030    0             23,400            0        -11,362           62380.16           842.66
16      15-09-2031    0             23,400        14400  -49,162           21089.66             --

                                                                                                                                             74789.26

Explanation of Premiums Paid and Payout Table:

Premiums (Rs.): This column shows the fixed annual premium of Rs. 18,434 that the insured paid for the initial 7 years, accumulating to a total balance of Rs. 129,038 by the end of 9 years.
Payout (Rs.): This column represents the fixed annual payout of Rs. 23,400 that the insurer will provide to the insured, beginning in the 10th year. The payouts continue for 7 years, covering the period from the 10th to the 16th year of the policy.
Initially, the payouts for years 10–14 will effectively return the premiums paid by the insured. The total premium paid, Rs. 129,038, will be fully covered by the insurer’s payouts within this period.

It is only in the 15th and 16th year that the payout exceeds the total premiums paid, with the insurer covering an additional Rs. 49,162, including a bonus of Rs. 14,400. This suggests that the majority of the payouts are simply a return of the premiums, with limited financial gain coming in the last two years from the total premiums paid by insured.

• Comparison of Cumulative Annual Inflation of Paid Premiums:

The 'Inflation@7%' column represents the cumulative impact of inflation on the premiums paid over the policy term, calculated at an assumed average annual inflation rate of 7%. This inflation-adjusted column shows how the real value of the premiums erodes over time, accumulating to a total loss of Rs. 74,789.26 by the end of the 15th year. Given the historical average inflation rate in India, the policyholder's total premium payments will effectively lose Rs. 74,789.26 in purchasing power by 15-09-2031, diminishing the real financial value of the premiums paid. Therefore, despite the nominal payouts and bonus offered by the policy, the cumulative inflation-adjusted loss significantly affects the overall financial outcome, reducing the true worth of the insured’s contributions over the policy’s term.

Comparison to Market Returns: By the end of the 16th year, the total amount paid out by the insurer—including the bonus—will not exceed the returns that would have been earned on the premiums had they been invested in a standard fixed deposit (FD) account at an interest rate of 7.1% (a typical rate offered by Indian banks). Based on FD interest, the total accumulation on Rs. 129,038 would surpass the payouts and bonus from the insurer by Rs. 21,089.66.

Conclusion: This suggests that, financially, the insurance policy offers little benefit beyond the basic return of premiums and a small bonus. In comparison, a Public Provident Fund (PPF) or senior citizen FD account would yield significantly better returns. The minimal financial advantage, combined with the limited bonus and payout structure, implies that the policy’s true value lies in the insurance coverage rather than providing meaningful financial growth.

Conclusion:


The insurance policy's financial structure and impact become evident through a detailed analysis of the premium contributions over seven years, compared to the eventual payouts by the insurer. The policyholder consistently contributes Rs. 18,434 annually for seven years, totalling Rs. 129,038 by the end of the ninth year. However, when compared to investing this amount in a fixed deposit account with a 7.1% interest rate, the balance would grow to Rs. 182,699.37 by the end of the same period, far surpassing the insurer's total payouts of Rs. 23,400 annually.


The insurer’s financial contribution appears relatively modest, as the majority of payouts essentially function as a return of the premiums, with only a small bonus added toward the end. It is only during the 15th and final years of the policy that the payouts marginally exceed the total premiums paid, offering a modest gain. However, this gain pales in comparison to the returns that could have been achieved through low-risk investment alternatives such as fixed deposits or the Public Provident Fund (PPF), both of which provide substantially higher returns over the same period.


When factoring in inflation, the policy’s financial benefits appear even less attractive. The cumulative inflation-adjusted loss significantly erodes the real value of the premiums paid, diminishing the policyholder's purchasing power over the policy term. Despite a nominal gain in the final years, the inflationary pressures and opportunity cost of choosing this policy over more lucrative, low-risk investments further diminish its financial appeal.


In conclusion, the policy's real value lies in the life insurance coverage it provides, rather than any significant monetary growth. The analysis shows that while the policy may offer some security, its financial utility is limited, with alternative investments offering better returns and greater protection against inflation. Ultimately, the policy serves more as a means of insurance protection rather than a tool for financial growth.


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