LIC’s new plans 2014-New Jeevan Anand (No.815)

Today LIC relaunched it’s one of the popular plan JEEVAN ANAND. As I said in my earlier posts, there is no such a major revamp. But only few changes to meet the new guidelines. Below are the features of New Jeevan Anand (No.815).

New Jeevan Anand (No.815)

What are the new changes?

  • Maximum age at entry is reduced.
  • The maximum policy term is reduced.
  • Rebates on higher premium and the Basic Sum Assured modified.
  • Loan features modified.
  • Change in Guaranteed Surrender Value.
  • Policy revival conditions changed.

Few readers suggested me to come out with the benefits of investing in these new plans. But as of now without knowing the premium rates and other details, I am unable to do so. Hence once the clear picture come out then I will do that review. As of now I am just updating the plan features whenever LIC launches new revamped plans.

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Comments

  1. muraly says

    sir,
    i read one advertisement regarding rupees one crore life coverage at rupees 18 per day. kindly give me details regarding this .

  2. Hriday Malangaon says

    Sir; In New Jeevan Anand policy what are the charges for accident benefit rider..is is inbuilt in premium or I have to pay additionally?

    My age is 38 and I want to go for 21 yr. policy for SA 25 Lac. Kindly illustrate and calculate the premium including ACCIDENT RIDER for 25 lac

    • says

      Hriday-Whether you are buying this plan for Life Insurance, Life Insurance+Investment or for Accidental Insurance? For your information accidental rider is in built. But to do you feel this is best plan of earth??

      • Hriday Malangaon says

        Sir; I have gone through the circular from LIC towards Jeevan Anand Policy which state that Accident & DISABILITY rider is available for Rs. 1 per thousand (hence I understand it is not in built).

  3. ABHIRUP MITRA says

    Hi,

    I have Jeevan Anand plan for 21 years term with Rs.200000/-SA.But i want to extend my term till 35 years and increase SA of Rs.400000 after giving only 1 premium last year..Is it Possible?

    Abhirup

    • says

      Tarannum-In that case don’t run behind product. Buy online term plans to the tune of 15 times of your yearly income. Create emergency fund for your family of at least around 6 months household expenses. Buy health insurance for your family. Start investing in PPF. Choose mutual funds (equity) for your long term goals like more than 7 years.

      • tarannum says

        thank you very much sir, for your advise. I really appreciate your suggestion. so kindly tell me sir ,which online term should I take? what do I need to buy online term? how can I create emergency fund ?please specify this as I know nothing of it. I am thinking of sbi SIP to invest RS.2000 p.m.for 20 years . so how can I create sip account?

  4. Tarannum says

    hello sir, i am from bengal, my yearly income is Rs. 3 lac . My age 31,unmarried. For tax rebate i took a new jeevan anand policy on march 2014 .S.A. 5 lac. Now i am tensed. Will i get tax benefit before or after maturity. Or i should invest in ppF?can i invest in in NSC ? will i get tax benefit on NSC!please give me yous valuable suggession. I am very much in depression

  5. varun a b says

    sir i have one policy new jevan anand (815) i wants to get complet details of amount plz give me lnformation -21term,policy 100000,6month payed amount 2815. Plz give me details

  6. subrata biswas says

    sir…..
    mai 26 yrs ka hoon. yrly primium – nearly 20000.
    Lic-jeevan anand plan
    Lic-endowment plan…….en dono plan mese konsi plan mere liye best hogi…??plz reply as early as possible.

    • says

      Subrata-Donoan bhi ache hai agar aapko 6% return se kuch problem nahin hai to. Donaon kam return dene waale products hai. Isiliye mera salaha yahi hai ki, ina donaon plan se door rahe.

      • says

        Dharmendra-Please reply to all your earlier comment if you are here on this platform for sharing your knowledge but getting any business :) Otherwise we may consider you as spammer and block permanently. I welcome for knowledge sharing but not spamming.

  7. k n venkatesh says

    Hi Mr. Basavaraj… I have been reading your comments very frequently. You seem to be hitting the bulls eye always. Gr8. Need suggestion.

    I have a Daughter (presently she is 24 yrs – working) and a Son ( presently he is 22 yrs – will be going to work soon)..Please suggest the best LIC Plan for them which should cover, Life + good income + IT Rebate + Bonus etc. or any other that is giving good returns and not a loss. Because, in my early days I lost many. I don’t want them to suffer like me. Revert with your valuable suggestions and. Regards. KN Venkatesh

    • says

      Venkatesh-It is the truth which I am unfolding and nothing more than that. Stay away from typical traditional LIC plans. Instead suggest them to buy the pure insurance product which is also called Term Insurance (even with LIC, which recently launched online term plan called e-Term) to the tune of around 15-20 times of their yearly income. Rest invest them in a product based on their financial goals. Even if you choose a simple product PPF then you have 100% possibility of earning more than all these LIC policies.

  8. says

    Hi Basavaraj,

    I am an IT professional (age 22 years) and I have very less knowledge about these policies.

    I have enrolled LIC policy of New Jeevan Anand 815 plan for Term (21) and SA (15,00,000). The commencement date was Feb, 2014 and my premium is INR 19,725 payable quarterly.

    Please guide me if I have taken the right decision.

    If possible, please predict the approx. amount (SA + bonus, gratuity and everything) that I may get after 21 years? :)

    • says

      Sanket-Return from this policy will be around 6%. So if you are satisfied with kind of return then go ahead. Otherwise better to stop immediately and buy term plan to the tune of around 15 times of your yearly income.

      • Sanket says

        6% is very much low. Please guide me the plan or premium which can provide me a good return. I am very confused.

        • says

          Sanket-No plan will give you more than 7% return if you are very thoroughly searching. So stay away from such traditional plans. Instead buy online term plan to cover your life risk and start invest in separate products based on your goals.

  9. RK Sharma says

    Hi Basavaraj Tonagatti

    I am really impressed with your answers.Now a days i am planning to purchase a LIC (Pension Plan) for securing my retirement .Can you please suggest me for the same.My basic requirement is i want to get the handsome amount(40K-50K) after 55 years (Retirement). Now i am 30 yours Young.Also please can u provide me the detail i.e. a calendar type information so that i can able to know that after investing how much money how much money will i get after retirement.

    Regards
    Ramakant

  10. L.Manojkumar says

    LIC New Jeevan Anand Plan Table No 815 policy details

    Dear Sir,

    Good morning,kindly share the details of LIC New Jeevan Anand Plan Table No 815
    policy.

    So i may request you to confirm that,where it’s government policy or not.

    Regards,
    Manojkumar

    • Rathnavel says

      Hi sir,
      i would to like to investment @ fixed deposit.
      i here about Shriram Transport Finance Company Fixed Deposits scheme. may i know how they are deliver the Cash,at the time of maturity ? i mean, all the 100 % depositors get the cash @ time of maturity ? OR if any problem or issue@ deliver the cash,to customer @ time of maturity ? may we trust the concern for deposit ?
      This concern is good for Inverstment or Not ? please suggest me.give some Top 5 concerns and give your suggestions please.

      Thanks in advance
      A.Rathnavel.

      • Rathnavel says

        Hi sir,
        i would to like to investment @ fixed deposit.
        i here about Shriram Transport Finance Company Fixed Deposits scheme. may i know how they are deliver the Cash,at the time of maturity ? i mean, all the 100 % depositors get the cash @ time of maturity ? OR if any problem or issue@ deliver the cash,to customer @ time of maturity ? may we trust the concern for deposit ?
        This concern is good for Inverstment or Not ? please suggest me.give some Top 5 concerns and give your suggestions please.

        Thanks in advance
        A.Rathnavel.

  11. Anand says

    hello sir,

    my policy in LIC new jeevan anand 815, term(21), SA(1000000)

    I got my first premium receipt in which premium noted 52488 but as per premium calculator 51488. So what have should i paid.
    However I have paid by cheque Rs (53299).

    As per receipt .

    premium 52488 + ser tax 1575 + surcharge 47 = 54110 (total amount)

    what is happened .why Rs 811 paid extra .

    Please shall i get clarification .

    regards
    Anand

      • Sonia says

        Sir,
        Many many thanks for this really helpful blog.
        I am a 30 years, married woman, working in a PSU.Annual income is around 4L.

        I want to know that what kind of tax benefits I can get from a Single Premium LIC policy of Rs.1L for FY 2013-14.

      • K N Pandey says

        I am holding a Jeevan Anand LIC policy 21 terms since 2010. Paid 4 premiums of Rs 96000/ year. I want to reduce the terms for 11 years now with the same premium and reduce sum insured accordingly or willing to increase the premium to attain maturity value in 11 terms for the sum already insured whichever is more more beneficial. Kindly give your valuable suggestion on the subject. With best of regards

        • says

          K N Pandey-If you reduce your term of policy then your return will be lesser than 21 years policy. Because bonus declaration is based on term of the plan too. For me best option is to come out of the plan after 3 years.

  12. Sandeep says

    Sir,
    Gud Afternoon,

    I bought a policy JEEVAN ANAND (149) last year. My yearly premium is Rs.17545/- for 20 years.
    What the benefits I get after 20 years. and what other benefits I got before death and after death.
    Can I get the after maturity benefit alongwith maturity.
    Sandeep
    9911160302

  13. Abhishek says

    Hi,
    Last week i got a call from LIC marketing team.
    As per them,because of year closing they are offering some extra benefits on Policy 815.
    I’ll explain it with an example of

    Sum Assured=500000(5 L)
    Term=15 years,
    My age=27 years

    After maturity
    total sum=1260000 (12L 60K)+death cover of 5L for rest of the life(that I can encash after 3 years with 5% deduction)

    Benefits:
    10% discount on yearly premium upto 15 years
    3% extra bonus that makes it 12L 60K
    After maturity i can convert it into yearly pension of 160000 for rest of my life or I can get my 12L 60K any time.
    plus other benefits as explained by you.

    So i just wanted to know if these are genuine promises or just the tricks to attract customers.
    will I get something in written(in contract)?
    should I go with these promises?

    Please reply in urgent as I have 4 more days to go for 2013-14 session(I want tax rebates also for the session 2013-14).

    • says

      Abhishek-It is complete way of mis-selling. There is no where mention of such kind of discounts. Never ever be in such trap. If you need confirmation of my claim, visit any nearest LIC branch and discuss with them the same issue. Otherwise if you receive the same call once again then let them give in writing all the benefits they are claiming to be. If they ask why then simply say in one line that “TO SHOW WITH IRDA FOR CROSS CHECKING”. I assure you that they will automatically disappear :)

      • Abhishek says

        Hi Basavaraj,
        I think they have disappeared already, as before writting to you I asked them just to provide all these in written and I did not hear from them since then.

        Thanks, for your help.

        Abhishek

  14. sujeet Pal says

    sir, mai lic agent hoon. aap ye jo awareness de rahe hain wo bahut acha hai. sir maine ulip nahi sell kiye the.hala ki mai Z M club member hoon agar mujhe pahle aapke baare mein jaankari hoti to shayad mai jeevan saral ki maturity aane ke baad jo term insurance bechne ki soch raha hoon wo mai pahle hi bechta sir jeevan saral mein 255 per month for 10 yrs maturity is only 30246 aur customer pay karta hai 30600/ sir mai apollo se health insurance bhi kar raha hoon kya ye theek co hai kya aap mediclaim se sambandhit awareness progame bhi chalate hai sir mere liye kya theek rahega kyonki sir mai chahta hoon ki meri earning bhi ho aur meri vajah se kisi bhi person ka loss na ho

    • says

      Sujeet-Aapaka decision correct hai. Aap jyada se jyada customer ki bhalaayi dekhiye to aapko long term meing fayada hoga. Apollo Health Insurance company acha hai aur usaka products bhi ache hai. Aap jaroor donaon companies ka product bhejo aur tarakki bhi karo. Best of luck :)

  15. samrat roy says

    Hello Mr Basavaraj,

    For quite a few days I follow your blog. I am impressed, to say the least.
    I am a 34 yr man with my wife (home maker till date), a 3.5 yr old son and a pensioner Mother. I work in a Pvt co with a salary range between 4-5 pa. I stay in my own Flat at Kolkata.
    here are the details of my investments till date. can you evaluate, and suggest improvements?
    - got an online Term Insurance Policy (Kotak Life Insurance) of SA-50lacs. (planning to increase that to Rs 1 cr).
    - got a Mediclaim (Star Health) of SI-3lacs with Top up facility.
    - got a few MFs which are
    —Debt SIP of Rs 2k pm, in DSP Blackrock World Gold Fund & IDBI Top 100 Equity Fund
    —Equity SIP of 8k pm, in TATA Equity PE, IPRU Focused Bluechip, Birla Frontline Equity, Reliance Equity Opportunities & HDFC Top 200)
    -got a Bank R/D of Rs 2k pm
    -got an R/D from ESBI of Rs 3k pm
    -planning to buy a garage and a Residential Flat (for investment only).
    Please evaluate and suggest for betterment……..

    regards Sir.

    • says

      Samrat-1) Cover your mother too in your health insurance. Because she must have health insurance more than you 3.
      2) May I know the reason for choosing debt fund? For your information DSP Blackrock World Gold Fund is not a debt product. It invest in gold mining companies, which I don’t think a right way to have your investment in Gold. Also restrict your investment in gold to the tune of around 10% only. For this purpose you can choose Gold Funds (underlying assets are Gold ETFs but are costly as you need to pay the expenses for Gold funds as well as Gold ETF) or Gold ETF (cheapest but minimum one gram investment is need and you need demat account to invest). IDBI Top 100 Equity is large cap fund (but not debt fund) and in my view not a right choice. Switch to ICICI Focused Bluechip Fund.
      3) TATA Equity is PE fund which is taxed to you as debt fund (you loose advantage of long term tax exemption from equity) and this being fund of fund, expenses will be at higher end. Hence come out of this fund. You can continue Birla Frontline Equity (Large and Mid Cap), Reliance Equity Opportunities Fund (Mid and Small Cap) and HDFC Top 200 Fund. Keep equity investment for your long term goals like more than 7+ yrs.
      4) May I know the reason behind having RD of Rs.5,000? Because it’s return are not tax free.
      5) Include PPF in your investment (part of debt portfolio) which is best tax saving and good return generating plan for long term.
      6) Missing emergency fund (if not shared then alright), create around 12 months household expenses fund in liquid funds and Bank FDs.
      7) Missing goal based investment. Rather prioritize your goals and start investing based on goal. Simply investing surplus from your saving will not be a best option. So create investment for your kid’s education cost, retirement planning or some other important goals of your life. Then think for one more investment in real estate. Keep in mind that, real estate is good investment but at the same time don’t over expose any one sector and liquidity is an issue with real estate when you need.

      • samrat roy says

        Hello Mr Basavaraj,

        First of all, thanks for adding values, I was a bit confused, no more now.
        I have got a few things to share,
        - my mother has got a Retired Employees’ Mediclaim of Rs 2 L.
        - I always do online F/Ds for short tenure after adjusting AQB/AMB, for any contingency which I did not mention.
        - I do R/Ds because I like to Deduct Tax instead of saving for it. And these R/Ds mature during April to continue with the expenses, pay LI & Mediclaim Premium. That’s why I don’t get stressed out. Can pls suggest any other alternative?
        - I will start investing in PPF
        - what can be done for my Child’s education? I already have invested for the Milestones, like Class 1 Class 10, Class 12, Graduation, PG, (F/Ds & NCDs). Have not invested for expenses in between, my fault. What can be done?
        - Can the MFs build a corpus for my Annuation? I invested keeping a horizon of more than 10 yrs.
        Thanks once again, looking forward for your inputs…..

        Regards

        • says

          Samrat-Regarding your kids education cost, you need to consider each year requirement separately and start investing based on time frame like what you did for your RDs. Select product based on goal time frame and your risk appetite. You can build good retirement fund by investing in equity only if your goal is of long term view like 7+ years. Otherwise it is not worth to test your knowledge. Also I can’t guide you plainly without knowing the full details about goals, investment and your current financial situation. It need proper planning. But in short I guided you in better way. Hope this answer will satisfy your need.

          • samrat roy says

            Mr Basavaraj,
            of course sir, you have given valuable insights which I will definitely work upon.
            I will let you know, and seek for your help, even if that costs me. I simply want to make a better financial life with whatever limited resources I have.
            Thank you. Let’s talk later………..

            Regards Sir.

  16. Manikandan says

    Hi Basavaraj,
    Recently, I was approrached by LIC agents, who told me about New Jeevan Anand plan. They told me that it will give assured annual return of 14 per cent (in addition to the insurance and tax savings benefit). I surfed through different website to know about the same. However, i didn’t find any mention about 14 per cent (they told that even if I invest for 3 years minimun, i will get this return). Further, i am skeptical about the return since the investments will only be in govt bonds. Can you please clarify me about the query regarding this plan? Thanks.

    • says

      Manikandan-Your understanding is 100% right. Please think generically, like a product which involves such high expense ratio like agents commission and again collected corpus will be invested in Govt Bonds then how come will give you more than say 8% return at least? It is complete mis-selling by your agent. Hence request you to stay away from this plan. It is a typical traditional plan and you can expect around 7% return from this plan.

  17. says

    Good morning sir, i dont no how to convience the people about lic only, because now a days people not have faith in lic. and so many companies are there to compitate. please give me some guide line for marketing.

    • says

      Badiger-Competition is good for any business. First you learn what your clients ask for and spread that awareness among them and importance of awareness (I mean pure life insurance products). Then business is secondary.

  18. Santhosh LIC agent says

    Are you Insured?LIC is here, why to go anywhere else.
    I am MDRT LIC Agent.I have customers all over India,especially in the state of karnataka(Bangalore,Mangalore,Mysore,Davanagere etc….) if u are around these places, why late, For all plans and benefits you can contact me.

    • says

      Santosh-A strict wanting to not promote your business on this platform. This is purely for knowledge sharing. If you have knowledge about Financial Planning then share it and readers will automatically contact you. Hence I removed your contact details from above comment. You may be MDRT, but what good you are doing to customers? First let them understand where they are and where they need to go financially. Try to spread awareness about financial literacy than SELLING.

  19. jaymin says

    hi Basavaraj

    Really liked the website and comments/details shared across for all…It really helped…

    I have a query on the 3 items below. i Plan to invest in all of this…
    so, looking for details…suggest some plans either from LIC or other private players…

    1) Life Insurance – got few details on LICs New Jeevan Anand…Your suggestions on any other policies which are better than this…
    2) Health Insurance –
    3) Investment –

    Looking forward for your reply…you can share me the details or

    Thanks

    • says

      Jaymin-Thanks for your kind words :)
      1) When you are planning for investment then why Life Insurance? Separate your investment with insurance. So buy term insurance.
      2) You have plenty of options to nowadays with competitive price on health insurance product. Hence you can buy them online also. (I am not suggesting you any plan as I am unaware about your need and requirement from this product).
      3) First prioritize your financial goals then based on the time frame start investing.

  20. Alok Sharma says

    Hi
    Life insuranc Corpration (LIC) is the largest lic Companany
    in india fully owned by the Goverment this
    Financial year 2013-14 takc lic best new policy and save tax under
    80C,Maturity/claim are 100% tax free amount

    • says

      Alok-This is the wrong platform you used to canvas your business by submitting your contact details like your address, phone number and mail ids. Hence I deleted those personal details and retained your comment. This is for knowledge sharing. You can share your knowledge with all of us and we can exchange a healthy knowledge sharing. But friend not business :) Sorry to say this.

    • sushil pol says

      Hi, this is good and knowledgeable site. This is response to ashish question. If u have old jeevan anand plan (149) after maturity, u can take loan on free risk cover and also u can surrender the free risk cover. U need to visit home branch with your policy documents to complete the required procedure.

  21. Dinkar Sinha says

    Hi
    Thanks for the detailed description. Me and my wife want to invest in life insurance which can give higher returns after 15-20 years. We zeroed in on 2 plans, one is Jeeva sathi (which is discontinued) and other is this new jeevan anand.
    Which plans (any plan including above 2) according to you can give higher returns without much risks? What’s the trend till now? Can you suggest few plans to us?

    Thanks in advance,
    Dinkar

    • says

      Dinkar-First understand that high return always involves high risk. So without taking risk you can’t earn more return. Coming to this plan, this is typical traditional plan (combination of insurance+investment). So your return will be around 7%. If you are satisfied with the kind of return then go ahead.

    • says

      If you are looking for lesser risks you could look at:

      - Debt MF
      - NSC (guaranteed and safe)
      - PPF

      I would advise you to have PPF first and look at other alternatives later.

      Simply put:
      If you put 1L every year in PPF for 15 yrs @ 8.5% – guess what amount will you get?
      30L

      If you make 2, one for you and one for your wife – you can get 60L (guaranteed)

      Thoughts?

      Thanks
      Nitin
      mylearningcafe.blogspot.com
      mymoneyrules.blogspot.com

  22. Yogesh says

    Want to take a policy 1200 to 1500 INR /Month for 25 to 30yrs !!Need suggestion and please explain plan-(815) LIC jeevan anand!! plans and benefits!!

    Thanks in advance!!

  23. DARSHAN SONI says

    MY AGE IS 23 I WANT TO BUY NEW JEEVAN ANAND FOR 35 YEARS,PLEASE SUGGEST ME BEST INVESTMENT OPTION FOR LONG TERM,AFTER 35 YEARS I NEED 4 CRORE INR.50000rs annualy

    • says

      Darshan-Investing Rs.50,000 per year and expecting Rs.4,00,00,000 after 35 years means return expectation is around 14.50% which is highly impossible from this product. Better you think something different :)

  24. Raman says

    This is a follow up to the above discussion with Mr. Basavraj on equities versus secure investments for retirement. I pointed out to an article
    http://www.alternet.org/economy/401k-revolution-and-inequality
    which has indicated the failure of the stock market based retirement plans in the USA (401k plans). Mr. Basavraj responded by picking out two specific points in the article which indicate that people in USA borrowed and used the plans for paying mortgages and suggested Indians are somehow better in not making such mistakes. But this is precisely the tragedy.
    The main point of the article is not to blame “Americans” or “Indians” but it points to the volatility or “gyrations” of the stock market. The reason people borrowed is because poor economic policy created inflated assets making borrowing look attractive.
    The reason Americans spend more is not because they are Americans but because of a policy of advertising and a culture of consumerism around it.
    Today in India, with FDI all over the place, and a kind of greed and inequality in wages that is being promoted, more Indians are being made into the spenders that we detest in America. There is more reason to think that stock market gyrations over the long term will be more extreme in India given a range of factors including that we have less protections for people and more vulnerabilities arising from resource mismanagement/depletion etc. unlike the US where they don’t have these latter problems or are better technologically equipped to deal with emerging challenges like climate change.

    So, sure you can look at the stock market over the last 10 years and then go yay, Indian equities are great. But there is no evidence I repeat of any society encouraging a social insurance/retirement program based on stock market. US Social Security by law requires its trustees to invest the funds in safe bonds and such instruments. This is almost the same thing LIC does with its investments. Inflation is a problem, but that cannot be solved by the imaginary magic bullet of the stock market.

    I would only recommend investing a smaller portion of ones savings (say 20-30 %) on stocks. And when one turns over 40 to reduce that to 15% and under.

    Regards,

    • says

      Raman-Thanks for this detailed explanation. Now let us come to the core issues and let me know your answers on these.
      1) Where does LIC invest it’s corpus?
      2) What solution you are providing me to beat inflation?
      3) How one can sustain for such long post retirement life (considering the current high life expectancy rate)?

      • Raman says

        Hi Basavraj,

        1) My understanding is LIC does not invest more than 15% in the stock market (equities). The rest 85% will have to be in government and other bonds.

        2) Inflation is a problem and I don’t claim a magic solution for it. But I disagree with those suggesting stock market is a solution. My solution would be simpler : be less involved in consumerism and remember that we are a people of limited means and resources, put away as much as we can in safer instruments and it will be sufficient. And also as an aside, I would try to demand solutions from a democratic society to create a climate that is concerned about peoples in old age, so we should try to get social security for all Indians. It can be done if people work together on it.

        3) Same answer as above.

        • says

          Raman-1) Check your information :) Because of Government policies currently LIC is more exposed towards equity than any other insurer.
          2) Now let us understand this in a better way. Suppose a person with limited source of savings and planning for retirement. Then how can you suggest him to invest? In my view for goals such as retirement planning you have three options if you have to invest a) Invest in safer products, earn less. But to reach goal of specified you need to invest more as return from investment will be less.So in this case you need to cough more. Otherwise you will need to compromise your retirement life. b) Take a calculated risk by diversifying your investment among all asset classes (which automatically reduce your risk) and achieve your financial goals. c) Totally forget the inflation, planning or investing and live the life as it is. Which one you suggest to that person?

          • Raman says

            Hi Basavraj,

            Thanks for your observation that recently LIC is investing more than 15% in stocks. This is something I did not know till you indicated. Now I think its between 20 and 25% after I checked the latest reports. Still good as it is not placing majority investments in stock market.

            I would agree with you that diversification (b) is the best approach. My only word of caution for young Indians is to still be cautious about the stock market even when diversifying. Its their hard earned money. And unlike you, there are many financial vultures out there, encouraging them to put most of the savings into stocks. That I would guard against.

            I would be making a trip to B’lore area next year and would love to meet you in person and talk.

            Best regards,
            Karthik

            • says

              Raman-Again, this equity investment is not based on LIC guideline. Government is using LIC as it’s scapegoat for it’s disinvestment policy. Which I think will harm the belief policy holder have on LIC. Thanks for endorsing my views about equity. So once again I am retreating my belief that no products are bad. But if we choose them based on our requirement then it suites you. Otherwise whether it is LIC, Equity, Gold, FDs or even real estate may ruin your financial life. Hence education about personal finance is the panacea.
              Oh Sure…you are always welcome. I always love a healthy discussion like what we both did. Looking forward to meet you :)

      • ramkumar says

        Hello Basavaraj.
        your website is veryusefuls for us.
        i want to know 1 clarification from you. i would like to start the LIC policy (New jeevan anand). instead of start my policy through LIC agent. if i start my policy through LIC direct marketing, can i get any extra features (extra amount will be added @maturity). which is more benefit for policy holders ?

        Thanks in advance.
        Ramkumar.

  25. Raman says

    Looking at the LIC website for new Jeevan Anand, it appears that the Premium has been increased by about 20 % per unit BSA if we include 3% service tax and that too without an inbuilt “accidental death” clause. With the old jeevan ananad, accidental death clause was inbuilt. In the new jeevan anand, the “accidental death” needs to be purchased as separate rider. Meaning to get a similar policy to the old one, we have to now pay more than 20% of what we would have paid earlier.

    This means that to get the same returns as before LIC will have to provide between 60-65 rupees annual bonus per 1000 Rs. of BSA. Since old jeevan anand was providing between 45-50 annual bonus, it will be something to watch out for in the next year or so what LIC announces as annual bonus for new plan..

    • says

      Raman-It looks costly now. But before these new IRDA moves, LIC used to pay service tax indirectly (not directly collecting from insured). So I think it will get reflected in the bonus rate increase in coming days. In my view accidental death benefit was not in built previously too. But agents used to say including that (especially few ready reckoner tables). So in my view overall it is a good move of these new IRDA guidelines.

      • Raman says

        Dear Basavraj,

        I first want to thank you for the article and following up on LIC – an organization I value a lot as a citizen of India. If you really think about it, we don’t have uniform Social Security (pension) for all citizens in India and in such a situation, LIC plays an important role in my opinion to provide some security.

        But regarding old Jeevan Anand (plan 149), the LIC website indicates that the old plan used to have “Accident Benefit” as part of the plan. See http://www.licindia.in/endowment_005_benefits.htm

        That clarification apart, I agree with you overall, that new bonus rates should reflect the increased cost.

        Best regards,
        Karthik

        • says

          Raman-What role LIC providing in the case of providing pension to all citizens of India? I don’t think LIC has any game changer plan, especially when you look at pension perspective. Old LIG Jeevan Anand might have inbuilt accidental benefit cover. But what I am pointing is, it was not free. It was included in your premium which not reflected upfront (same way like service tax). Am I right?

          • Raman says

            Hi Basavraj,

            Not exactly the same cost regarding Accident cover. In Old LIC Jeevan Anand the accidental benefit being inbuilt means the cost was spread across all the jeevan anand policy holders. Now, if Mr. X purchases new Jeevan Anand and wants Accident cover, he will have to bear the cost himself (and with others who opt the option, who will only be a subset of all jeevan anand policy holders) so that makes it more expensive to get an equivalent policy on top of the increased premium.

            Regarding the social securiy aspect, LIC doesn’t provide pension to all citizens, we don’t have that yet in India. But a citizen does have the option to secure long term savings using a plan like Jeevan Anand. What I meant is its not same as getting a pension, but in absense of universal pension, its a good second option for Indian citizens, particularly given the phenomenal reach and spread of LIC agents in the country. This point is separate from the accidental cover aspect.

            • says

              Raman-I am still unable to understand, if it is inbuilt then you mean to say it is free of cost? Please clarify it. I understand your point about social security provided by LIC, which differentiate from the accidental cover benefit discussion. My point is, how Jeevan Anand can be substituted to one’s retirement planning? Can you elaborate more on this?

              • Raman says

                Hi Basavaraj,

                When a risk protection feature like Accident cover is inbuilt, it is not cost free. Nothing is. But the cost per policy holder is less as all policy holders of that policy are sharing the cost. Now, each individual has to buy the feature as an add-on in the new Jeevan Anand. This means that only a subset of people will opt to buy this add-on. In a cost-sensitive market like India, the subset will only be fraction of all the buyers of the policy. So before if 100 people brought it the cost of accident cover is shared by all 100 policy holders.

                Now, if 100 people buy new jeevan anand policy, and only 10 opt for accident cover, then only those 10 will pay for the cost of accident cover. Hence, those 10 individuals will pay more for a policy with accident cover which they would have got for lesser in old jeevan anand. This is my point. And furthermore, I don’t know how LIC is going to calculate Accident cover. The following is a possibility : The people who are going to opt for Accident cover maybe the high risk types who live in crowded cities or are police officers or work in a other risky environment. People in second-tier cities, rural areas and NRIs are less likely to die from accident and may not choose to buy this option. The person who gets accident cover being from a higher risk for accident, LIC can now possibly also scale the cost further based on LIC’s estimate for accident risk for the given buyers. So, all in all, it has the effect of individualizing the cost for accident cover and hence higher cost to buy a feature equivalent policy to old jeevan anand.

                Regarding retirement and LIC: Retirement is a long-term planning for a young person say 30 years old. If we get a LIC policy like Jeevan anand for 30 years, though the returns maybe slightly less than a bank deposit, there is no Bank deposit where you are forced to contribute for 30 years. Recurring Deposit maximum period is 10 years and that too if you close early RD penalties are only minor. If one pays an RD for 10 years, given modern life and its consumption demands (buying a car, wife wants vacation to Assam, kids want computer and iPhone etc.) chances are very high that funds will not be invested for retirement.

                With long term insurance policies on the other hand, there is a demand for a long term commitment from policy holder over the PPT which we can choose for a period of 30-40 years. If buyer stops paying half-way through, the penalties are much higher than a recurring deposit. This creates a long-term incentive for buyer to commit to the policy contract. Hence in my opinion, long term LIC policies can be a valuable base for retirement planning. It cannot substitute retirement planning, but can provide a strong base, which is what social security is fundamentally about – not complete but a insurance program.

                • says

                  Raman-I understood the concept. So, according to you how much more it will cost a person who opt for Rs.1,000 SA? I don’t think there will be much higher difference. If you have data to show the comparison then you can do so. So you mean to say that only LIC has this option of investing over the long term like 30 years or more? If that is the case, then what about PPF (15 years+extension of 5 years in each block till investor’s death), Equity Investment (I know you may argue that no guarantee of return-but LIC gives any guarantee?) or opting for 10 Yrs FDs and again reinvesting (not my suggestion but one can play with it)? You can just say that LIC might have created saving habits among Indians. But it is not a good tool for retirement corpus creation. Return from these plans are around 7% and inflation is around 6%, so real return of 1% suffice to survive on this corpus creation?

                  • Raman says

                    Hi Basavraj,

                    You mention PPF, which I agree with you is a very good option to provide a sound fnancial base for retirement. However, PPF is only max of Rs, 1 lakh per year. If someone wants to contibute on top of that, I would argue LIC is more preferrable from retirement perspective than equities and 10 Yr FDs because from a modern consumption behavior standpoint, people are less likely to reinvest FD’s after 10 years or higher risk equities.

                    I also want to clarify that I’m talking about providing a solid base for retirement, not about creating a complete retirement plan only using LIC.

                    I would agree with you that FDs and equities can provide an additional layer of support to ones retirement planning. But FDs and equities cannot provide a base.

                    PPF and LIC policies can, by creating incentives to contribute over many decades and providing consistent returns.

                    Best regards,

                    • says

                      Raman-So according to you Equity is an additional layer of retirement but not the core? How about inflation of retirement planning? How you hedge this by investing in which product? Also, let me know the portfolio structure of one’s retirement corpus?

                    • Raman says

                      Hi Basavraj,

                      PPF and LIC policies like Jeevan Anand have a historical record of providing protection over many decades. The stock market (equities) on the other hand have no track record in providing protection to people. Not only does its value gyrate by definition, the country with the longest history of using the stock market for retirement is the US. In that country, they call equity based plans for retirement as 401k plans. The record is a terrible one for that entire country, with the exception of the very wealthy sectors.. Take a look at this article (How America’s 401k Revolution rewarded the rich and Turned the Rest of Us into Big Losers):

                      http://www.alternet.org/economy/401k-revolution-and-inequality

                      There is every reason to think that Indians today who are being goaded to push their hard earned retirement money into the stock market, are setting themselves up for a similar terrible risk.

                      Unlike PPF and LIC, the evidence for stock market providing security I’m afraid is mainly mythological if you consider society as a whole.

                      Best regards,

                    • says

                      Raman-So you mean to say that equity investment for long term perspective like more than 10 years will give less return than PPF or LIC or it may suck our own invested amount itself? Have a look at Indian stock market rolling return calculation, you will come to know who is at upper hand. Coming back to USA’s 401, do you feel USAs spending habit equals to Indians spending habit? Please read yourself the above mentioned article, you will come to know other side of reasons also (over spending and withdrawing for mortgage).
                      If you still believe equity is risky then let me know how you will plan yourself for your retirement corpus creation? What asset classes you consider for your retirement corpus creation wherein inflation itself is around 7%?? Please elaborate more :)

  26. Krish says

    Dear Basavaraj..Thanks for your help in this arena…

    I have 2 policies taken in 2008..i am definitely thinking for making them as paid up…I need your suggestion for that…

    1) Jeevan chhaya – Premium 10K / year…term of premium 18 yrs – (SA – 1.8Lakh)…(accured bonus as of jan`14 – 30K)
    2) Jeevan Anand – Premium 20K/year…premium payment for 17 years…(SA – 3 Lakh)…accured bonus as of jan 2014 – 50K)

    I have paid premium for those 2 policies so far 6 yrs…i am thinking to make it as paid up..

    Question is –
    1) Are both policies are applicable for paid up ?
    2) What i have to do to make it officially paid up ? (Agent is my friend..so i am facing issue in getting the real details for the paid up details)
    3) What will be the amount i wil get after the maturity in above 2 policies ?

    Thanks for your help in ad..

    Regards,
    Krish

    • says

      Krish-My answers are as below.
      1) Yes, you can take the options of paid up for both.
      2) No need to worry. Visit the servicing branch with the original bonds. They will guide you.
      3) This will be answered by your servicing branch or nearest branch.

  27. Vamsi says

    One more question, if after 3 yrs even for a 20 yr policy, I stop paying for Jeevan Anand, it becomes a paid up policy right. Can you advise what would be the maturity benefit and death benefit after a policy becomes paid up policy.

    • says

      Vamsi-Yes it will be converted to paid up policy. The same paid up amount will be payable to you both in the case of maturity as well as death. Because paid up value will not grow and it will become constant throughout the period of the plan.

  28. Vamsi says

    Very well compared Mr.Basavaraj. Thanks for all the info. By the way, for someone like me who is already enrolled in Old Jeevan Anand, do you advise a switch to new Jeevan Anand.

    • says

      Vamsi-Thanks. If you took this policy between IRDA new guideline announcement and 1st Jan 2014 then you have the option to switch to this new plan. Otherwise, you don’t have the option to move. Also closing the old plan and opening the new plan now will cost you more.

      • Vamshi says

        My father took this plan on Dec 31st 2013, if he has to switch to the new plan, how much will it cost more and is this beneficial in the long term?

        • says

          Vamshi-How it costs more is depends on your father’s age, term and SA he opted. So I can’t say plainly. Yes, it is beneficial in one way as there are more flexible options than the older one to come out or death benefits. But you also need to think how much it cost more.

  29. Anil Oza says

    Thanks Raj for sharing latest things clearly, hope for next sharing this way on fb/email/whatsup, Anil Oza, DO, 3/838, A’bad

  30. raj k says

    Thank you for posting details in clearly & convenient to differentiate.
    Just now we are waiting for your green signal to the list of policies as per your analysis.

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