LIC Agent’s Magic Plan Retire and Enjoy-Stay away

Since two months I am receiving few requests to review the LIC Agent’s (but not from LIC of India) plan Retire and Enjoy. Finally one of my clients provided the plan presentation. I know I am late by reviewing this plan at the end ( as all existing plans are about to close).

But at the same time, I know that this is the peak period (from today to till 31st Dec 014-before closure of existing plans) to sale as much as possible. So I thought it may be helpful even if I review it now.

As I said above, this is the plan prepared by agents of LIC, but not from LIC of India. It is the bundle of an LIC plans with different maturity period. So by selling a single Retire and Enjoy, an agent may complete his/her yearly minimum business requirement. But what about the person who bought this plan for his retirement?

Let us first list down the things we need to consider before planning for retirement.

1) Current Age-This is a most important factor. If you are younger, you have plenty of work life still pending. But at the same time if you are older, a lesser working life and about to start your retirement.

2) How long you want to work-It is required, as this the phase which also called the accumulation period for your retirement goal.

3) Current monthly expenses-This is the base on which we can inflate the expenses to arrive at how much you need for the first month of your retirement.

4) Annual expenses-Apart from regular monthly expenses we also have few annual expenses which we also need to consider to arrive at retirement corpus.

5) Expected inflation upto retirement-This will be required to arrive at how today’s expenses will be at your retirement.

6) Expected inflation during retirement-As this period is distribution period, it requires to adjust your outflow during your retirement period.

7) Expenses which you want to add or delete during the retirement phase-Few of your current lifestyle expenses may not be there during retirement but at the same time few expenses may add up like health expenses.

8) Current investment you preserved for retirement-This will lower your future investment requirement for retirement goal.

9) Pre and Post Retirement investment returns-This will indicate like what type of investor you are and how much you are expecting to generate from retirement investment.

10) What type investor you are-This actually can be judged by your investment style, how much you are comfortable with each asset class and what type of risk you can take in the future.

Below are the few screen shots for your reference where I hid the buyer as well as agent’s details.

A) You notice that in below image, the age of a buyer is 42 years and yearly premium quoting as Rs.1, 27,516 also they showing tax benefits if you are under highest tax bracket.

Magic Plan-Retire and Enjoy-1

B) In below image, you notice the retirement benefit you receive.

Magic Plan-Retire and Enjoy-2

C) I don’t know what the benefit agent is illustrating post-retirement 🙂 Is there any life insurance requirement during post-retirement? May be he is illustrating the benefit of death claim one receive under Jeevan Anand.

Magic Plan-Retire and Enjoy-3

D) Below is the number of plans he will sell you in one shot with this magic plan.

Magic Plan-Retire and Enjoy-4

Above listed points are commonly used factors to arrive at one’s retirement planning. The list may prolong based on client profile. Now coming back to this plan. Below is the list of advantages of this plan.

1) This is the bundle of a plan like bundle of Endomwnet plan or Jeevan Anand.

2) Number of plans will go on increase based on your life expectancy in post-retirement. Suppose your retirement age is 60 years and you are planning to have retirement income till 70 years then 10 numbers of either endowment plans or Jeevan Anand Plans 🙂

3) The basic thing here is, suppose you are 30 years old and planning to retire at 60 years and your expectation of income post retirement will be 10 years, then your agent will design you the plan in such a way that plan 149 term 30 years, 31 years, 32 years and so on till maturity equal to 70 years.

4) What they may show you is the benefit of Sec80C. The premium range will vary from Rs.1,00,000 to Rs.1,50,000 yearly. However, there are many options to fill the gap of Sec.80C easily like EPF, Term Insurance, PPF or home loan. So featuring this as the only plan, which give you the best benefit of Sec80C will be foolish.

5) If you need Rs.4,00,000  at the age of 60 years, then your agent will issue one policy with around SA Rs.2,00,000 so that you get yearly retirement (maturity amount) of Rs.4,00,000. But he will actually forget to say that what will be the value of Rs.4,00,000 in that year.

6) This plan completely neglects the effect of inflation. Currently, the value of Rs.4, 00,000 may seem a good amount. But down the line, after 30 years with the kind of inflation of around 6%, will it be the same value as of today? He will not explain to you.

7) Let us say inflation @ 6% and your retirement age will be around 30 years from now. So Rs.4, 00,000 you receive from that plan is Rs.69, 644 in today’s term. So decide today whether you survive with Rs.69, 644 a year or not then go for buying.

8) It is the traditional plan and in all probability return from such plan will hover around 7%. Then how one can beat the inflation rate of 6%? (A moderate consideration of inflation rate, but when you retire it may be more).

9) The agent may be forcing you to buy stating that the current plans will not be available after Dec 31st 2013. But in reality you will get a more beneficial product rather than these.

10) Finally, it not answers to retirement solution, which one need to consider while calculating the retirement corpus. Instead, it only calculates how much is a current surplus in your pocket to buy this product.

Hope I gave the valid points. Let us discuss further if someone already invested.

140 Comments

  1. Hi,
    I enrolled into LIC magic plan way back in 2013 due to insistence of one my family friend and also I had no clue back then regarding investment. The plan was like 60,000 yearly and after 25 years I would get 4 lakhs yearly till 75 years. In total there are 23 plans in that bundle with varying premiums and SA, so from my 52nd policy anniversary I will start getting 4 LPA till 75th anniversary. But going through this article I started digging up as to what is my plan details as you stated that there is no magic plan as such. So my plan is the “endowment assurance policy (plan-14)” and SA is 155000 for one of them. I have so many questions like will I get the SA plus the four lakhs after the first policy is matured and the cycle will continue till the last of the 20 policies is matured

    Also I can see that investing in endowment policy was a mistake but do you think exiting now would make sense given the market scenario.

    Reply
  2. Hi
    I bought the Magic Plan in 2013.After reading your views about the plan,i wish to stop paying the premium amount as I do not see any benefit.
    How do I surrender this plan as my agent is not cooperating.
    Thanks

    Reply
  3. Why do you go for such plans. I can suggest a good plan for investment and protection.

    I you can invest one lack per year for 15 years,

    You will get 15,000 per month for ten years (ie. 15,500 x 12 x 10 = 18,50,000) from 16th year onwords. at the end of 25th year, you will get 17 L extra on maturity. (ie. a total of 35 Lakhs).

    If something happens in between, you will get 18L and the policy will continue and the living benefit will receive by the nominee. If you can invest 1800 extra, you will have an accident death benefit of 18L. Thus there is a protection of 71 Lakhs.

    Reply
      • Mr. Basavaraj,

        Return of investment is Rs. 15,500 per month fo r 10 years and at the end of 10th year 17 Lakhs.

        A total of 35 laks

        Paul.

        Please call me in 9895705143 for more details.

        Reply
  4. hi
    can you please suggest me a lic magic plan ? please send me the detailed computation.

    Reply
    • Nand-After reading above post, do you still feel the urge to invest in such dumb products?

      Reply
  5. I HAVE LIC PLAN NEW BHIMA GOLD AND JEEVAN SARAL AND PLANS ARE CLOSED NOW BY LIC.. AND THERE ARE NO EXISTING PALNS OF THESE.. WHAT WILL BE THE FUTURE OF THESE PLANS… ARE THEY GOOD PLANS.. AND I AM PAYIMG A PREMIUM OF 48225 AND 72060 TOWARDS EACH POLICIES.. CLARIFY ME IN THIS MATTER… THANK YOU

    Reply
    • It is OK no problem. It is very good plan. It’s not affected your future. what LIC approach, its already have the return. if any clarification contact me in 9380898983

      Reply
      • Stella-In what way it is NO PROBLEM? Can you defend how this is VERY GOOD PLAN?

        Reply
  6. Hi Sir,

    i have taken already Retire and enjoy plan in 2009 and premium is 555330 and continuously paying premium till date and 7 years completed and if i surrender the policy now how much i will get now?

    i am waiting for reply

    thanks in advance!

    Reply
  7. Dear Sir,

    I, age 22, have he so called LIC- magic plan retire and enjoy, and I read your post about the same but it was too late. I have already paid 3 yearly premiums of Rs 108,813/- each and after reading your article I am totally lost on what to do with the almost 3.26lakhs that I have paid till date.
    I looked at my options and could find 2 possible resolutions.

    A) Surrender – This option will pay me around Rs 70,000/- (@30% the total amount of premium paid for two years)

    B) Paid-Up – With this option I stop making the premium payments and the first of my policies is set to expire in the year 2054 which will give me an amount of around Rs 26,000/-. And similar amounts are expected from the rest of the “Jeevan Anands” per year.

    I am devastated learning that I’ll be losing my money the either way I choose. I just request you to give me a suggestion on the option that I should opt for which could be more beneficial than the other.
    I know you must receive many such emails each day, so any help that you can provide would be greatly appreciated.

    Regards,
    Vedang Vadalkar.

    Reply
    • Vedang-Hardest truth is to close it immediately (even though blood boils with the loss).

      Reply
  8. Mr. B. Tonagatti, i received a policy from Lici under table & term-122- 15, which is guaranteed pension scheme. Please not give such false statement. Which is totally unacceptable.

    Reply
    • Swajan-Why you are comparing old endowment type Jeevan Suraksha plan with these agent’s own creation of Magic Plan? Is anything guaranteed in this plan? Also, do you know the return of your Table and Term 122-15 plan? Blind investing is most dangerous than NOT INVESTING.

      Reply
  9. Hi Basav,

    My name is Niyas, I have taken this plan in the year 2011 & I was 25 years old at the time. I pay a premium of 105000 on a yearly basis. I have to pay for 20 years (until 2030), by the time I would have paid 2100000. It has mentioned about returns effective from 2031 (age 46) onwards, it starts from 216755 onwards & increases at 5% per annum. Other rules remains the same as discussed above by you. The returns continues still 2059 (age 74) and then stops for 4 years. In 2065 it is mentioned for a return of 1995000.

    This plan was sold to my dad by a known agent. Now I had taken all over on all my investment, am not an A/C person, so please advice me if this “Magic Plan” will help me by any chance, considering all the inflation facts.

    Reply
  10. Hi Basavraj,

    A couple of points here.

    1. I have started investing from Age 31 and will be paying till 48. I will start getting benefit from Age 54 through 75. I have option of withdrawing cash amount after 75 or continue being covered. If I calculate returns (minus term insurance premium ) it comes down to 8% (Compounded annually) Tax free return. Don’t you think it’s worth?

    2.Similar option for investment is PPF however it’s Interest rate is not guaranteed and it has limit of 1.5 lacs per year with 5 year multiple lock-in period. so can’t think of a better plan. Can you please suggest?

    Reply
      • Hi Basavaraj,

        Even I’ve made a similar calculation, which gave an 8% return. I used the IRR method for an annual investment fo 60K from the age of 22 to 50 – giving a return of 6L per annum from 51 onwards. The return sum increases every year (magic retire and enjoy plan)

        I used the IRR calculation tool and the result arrived was 8.1%. So if thats the case, can I continue to use this as part of my risk free portfolio. Just wishing that the LIC bonus rate wont dip in future.

        Please share your thoughts on this.

        Regards,
        Simon

        Reply
          • Hi Basavaraj,

            I used the current bonus of 49 per 1000 and a one time bonus (FAB) of 350 per thousand (got the values from your blog).

            They have laid out the plan in such a way that, every year from my 51st age, I’ll get a premium expired and part of that sum will be used to pay other premiums. I used the balance amount for the IRR calculation.

            Regards,
            Neeraj

            Reply
            • Simon-Whatever it is, if you claim to be returns are at 8%, then I request you to share the calculation in detail.

              Reply
              • Sure. Please find the split up below. The one in negative is the premium paid and the positive is the returns.

                Regards,
                Simon

                Age 22 -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                -62706
                Age 50 -62706
                603390
                627617
                638382
                643230
                649143
                660544
                669511
                682283
                721745
                736175
                747130
                754596
                767747
                781015
                794401
                807952
                821662
                835497
                849460
                863555

                IRR = 8.20%

                Reply
                  • Hi, Sum Assured is given as 2535000.

                    Reply
                    • Simon-Whether it will remain the same throughout the period? I hope it is difficult for you to share the file which your agent shared with you with an illustration of 8% return. Hence, suggest you to send the copy of that to my mail [email protected]. I will go through it and reply to your all queries or the doubts you raised.

  11. Dear Sir,

    Please help me understand the benefit of Retire and Enjoy plan of LIC if I pay a yearly premium Rs 1,85,000/-.
    My age is 43 years. I am confused and want a very candid support before I take the plan.
    Is it beneficial or not?

    Thanks & Regards
    Shailesh

    Reply
    • Shailesh-I already explained it above. If you still have urge of buying it, then I can’t say more.

      Reply
  12. Hi Basavaraju,

    I have opted retire and enjoy with yearly premium of 65000/- in 2013 and paid around 3 years.

    Actually My plan is to get 20k per month from age of 50. So i opted this i don’t want to loose my money by surrendering it.
    So, I will continue. What I want to know is at age of 50 i can take a loan of 14lacs which is i have paid in 22 years.

    1.At that time Can i request I will take 14lacs and i will withdraw?
    2. We have 2 columns LIC returns and NET SURPLUS which column amount will be given to me?

    Reply
    • Kamesh-Do you know the value of Rs.20,000 when you retire at 50 years of age? I am not suggesting you to surrender. But need a serious think on it.
      1) Loan eligibility depends on the bonus accrued and how long the policy is in continue. So I can’t say the exact loan amount which you want to take after 22 years.
      2) Only your agent know this. Because it is agent’s creation to retain their long earning and turning it to be RICH than their customer.
      Best of luck and wish god can enlighten you SOON.

      Reply
      • Basavaraj,

        After 50 years, I know 20k is not a big amount. But if i have 15 to 20 lacs in my account at that time then also it has no use or it will be completed in some how. Currently i am able to survive with 10k . So, i don’t think its not less amount. but we don’t have option of pension. other one is govt will take our money if we deposit in FD or any savings in the form of TAX. I have one more option of PPF as well .If you have any other plans please suggest.

        Reply
        • Kamesh-Whether TAX matters you more than the beating inflation based wealth creation for your retirement?

          Reply
  13. Dear Sir,
    Please guide me,
    I have read your blog on “LIC new retire and enjoy policy”.
    I am paying Rs.4798/- per month towards “LIC new retire and enjoy policy”.
    Premium paying term is 22years (started from Aug-2013). Sum assured is Rs.16,50,000/-
    Now another 7 months are left to complete 3 years and I will pay it and stop.
    After reading below articles.
    Q. What will be my surrender value if I surrender after 7 years or till what period if I wait I get maximum of premium paid?
    (Increase in Surrender Value
    One of the major changes which has happened, is the change in surrender value for policy holders. The rules of surrender value depends on the premium paying term of the policy. If the premium paying term for policy is less than 10 yrs. Then the policy will acquire the surrender value after paying premium for 2 yrs (earliar it was 3 yrs), however if the premium paying tenure is more than 10 yrs , then the surrender value will be acquired only after paying 3 yrs premium.
    In both the cases, the minimum surrender value would be 30% of the premiums paid without excluding the first year premium. Note that earlier, if you used to surrender after paying 3 premiums, you got 30% of premiums paid MINUS first year premium, but now as per new rules, the first year premium will not be deducted. Learn everything about LIC policies working before Oct 1
    Another good change is that, from 4th-7th year, the minimum surrender value would be 50% of the premiums paid, and has to reach 90% of premiums paid in last 2 yrs of policy paying tenure.)
    And from your blog
    (Guaranteed Surrender Value (for regular premium policies) will be as below. A) 30% of premium paid less any survival benefit already paid, if surrendered within 2nd Or 3rd Year. B) 50% of premium paid less any survival benefit already paid, if surrendered within 4th To 7th Year. C) 90% of premium paid less any survival benefit already paid, if surrendered in the last 2 years of policy , if term of the policy is less than 7 years.)

    Reply
  14. Hi,

    Though I am a bit late in seeing your article on Retire-n-Enjoy, I would like to add my humble opinion. Retire-n-Enjoy is a combination of Endowment Plans. The plans are combined in such a way it provides a regular income from the investor’s retirement age till the age of 75. Both pension from a traditional pension plan and interest earned from bank fixed deposit by investing the retirement corpus (accumulated through any investment instrument), are taxable and do not increase with time. Retire-n-Enjoy provides a tax-free income (since it is a maturity from policy under section 10-D of IT Act 1961) and increasing pension (as shown in your illustration – Pension at 60 is 2.79Lacs and 75 is 5.12Lacs). In addition to this, it provides life cover for whole life with an optional cash/loan.

    Of course, we can list a number of disadvantages like we have to maintain at least 16 policies for pension from 60 to 75 and premium needs to be paid even during retirement. But the column shows only the Net Pension after the payment of premiums after age of 60. And for a tax-free income, I think we can take a small pain of submitting a policy document at the LIC branch to get the maturity each year.

    I admit the net returns would be close 7% which is at par with the assumed inflation rate of 6%. But do you have any other better investment option for Retirement. You can always list down PPF, Mutual Funds, Stocks, Real Estates, Commodities etc. I accept all these products provide returns way better than an LIC Policy. But what is the use of boasting that mutual funds provide 15% returns if the investor is not investing regularly and redeem the mutual funds whenever he requires money for useful and useless needs. (Few of my clients broke the Mutual Funds just because they wanted a down payment for Car, buying an iPad etc). What is the use of 8.75% returns in PPF if the investor is not regularly investing but deposit only Rs.500 to keep the account active? What is the use of investing in real estate if we are taking a loan to buy a land / flat and not investing a bulk amount? We are only benefiting the seller and the bank.

    I am not saying LIC’s Retire-n-Enjoy is the only and the best option for Retirement Option. But it is one option we can consider along with the other investment avenues. Because, in an LIC Policy, you know the exact due date and exact premium to be paid every year and you also know that you would be penalized with surrender charge if you break your saving discipline and discontinue the policy for any reason. So ultimately, it helps a person build a retirement corpus though it is at par with the inflation. Though I am a fan of Term Plan + Mutual Funds, with the current savings indiscipline of investors and people’s love for postponement of their financial planning and their ignorance of not hiring a financial planner to plan their goals, investment in LIC Policy is the one of the best available options to secure the future to some extent.

    (P.S.: I am not sure whether you will publish this comment 🙂 )

    Reply
    • Shanker-What is there in your comment to publish or hide?? Because your only loose point of defending LIC is that, people pay to LIC but not to other investments at regular intervals. Strange, because if they are serious about their money and future goals then they abide by their strategy. Lapsation is a major concern that LIC is facing. So how can LIC is unique product which forces buyers to PAY??

      Reply
      • Hi,

        Of course, Lapsation is a major concern for any insurance company. Though LIC’s lapsation ratio is only 5.6% when compared to the huge numbers of private players, like I said, lapsation is a concern for any insurance company. Mutual Fund industry faces the same or a worse situation in terms of redemption pressure.

        Neither I am defending LIC nor I am saying this particular Retire-n-Enjoy is a very unique product. As I said in my previous comment, I suggest people to go for mutual funds and take a term plan from LIC (considering the claim settlement ratio and not the premium amount). But I am saying there is nothing wrong with this product that we have to STAY AWAY from it.

        As per your illustration, if the same amount of Rs.10,600 is invested in SIP for 18 Years, provided market grows by 12% annually on an average, and provided the investor continues to invest regularly without any partial or complete redemption, then he will end up getting 80+ Lakhs. If this is converted to pension, it will give 4.8Lakhs considering 6% pension or interest rate and it is taxable. Retire-n-Enjoy provides starting 2.8Lakhs up to 5.2Lakhs till the Age of 75 and an optional cash value of Rs.15.64 Lakhs. The difference I see is at the event of the death of the person. Death before Retirement is beneficial in Retire-n-Enjoy and Death after Retirement is beneficial if we have a corpus from Mutual Fund (or) any investment.

        As I said earlier, I re-emphasize that Retire-n-Enjoy is not the only option but a very good option to consider along with the other instruments, when planning for retirement. And please, I am not at all comparing LIC with mutual funds or any other instrument and saying LIC is the Best. Kindly do not argue in those terms.

        Regarding the seriousness about financial planning and strategy you mentioned, I think we have to see the redemption rate in Mutual Fund Industry. I don’t know the nation-wide stats, but at least in my 9 years of financial planning experience, among about 3000-4000 people I would have discussed with, it is only a countable figure who had started with the mutual funds and continued it for more than 5 years and a very few reinvest the redeemed funds.

        Reply
        • Shanker-How in what way this GREAT PRODUCT makes you to sustain on your own at retirement? There are many options one can use rather than simply buying an annuity product and be in trap of tax. So, don’t say that mutual fund investors have a burden of taxation post retirement.
          Redemption rate of mutual funds is the risk of investor-specific who don’t know how to react to volatility. Hence, those who not believe in compounding and what constitutes compounding formula, fail miserably to create wealth. What required is understanding the effect of inflation, patience, how to react to volatility and more things than buying this crap product. Lack of investor knowledge is not equal to buying a crap product.

          Reply
          • If you have the patience and will to listen to what is wrong in your article, proceed further: (or if you only want to prove yourself right and use terms like “GREAT PRODUCT”, “CRAP PRODUCT”, “LOOSE POINT” etc., then this is my last comment as I believe in a discussion and not arguing proving each other wrong)

            1. As you have mentioned in your article, providing a Retire-n-Enjoy does not fulfill the minimum business requirements of an agent in a year because as you know, the minimum requirement is on the basis of number of lives and not number of policies. So in this case, agent pushing the product for his targets is overruled.

            2. The agent has rightly used a very conservative returns percentage based on current bonus rates. Neither he has goofed up the step rate in the bonus to show higher returns. So misselling with wrong data is also overruled. (At Least the Quotation is genuine. I don’t know about the Agent)

            3. If you are reviewing a product, you should project both the Pros and Cons of the product. I do not see any pros being mentioned here like Tax-Free Pension, Increasing Pension, Life-Long Insurance Cover.

            4. You said “This Plan completely lacks Consideration of Inflation”. Obviously any plan would lack that if seen as a stand-alone solution for a requirement. Inflation needs to be calculated first and then we should consider the product.

            5. I did not say Mutual Fund Investors have a tax burden post-retirement. An investment in Mutual Fund or PPF or an Endowment Plan can only generate you the retirement corpus. Again that corpus has to be reinvested in an immediate pension plan or a fixed deposit to create pension. That pension which is created is taxable as on today. The investor has to be aware of this.

            This plan is suitable who is OK with traditional returns (7%), who does not want to take the stock market risk, who wants a product which provides life insurance along with investment rather than going for a term plan, who wants a tax-free and increasing pension. I repeat again and again and again that I am not saying Retire-n-Enjoy is a GREAT Product. Any product has it own pros and cons and no product is a GREAT Product or a CRAP product. Depending on the nature and need of the investor, a product is decided.

            Reply
            • Shanker-1) Please check the date of post I published and later on changes of IRDA Regulation. Now it is overruled I think 🙂
              2) Mis-selling is not only about considering the low return. But, making clients not understand the risk of investing in such low yielding product. Hope this also overruled.
              3) Tax-Free Pension and Increasing Pension at what cost? when one not able to survive the kind of return then are these points very much relevant? You are struggling to survive with kind of PENSION (as you said). Forget about the rest of the features. Life long insurance is required? Also what will the value of that cover to his/her nominees during retirement? It is peanut.
              4) You are agreeing my point on INFLATION. Why to look only for a standalone product? Whether LIC ever preached or sold this as PENSION PLAN?
              5) You do your Google on the methodology called BUCKET THEORY. You find tax will not harm you 🙂
              That is what I said, whoever looking for 5% to 6% return then definitely this product is worth for consideration 🙂 However, agents have daring to say so to clients (especially the client is about sign cheques)?
              Now let the readers decide 🙂

              Reply
  15. Hi Sir, Recently I have purchased LIC Retire & Enjoy policy for Rs : 24,20,000/- ( I am 40 years)for an yearly premium of RS: 1, 44,868. but I was suprised when I saw the ploicies in which the paying term is continued till 74 years is there a way for me to change these policys, the whole purpose of buying these policys is get pension after 55. instead of geting pension i have to pay the premiums till I am 75.

    Kindly help me with you thoughts.

    Regards
    Ruth

    Reply
    • Ruthpremsagar-This is how the policies sold and as per your expectation, your agent delivered it.

      Reply
  16. Hello Mr. Basavaraj,

    Thank you for this article.
    I have purchased this policy since 2012. I pay an annual premium of 89000. I was 22 and naive at the time and this seems like a good option for me. Pay from 22 to 43, and receive an incremental sum from age 44 to 58, to supplement my income.
    The total projected income of approx 78 lacs (total amount received between age 44 to 58) seemed like a great return for an investment of 19 lacks (age 22 to 43). I am shocked to discover that these figures are not guaranteed. I feel betrayed rather.

    I pay quarterly (around 22k per qtr) and am a couple of qtrly payments away from completing 3 years. I would assume your recommendation will be to see out these payments and surrender the policy. Let me know if you think otherwise.

    Since I am also from Bangalore, I would like to book a consultation session with you. Please let me know I can make that happen.

    Reply
    • Les-Before proceeding for payment, first chek the surrender and paid up values. Then decide.

      Reply
      • Hi sir,

        Going to have a meeting tomorrow with my LIC agent to surrender or pay up the policy. Knowing him, I am sure he will try his best to persuade me to continue.

        Can you help me put forth some arguments in the form of points that will help me succeed?

        Reply
        • Led-Just ask him one question-Whether the maturity of this policy be suffice for your survival (considering the inflation rate)? What will be the CURRENT VALUE of that maturity amount if we consider an inflation of 6%? How he arrived at the values of maturity amount will suffice your survival during RETIRE and make you ENJOY that?

          Reply
  17. I am having lic magic plan retire and enjoy for 3 years I have been paying annual premium of 60000 now I do not want to continue the policy what should I do. it has several bonds of different maturity dates the nearest one 30 years. Shall Isurrender the policy or make it paid up.

    Reply
    • Himanshu-If you just completed 3 years then better to go for surrender. But you may loose of what you paid. You get some %.

      Reply
  18. Good day, Hope you are doing fine,I have below two queries
    1) I have taken the retire and magic plan on march 2008 and I am paying Rs.13906/- as premium amount quarterly . LIC had issued 25 policies with different maturity terms. I am paying regularly since 2008 and i need to until 2026. Kindly give your suggestion to continue or stop
    2) Cold you please tell me which is the best guaranteed retirement plan ?

    Reply
    • Rathish-Regarding Magic plan, I already shared my views. GUARANTEED RETIREMENT PLAN? No available on this earth.

      Reply
  19. Hello Sir,
    Our LIC agent explained me investment benefits of retire and enjoy. I understand that this is a handmade mixture of several standard plans from LIC. Frankly speaking, I was quite convinced with guaranteed return. Now my question is: Is such a combi plan reliable ? Do we get money back as expected after xx number of years?

    Reply
    • Harish-Reliable for what? Agent’s claim? Check the facts properly like what bonus rate he considered to arrive at maturity values. You will get money back, but at what cost? Return of around 5% to 6% will really a great return?

      Reply
  20. Sir , I have taken the retire and magic plan and currently I am paying Rs.65,233/- as premium amount. LIC had issued 13 policies with different maturity terms. Taken this policy after too much pressure from the agent. General opinion about this policy is not good. I have paid 4 instalments as of now. How much amount I will get if I surrender the thirteen policies. Kindly advise and await for your valuable reply

    Reply
    • Anantha-Sir you need to contact your nearest branch. But in all probability either they will force you to continue or you receive less than of what you paid.

      Reply
  21. I have got this plan recently and just want to confirm do this policy have 19 different policy numbers or agent have fooled me by increasing the number of policy and getting his own benefits.

    As I have took this half yearly and I have to pay 19 policy separately where its waste of time there must be option to pay at once whole amount against 1 single policy.

    Please correct me if I am on the right track.

    Reply
    • Vaibhav-It is agent’s creation of 19 separate policies. So first understand whether this policy suites to you or not.

      Reply
  22. Dear Sir,

    I have already paid 2 premiums of 55k/yr for LIC Magic Plan-Retire and Enjoy.

    Now I request you to clarify three points

    1)whether I will get the principal amt of three years i.e.Rs. 1,65,000 after paying last premium and opting surrender option or I will be in some loss with this amt also?
    2)How to better predict the inflation and calculate it ?
    3)Best pension plans to invest in?

    Reply
    • Bhushan-Please contact LIC branch regarding valuations. Inflation is cyclical which depends on lot of macro and micro economies. So hard to predict but we can assume based on past history. Sadly there is no such pension plan in India which suites too all investors need as BEST.

      Reply
  23. My magic plan was purchased in 2006 and paid till 2010 for 5 years. Will there be any relief from irda rules .i have paid approx 220000.tell us how to exit grom this trap

    Reply
    • Praveen-You already paid it for 5 years and if no premium paid since 2010 then it will be in lapsed mode. So either you can surrender it or convert it to paid up.

      Reply
  24. Hi,

    I have made my first premium towards this plan this april and my premium is very high – 1.8L and this includes Rs 11,000 extra as i am obese.

    I did read the previous posts and noticed that, i have three options : 1. Stop and come out now, 2. Wait till 3 yrs and come out when each of the plan is done for three years, 3. Continue till maturity.

    Following are my questions now,

    1. If i want to come out immediately, am i at the risk of Losing 1.8L? Considering the low returns and the plan does not beat inflation, is it advisable for me to loose 1.8L and plan ahead?

    2. If i wait till 3 years and surrender, i.e. 1.8*3 = 5.4 L, do i stand a chance of getting back more of my money?

    3. Worst case, if i choose to stay, am i really incurring a loss or it would be as if my money has been stashed away in a savings bank account + life cover?

    Please let me know in detail. I am terribly confused and anxious now. I trusted someone blindly and fell into this. I want to make sure i research completely before i take a decision and also tell my family about it. Obviously, they will be angry if i loose so much amount…:(

    Expecting your reply.

    Reply
    • ArunS-1) Loosing Rs.1.8L depends on one’s capability and earning capacity. So I can’t advice upfront like whether it is advisable to you or not.
      2) No you still get lesser of what you paid. But loss on principal will be less (forget about interest of these 3 years investment).
      3) If you continue then the probability of earning will be equal to savings account. Now think which is best for you based on your financial health. Best option according to me is, let agent pay the 35% of Rs.1.8 Lakh and forget about the policy. He need to pay back to you as he mis-guided you. Rest 65% you need to think as a penalty for your ignorance.

      Reply
      • Thanks Basavraj.
        1. When you say let agent Pay 35% of 1.8L, does it mean, i can actually ask him? Please guide me on this.
        2. Has LIC policies never paid more than FD in comparison? Please suggested. Considering LIC a very safe investment, in one perspective, i feel i can continue this policy as one of the safest instrument in my portfolio, please clarify if its worth that way.

        Reply
        • ArunS-1) Yes…because he is a main culprit. 2) It will not give at least equal to Bank FDs. In what way you feel secured? It is left with you to retain or cancel.

          Reply
  25. Hi,
    I started this retire n enjoy plan this april. I have paid my first premium of 1.8 L.
    1. If i withdraw now, how much will i get back?

    Please let mw know.

    Reply
  26. Hello Basavraj

    I was reviewing my investments made long back and came across your article now ..i agree with your views on this and decide to withdraw the “Retire and Enjoy” policy

    I may have around 5 lac of surplus cash after withdrawing …can you suggest some investment options where i can park this money ..i am looking for around 5 years of investment period.

    I am going with term insurance for my insurance needs.

    Reply
    • Manish-Again you are committing the same mistake. First understand your goals then based on that choose product. Instead it is common tendency to run for product and invest.

      Reply
  27. Thank you for explaining the procedure Sir, i was told in the servicing branch that only 65% of the amount i paid as premium wil be returned not the entire amount. it is a total loss, repenting for investing in a policy which is of actually no use..

    Reply
    • Sudheer-But it is better to come out and start a fresh rather than committing a same mistake for rest of your life.

      Reply
  28. Hello siir, i found analysis and explanation very interesting. unfortunately i have taken this magicplan retire&enjoy policy in 2009. i have completed firve payments till now. i am planning to surrender this policy. will i get atleast the amount which i paid for these five years which is 60 k per year which is 3 laksh. and if you can explain the surrender procedure that would be of great help. thanks in advance.

    Reply
    • Sudheer-Visit your servicing branch with original bonds, ID proof, Cancelled Bank Cheque Leaf or Zerox copy of passbook and surrender form.

      Reply
  29. can anyone explain each and every componenet of this policy…..I have already enrolled myself in this policy while i was 26…but now i feel like its wastage…. as i dont have much idea about the returns…
    please explain me

    Reply
  30. Hi, I am very good to see your Blog and would like to know the best retiremnt plan. My age is 33

    Reply
    • Srinivas-There is no such universal product which you can claim to best retirement for all. So without knowing your data how can I suggest you?

      Reply
  31. Dear sir
    i am 34 year and interested in retirement plan please suggest me a good one.

    Reply
      • Hi Basavraj.
        Is it better to have LIC’s ‘Retire & Enjoy’ plan as an alternate to any Child Education Plan ?
        Please revert.

        Reply
        • Sameer-I totally against both of the plans. Also how be specific about your buying like whether you are buying for retirement or child future.

          Reply
  32. sir i have taken this plan in 2009, for the premium of 55000/yr but now i want to surrender this policy but my agent said i will get only 30% of what i have invested minus first yr premium.what should i do?

    Reply
    • Anu-If you still believe the person who sold you such a worst product then it is purely your decision what you need to take. My suggestion is to visit the branch and inquire for the same. No agent will suggest his client to surrender a plan which is fetching him good yearly income for the next 20 to 30 years 🙂

      Reply
  33. Sir,
    What is your opinion about Postal life insurance? I am a public sector employee and 31 years old

    Reply
    • Anu-Compare to normal traditional life insurance plans, postal life insurance is best. Because premium is so cheap and bonus rate is so high. But all can’t subscribe to this. You are lucky so go ahead 🙂

      Reply
      • Thanks a lot for your guidance sir. My present age is 31, If I insure for the sum assured of Rs.500000/- (Postal life insurance) , for maturity at the age of 45 years , monthly premium will be Rs.3175/-, for maturity at the age of 50 years, monthly premium will be Rs.2275/-, please guide which is beneficial for me. Presently, I have other tax saving investments of about Rs.80000/- ( Eligible under 80 C – Maximum limit Rs. 1,00,000/-)
        Thanks and Regards

        Reply
        • Anu-May I know how you filled that tax saving options of Rs.80,000?

          Reply
          • Sir,
            Salary Deduction in respect of EPF and one insurance poicy (money back) is coming around Rs.80,000/-
            Thanks and regards

            Reply
            • Anu-In that case do you still feel the product which is combination of Insurance with Investment required for you? First ask yourself whether you have proper life insurance coverage and the extended investment will be for what goal and is this the best available option to invest or not. Please do answer, we discuss further.

              Reply
              • Sir,
                Thank you sir. Insurance coverage is less. It is around 3 lakhs.

                Reply
  34. Sir,
    Thank you for nice presentation. But, unfortunately, I have bought this plan last year for sum assured Rs.2500000 yearly premium is Rs. 68073/- Please suggest whether it is possible to come out from this plan and also suggest which is the best retirement plan to invest. My present age is 32 years. Pls guide

    Reply
    • AHN-You have now two options to come out out of this plan. One is to forget what you paid earlier and start a fresh with proper planning for your insurance and other goals. Second is to continue till 3 years to complete and surrender it (in that case I will not guarantee you that you will receive more than what you paid). Choice is your’s 🙂 Soon I am going to come out with post on best pension plan available in India. Just wait till that time.

      Reply
  35. Hi Basu,
    I m looking for Rs.5,00,000/- per annum from my age 50 onwards,can you suggest the plans to invest?
    My current age is 34

    Reply
    • Pankaj-First clear my doubts 🙂 How you arrived that Rs.5,00,000 is suffice to you once you reach the age of 50 years? Have you done any homework to arrive at this amount? Please share then we discuss further.

      Reply
  36. nice explanation Basu…well done and plz continue ur service…

    Reply
  37. Thrice I posted comment but never appeared here (clueless)

    Reply
    • Rajesh-When you comment first time the admin approval is needed. It is done to protect spam commenting 🙂 You can now view all your comments and I already replied to your query.

      Reply
  38. Hi Sir, nice to have come across your site, and hopeful that I will get some help (finally) as I have tried so many times. let me explain I don’t understand financial things and specially the investment bit, Am an NRI (with limited income approx. 12L/A), I have not done any investment so far except for buying couple of properties and 1 term plan from Edelweiss Tokio, and want to do some small investment to help grow my money :P. and looking to buy a child plan as well as a retirement plan can you guide? It will be of great help and ready to subscribing for the services you provide. also one more help, I brought a plot which is on my wife’s name can I get a home loan (to construct own house) on this plot? your help is much appreciated.

    Thank you.

    Reply
  39. WOW, great efforts Mr. Basavaraj, I must congratulate you, now let me honest and tell you I don’t understand a single bit of investment things and have not done any investment except for buying couple of properties and 1 term plan from Edelweiss Tokio, (Im an NRI) now I think I can get help from you? for some small investments tips which help my money grow? and one retirement plan suggestions? Would be of great help!

    Thank you so much.

    Reply
  40. Oh my god … i was knowing i was flung into the trip everytime i pay the premium… I was told by my friend to be part of this plan gets you high returns and better future. Now i already paid upto 2 years , can you please tell me how to surrender all the 16 endownment policies???

    Reply
    • Mohamed-Once each policy completes 3 years, you can surrender and come out.

      Reply
  41. Inflation rate assumed @ 5%, is this plan made in year 1980-85 or what. Current CPI is @ 11.24%, If we think that all this inflation will come down to 5-6% gradually, then I think we are fooling ourselves only. Reason is we are surrounded by so many foreign things that there are no chances to slow down inflation.
    I believe one should avoid such complex combo products and follow KISS (Keep It Simple Stupid) rule in financial investing.

    Reply
  42. Hi Kranti,

    I undertand your views on this plan and the role of inflation on our return every year. My question is what are the other ways that you can combat the inflation ?? Infact, you can’t combat inflation by yourself.

    My analysis is if you invest in the PPF for the same amount each year at an average of 8%, it is giving lower return than this. Just for your info, I have considered the compunded rate of interest. On top of it there is a confusing part of locking period in ppf.

    http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    for ex. 50k p.a. investment in ppf will give you around 29 lacs of return after 22 yrs. While the brochure povided me by my agent shows return of 54 lacs including life insurance benefits. Although I should also consider age factor.

    Reply
    • Kunal-There are two ways to beat inflation. One is to consider the product which will give you higher return than inflation rate. Second is satisfied with the low yielding product by investing more or being with same low yielding product and investing less and finally suffer your financial life.
      Coming back to PPF, let us calculate how you planned to invest Rs.50K yearly? Whether it is monthly? If monthly then before 5th or after 5th every month? If lump sum then on which month and date. Please do share with me these details then we discuss and compare this with LIC traditional plans. About liquidity, do you feel LIC products are highly liquid?
      Now about your agent’s claim, you did the wonderful work yourself about PPF compounding. I suggest you to do the same homework for your agent’s claim of Rs.54 Lac, like how he arrived at this value and what bonus rate he considered. I hope you will get the answer. If not then let me know.

      Reply
  43. Could you suggest me the best way of investment for longer period from now.i am not looking for policies for under section 80C as my PPF is way beyond the 80C limitation, i am paying premiums for my kids with Max and ICICI pru life too
    I have even had few SIP in place but doesn’t seems good returns till date
    i needs a advice for savings for my kids future and retirement .

    Reply
    • Ravi-Do you feel the plans you already have from Max or ICICI Pru Life are correct decisions? I don’t think they are. Please let me know the fund names and your start date of SIP, to understand why they are not giving you good returns. But bear in mind that equity is for long term goals of around 10 Yrs or more. So if you have patience then go ahead otherwise come out and switch to any debt products. Do share your personal details to my mail id [email protected] like your age, your kid’s age, your current investments and if your kid’s are currently ready for higher education or marriage then how much you feel the expenses in today’s term.
      Need lots of data from you to advise.

      Reply
    • RAVI KANTH VARMAJI..

      [1.] Take an ONLINE TERM PLAN of MAXIMUM duration worth 1 CRORE+ SUM ASSURED (AVIVA / AEOGAN-RELIGARE / HDFC CLICK2PROTECT) and many others.

      [2.] FAMILY FLOATER Mediclaim of Rs. 10 LAKHS.

      [3.] STOP paying premium for ALL ENDOWMENT policies (Insurance + returns Type) and hold on to it for some time.
      Don’t be in a immediate hurry to surrender. (Even if you invest in them you will get peanuts, if you sell them you get peanut shells)

      [4.] Continue Investing in PPF, but don’t overdo it.

      [5.] Start SIP in ELSS (Tax Saving MFs) after reading them on http://www.valueresearch.com / MINT-50.

      If you find it too taxing what i have written then better seek help from a Certified Financial Planner and then take proper action. All the BEST. Remember the Best time for Financial Planning is NOW!!

      Reply
      • Kranti-Well explained 🙂 Also I thought to add that by continues reading about personal finance related content you can easily become a planner yourself and I assure that it is not a rocket science. But the need continues reading and implementing that knowledge. So best of luck Ravi 🙂

        Reply
      • This is just 3rd page in BasuNivesh, Mr.Kranti I got to say though I know less your comparison of
        Peanuts and Peanut shell drives home the point:)

        Reply
  44. All these plans are closing on 31st dec 2013

    Reply
    • Manish-Yes I know and that is why there is a huge rush to sell such plans 🙂

      Reply
  45. My agent asked me to invest atleast 40k p.a in this plan recently so that i can get atleast 3lakh after completing 54 years. Now i undestand that the returns that the calculation shown above is not guaranteed. Luckily i read your post otherwise this week i would have taken this. And further to that agent has compelled to take this before Dec 31st as this is expiring by then.

    Reply
  46. Hi,

    Thanks for the detail review.
    But, I’m late and caught in the big trap now.

    I have given my 1st installment and the 2nd is due in April’14.
    Please guide me in further regarding this.
    Need to talk to you.

    Reply
    • Abhiram-You have three options now. First is, to forget the current paid premium as if the penalty you are paying for not doing enough research before proceeding. The second is, continue till each individual plan completes 3 years and surrender. Otherwise third and final will be, have faith in your LIC agent by sacrificing the real difficulty you will face in retirement and continue till maturity as per the schedule. The decision is your’s.

      Reply
      • Thanks!
        I think, I’ll go with the 1st one only. It is better to forget the 1st premium rather than investing more 2 years.

        Reply
        • Abhiram-Good decision 🙂 Go ahead. But at the same time don’t forget to have enough insurance coverage on your life by buying pure insurance products called Term Insurance.

          Reply
  47. Can you pls explain more abt the problems faced on getting this plan? You mean to say that we will not be getting a guaranteed return of 3lakh p.a after 60 yrs as this return p.a is based on inflation. Or you mean to say this amt 3lakh will not be sufficient for a life after 60 yrs. Am still not getting the drawback of this plan.

    Reply
    • gq-Return from this plan is not guaranteed, but not because of inflation instead because of the bonus rate. LIC declares bonus on yearly base which will accumulate yearly in your account (without any compounding) and it is a fluctuating part. Hence return from this plan fluctuating instead of guaranteed. Let us set aside this guaranteed part. Even if we assume that it is guaranteed, real question is, will it be suffice to your retirement life considering the INFLATION rate, which this plan wholly neglect?

      Consider yourself in the current expenses and inflate it to around 6% inflation rate then judge whether the return this plan will give you is suffice or not. Then let us discuss further.

      Reply
  48. dear sir, nice to read your blogs and i would like to plan up my financials, so request you to kindly help. My mail id: [email protected].
    thank you, vinod

    Reply
  49. Maximum LIC Plans are of 5-6% returns in nature, so why there was a need for you to review in detail ?
    We are very happy reading your posts on Term Plan,PPF, Mediclaim, MF-SIP.
    We expect more from you these front…:-)

    Reply
    • Kranti-I agree it was not necessary. But concentrate on the period, LIC is closing all of its existing plans. Agents are in such a hurry that they are selling such plans as if some innovative things during these days. So it is a high probability that some of my blog readers may fall into this trap. Hence I wrote this. In fact one of my new client stayed away from this plan after our meeting on Sunday. Otherwise she might be in big trap.

      Reply
      • oh…ok.

        Reply
    • Hi Kranthi,

      This is the right time to review these type of policies. When i shared this article to my friend, he stopped buying Lic policies. Now he looking for another ways to save tax.

      Reply
      • oh…good.

        Reply
        • sir , i read your article ,
          and amazed that lot of people are about to surrender , i had also purchased a retire & enjoy plan and i think it was my best wise decision to get it.
          i had having sip in mf from last 8 years and having invested in retire n enjoy from last 6 years , when i look towards stock market , and my mutual fund returns , its shocking for the whole terms its returns is less than 7 percent and in past some times its even below my invested amount.
          some of the points i liked about retire n enjoy
          1. assuered returns compare to mf. , at the time of retirement if market is just like todays position then my accumlated amount will erode and i will not get the required amount i am looking for.
          2. i have a enough risk cover from day 1 , though you have term insurance if you look towards settlement of private players for term insurance then , you cant rely only on term insurance .
          3. its giving me tax free returns , whatever i will get amount from mf or epf then the resultant interest will be taxable
          4. though i am paying premium during retirement , it will be paid off from maturity amount and not from my pocket
          5.when you look towards returns then its important when you are depositing the money , 90 percent people deposit the money in the month of march.
          6.you say of the inflation, but when the economy go on developing inflation rate will be down.
          7. if you want returns from mf then dont invest in sip instead keep a watch on market , wehn market is down , invest lump sum atleast 50 to 1 lakh and decide expected returns from the fund , once you get the returns come out with profit from mf
          8. its always better to divide the investment in different sector

          Reply
          • Shrutuj-I feel an AGENT commenting than a buyer 🙂 Anyhow my replies are as below.
            1) May I know how much is ASSURED RETURN? I too join this plan NOW ITSELF.
            2) Whether I anywhere insisted to buy term insurance only from PRIVATE PLAYERS? It proves you are an AGENT 🙂
            3) Equity MF taxable for long term? Check your facts.
            4) What difference it makes to retirement?
            5) So??
            6) Even GOD don’t know the exact market condition which we may say WHEN MARKET IS DOWN, forget about you, me or stock gurus. Timing the market is of what you do mistake. Also, you concerned about less than 7% return from MF. May I know it is due to your wrong selection of fund or market condition itself so bad? In my view if you are investor since 8 years, then definitely returns may be around 8% or more. Knowing half truth is dangerous than unknowing.

            Reply

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