Which is the Best Life Insurance Policy in India? I often face this question. Especially, when someone looking for investment, planning for their kids’ future or saving tax. So which plan it is?
In this post, I am repeating the basic GYAAN of insurance in a different way. Before searching for an answer of “Best Life Insurance Policy in India” first, understand why you need insurance. Insurance is a risk-mitigating tool. It means you are transferring your risk to the insurance company. For this, insurance company charging you the premium. So if you feel there is a risk of life (death), then buy life insurance. If there is a risk of death, then you buy health insurance. Same way, if you find the risk of accident, then buy an accidental insurance.
This is the major reason of buying insurance. However, in reality, the insurance meaning is entirely different especially for us. We feel insurance as an investment product. So we are searching for “Best Life Insurance Policy in India”. The insurance concept, especially when it comes to LIFE INSURANCE is purely backstabbed. By all of US means insurance companies, agents, and buyers. No one bothers about how much life cover I am having. Same way insurance companies, banks, or agents not bother.
Let us understand the types of insurance policies offered in India. The situation may be same in other countries. But concentrate our topic of discussion to India alone.1) Whole Life Insurance Policies-As the name indicates the life cover will be up to the policy holder’s death. The main purpose of this product
1) Whole Life Insurance Policies-As the name indicates the life cover will be up to the policyholder’s death. The main purpose of this product creates an estate to his dependents. However, in reality, life insurance companies provide the flexibility of maturity payout. For example, in case of LIC’s old whole life insurance policy, either the maturity will be at 80 years of age or 40-year policy term completion (whichever is later).
As the policy period is long, the premium will be very less. However, in reality, agent’s never sell such products. Why? The premium will be less. So the earning probability will also be less. Bonus rates may be higher than any other products (I think currently LIC offers Rs.70 per year per Rs.1, 000 SA as a bonus). However, the result will be returns of 7% to 8%. However, do you feel 8% is the BEST return for an investment of 40 years? If you found this as Best Life Insurance Policy in India, then go ahead.
For example, check my post on whole life insurance at “LIC’s Whole Life Plan-Best for Estate creation“.
2) Endowment Plans-These plans cover your life risk up to the maturity period. You simply pay the premium up to the policy period. At maturity, you receive the Sum Assured+Bonus. In case the death of the life assured, the nominee will receive, the Sum Assured+Bonus accrued until that day. There may be different variants to it like normal endowment plans or limited period endowment plans. However, the basic features are same.
Why you can consider this as ‘Best Life Insurance Policy in India”? If you feel 5% to 6% is best return and the life risk of 5 times to 10 times of yearly income is best to sustain your dependence in case of your absence.
Check the examples of such plans at “LIC’s New Endowment Plus (Table No.835)-Features, Benefits and Review” , “LIC’s Jeevan Labh (Table No.836)-Features and Review” and “LIC’s new plan Limited Payment Endowment Plan (Table No. 830)-Review“.
3) Money Back Plans-These are again nothing but typical endowment plans. But you receive some % of the sum assured during the policy period. Buyers feel this as an advantage. However, check the reality. Insurance companies charge higher premiums for such plans.
Why you can consider this plan as “Best Life Insurance Policy in India”? If you feel money required for you at regular interval of policy period, 5% to 6% is best return and as usual with lesser life risk, then definitely go ahead.
Check the examples of such plans at “LIC’s new plan 2015-New Children’s Money Back Plan (No.832) Review“.
4) Special plans-For example, during tax saving season, LIC launches special plan. This year they launched Jeevan Shikhar. These are for a limited period with some new features. But they are truly meant to garner business. Other variants are like LIC’s Jeevan Saral. Designed beautifully. LIC received huge recognization. However, check the experience of buyers after 10 years or so. The returns are just around 5%.
If you feel that such products are really “Best Life Insurance Policy in India”, then go ahead.
Check the examples of such plans at “LIC’s New Plan 2016-Jeevan Shikhar (Table No.837)-Feature and Review“, “LIC’s New Plan 2016-Jeevan Pragati (Table No.838) Review” and “LIC’s Jeevan Saral-Why so much confusion?“.
5) ULIPs-These are market-related products. Historically sold by private insurance companies and later on LIC too entered into it. But nowadays no agent ready to sell. The reason is expense ratios of such plans reduced. So agents also started to earn less.
In reality, these products are still costly when you compare with mutual funds. The other two negatives are hard to track the historical data and liquidity. Also, such products never fulfil your actual insurance requirement. Because if go for the actual insurance need, then you can’t afford the premium.
If you don’t have any issues, then these may be your “Best Life Insurance Policy in India”.
6) Term Insurance Plans-These are pure life insurance products. Means insurance companies only ask you the premium based on the risk they are offering you. In such plans, there will not be any investment amount. The premium will be purely for the life risk insurance companies providing you. If one opts for say Rs.1 Cr term insurance for 30-year term and the insured die within this 30-year period, then his nominee receive Rs.1 Cr. If his death does not occur within this 30-year period, then nothing will be payable back to insured. No investment part in such products. Therefore, you will not receive anything in return at maturity.
When we are looking for insurance plans, these are the one, which offers pure LIFE INSURANCE. Refer below link to know more about the features and top 5 term insurance products in India.
Conclusion
Here my intention was not to introduce the features of all types of life insurance products. Many of you all know the basics of life insurance. However, make sure that your search of “Best Life Insurance Policy in India” must end with the product called TERM INSURANCE. Because Term Insurance is the must have and best product which you buy for life. It is a MUST for all. But sadly regulators, insurance companies, and agents never sold this wonderful product. Also, we buyers never felt that we are looking for LIFE INSURANCE but not a product which combines INSURANCE+INVESTMENT. We simply followed agents, insurance companies or the advice of our friends. However, forgot the real need of life insurance and how under insurance badly affects our financial dependence life.
Now think twice before buying a life insurance. In my view, the “Best Life Insurance Policy in India” is only term insurance.
Refer below my posts and a video of how to calculate returns on your life insurance investment before believing on me.
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View Comments
Hi,
I am Srinath from Hyderabad and I am about 30 yrs old and about to marry and I can invest around 3 to 4k per month
I want to take a LIC policy so please suggest me a insurance policy which gives me a good return if survive the policy period or good money to my family if something happened to me.
So basically I am looking for a policy which gives me life cover and good returns too.
Some one suggested me a LIC Jeevan Anand and Amulya Jeevan are good choices but I want to know is these policy are good or is there my other policies like these in LIC or any other.
And can I take this Jeevan Anand and Amulya Jeevan policies online or I have to go through some agents because when I check for premiums there is a difference between agents and LIC portals premium for 5L rs.
Srinath-Basics of financial planning-NEVER COMBINE INSURANCE WITH INVESTMENT.
So what are the options or plans should i go for now only for insurance
Srinath-If you are looking for INSURANCE ONLY, then better to go for Term Life Insurance.
A known friend promoted this plan.Please suggest what can I do??
Nidhi-This is the ULIP plan and you completed 5 years. Hence, better to surrender now and STOP BELIEVING THAT KNOWN FRIEND FOREVER.
Hello
I have Canara hsbc smart life long plan.I have to pay 50000 annually for 10 years.I have already paid for 5 years.Should I continue to pay for next 5 years or should I quit?Kindly suggest.
Nidhi-What prompted you to buy this plan?
I have hdfc life super saver income plan. I have to pay 1.5 lacs annually for 8 years. I already paid for 2 years. Should I surrender now (loosing 2.1 lacs)? Or should I make it pay up, after paying for one more year? Kindly advise.
Alfin-Sad and painful but better option is to close now.
I have 2 LIC jeevan anand policys after 2 years my policy lapse & revived it. again after 2 years ( actually 4 years from first paid premium) can I stop the premium payments & paidup the policy as actually I paid 4 years premium or as lapsed policy revived it is counted as 2 years only please clarify
Tell me which is best option paidup or surrender
Please tell me which is best option for LIC policy paidup or surrender after paying 4 years premiums
Nivas-Surrender.
Nivas-As per me, it is from the beginning of the period as even though there were gaps, you re-instated the plan.
Hello Basavraj,
I am writing in to get information on traditional life insurance policies that I and my wife(housewife) have bought. At this time I am feeling that we are paying too much premium for the cover and real returns are below FD's. Therefore I recently bought a term cover of 1 cr with LIC. In addition, I have three significant policies:
1. LIC's Jeevan Anand -with Profits+Accidental benefit- Prem 31.5k/yr -Sum assured 5lk-started in 2013-maturity 2030.
2. BIMA GOLD- prem 24k/yr-sum- Sum assured 5lk with accidental benefit-start yr 2006- maturity 2021
3. Max Life Gain Premier Endowment-Sum assureed 3.2 lk- prem/yr- 30k/yr-start 2015- maturity 2035. But premium payment is for 8 years. Bought primarily to get insurance for my wife, whose a housewife. And I think for house wifes there are no term plans.
Can you please tell me as what % annual return (including the time value of money) I can expect in long term and should I continue or not. What would be your advice, keeping in mind the risk associated with my term insurance cover which started in May 2015, loss in terms of surrender value which is typically 0.3 of premium paid, wife being a house-wife and downside risks involved with just stop paying the premiums?
Thanks
Shri
Shri-From all you can expect around 5% to 6% returns. Considering such type of low returns for long term investment, I feel they are purely dumb products. Hence, better to come out at the earliest.
There may be some % of loss, but it does not mean that we must commit same mistake for next 10-20 years.
Thank you for your views.
What about the cover I loose on my wife(whose a housewife). Can I get a life/term cover cover for my wife?
Shri-Do you feel for a housewife insurance is required? Insurance is required only when if someone dependent financially on that person.
I agree. But was exploring the possibility.
I think, one of the Life insurance(with 5 lakh cover) policy I intend to cancel is listed in my Term policy(1Cr). Will surrendering of that policy negatively impact the Term insurance Policy?
Shri-NO.
Thank You!
Hello,
I appreciate for the information provided here.
Need small help about Lic's Jeevan Adhar Plan.
Will proposer can get the plan benefit if LA is alive in this plan?
In my case, the proposal is handicapped person and need benefit from this plan
Please help me on this.
Thanks
Pankaj
Pankaj-Here the proposer just act as policyholder. But the benefit will be fully to handicapped life assured.
Hello, could you please give me more information about LIC's Jeevan Laksha and Jeevan Anand.
Also if possible, please let me know which is the single premium plan for a Kid and Adult
Pankaj-Do you feel the products which combine both Insurance and Investment are great to invest??
Hi Basu,
I am Madhu, 31 Male, Married and No Children yet. I have gone through your post and it was really informative.
In 2012, started LIC Jevan Anand Policy for 3 lacs for Life Insurance purpose and paid all premiums till date. Later in 2015 I purchased an Online Term Policy from HDFC Life with Life cover of 50 lacs and paid 2 premiums till date.
Now I am feeling that continuing with LIC is no more needed. Is it a good idea to surrender my LIC policy?
Madhu-Better you do that.
Hi,
I am Jai, 35 years old. After going through lot of portals I shortlisted 3 for Term Insurance (30 years) namely Max Life, ICICI & SBI. I was a passive smoker for 10 years and now I have quit smoking for last 3 months. There are 2 options in premium one is SMOKER and the other is NON-SMOKER. There is section where it asks for TOBACCO usage in last 1year for Max Life & 5 years for ICICI.
Now that I have quit Smoking whether I need to check the option as SMOKER or NON-SMOKER.
I am worried if they reject claim after my demise.
Kindly advice. Thanks.
Jai-You quit your habit recently. Hence, mention it as smoker.