LIC’s Bima Diamond Plan No.841 – Why you should avoid?

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• I Can't find my Thread to reply back

  But My Only answer is to watch the below video...and come up with comparison which can compete with this Product.(Except LIC)

  • I will tell one simple reason why this INSURANCE policy is not worth it. The max sum INSURED is Rs.5,00,000.
    I stress INSURANCE here because that is what LIC is supposed to sell.
    Is an adult human life worth just Rs.5,00,000?
    Don't tell me that one can take 10 of these policies. No one will want to pay Rs.3,00,000 every year for insurance.
    You tell me is your life worth only Rs.5,00,000? Your company will pay you more in the form of gratuity if unfortunate death happens.
    This one reason alone is good enough to ignore this insurance policy.

    • Pradeep-His intention is not to come up with valid points, but promoting his video (in which only features of product explained) :)

      • Basu..where are my comments?

        • Sandeep-Check the link which I provided or take time to search the page with your name as "Sai Sandeep".

      • Basu, I think you explained this useless product in 300 words. Why would anyone watch and waste 30 mins video?
        May be these LIC folks are harnessing technology to sell their products nowadays. They are not getting convincing agents these days, may be because customers have become smarter.
        By the way he has no single valid point, so lets not compel him.

        • Hi Pradeep,

          First : Please note am not the person who spoke in the video and not even directly or Indirectly related to him.

          Second: am Ex. Development Officer of LIC and am no where concern to LIC now..am CFA by profession ..working in one reputed MNC.

          Third : If am financial planner ..I will never suggest my client to buy single naked Insurance Plan..Instead I will ask them to buy combinations to have them enough protection and coverage.( This is in response to your question to SA : 500,000)

          @ Basu : If you think If any my comments is promoting LIC ..Please delete my comments as soon as you read.

        • Hi Sai,
          The financial planners that I have heard from have all been saying to keep investment and insurance separate. Never combine the two. Spend as little as possible for a large insurance cover and invest the remaining large investible surplus in high return investments depending upon the goals and their tenures.
          You seem to be having different ideas presumably because you come from LIC background.
          In my humble opinion, Coverage and Protection denote the same idea in insurance context and Rs.5,00,000 is never a sufficient coverage/protection now let alone 15 or 20 years later.
          I will consider this only as an insurance policy.
          So anyone buying this plan now paying 30,000/year and dies 5 or 10 years later is planting a big disaster for his dependents.
          I am sure you cannot say this policy is for a low income population. Because the premium of 30,000 a year is not a low amount by any stretch of imagination.
          I am not a CFA or Financial planner, but I would rather advise someone to get an insurance cover of Rs.75,00,000 paying only 7,000 for 25 years. Invest the remaining 23,000 in a mutual fund to get 10-12 percent returns. Mind you all of the 30,000 is still eligible for tax benefit (ELSS MF).
          I hope you do justice to people (with little financial knowledge) who come to you for growing their money as well as asking ideas for insurance coverage.

        • @Pradeep...

          It doesn't matter If am CFA or from LIC profession ...

          Crux of the discussions is where should some one's hard earned money should go..Right?

          Before that .I would like to bring some more points

          1. No Product is Good or Bad.Its upon end Consumer how he plans it and what are his targets.
          2. Its Our Duty ( Bloggers, Finance Enthusiastic )to educate the pro's and cons of it.
          3. No One can say It is BAD product. It may not be fulfilling your target so it may not suit to you .. so you can avoid it ( Like Basu has mentioned in his Blog Post)
          4.I agree with the point which you have mentioned above( Term Insurance+Mutual fund)...which is suitable for the few set of people and not for Every body
          5.Bima Diamond is not for the people who are first timers to the personal finance world who Just started the carrier and even LIC clearly says in the promotion
          6.You can add Term Rider concept if your SA is not Sufficient ( Please note Premium is Very low in this case and SA will be multiplied)--This is in response to SA for above comment.
          7. My Hunch here is please recommend the product based on the Target of your Client.

          Thank You..

          Have a great day ahead.

        • I agree no product is a BAD product as long as it is beneficial to somebody and that somebody in this case is LIC agents with the commissions.

          We are into 5 or 6 comments in this discussion and you have not given one 'pro' for this product.
          When someone comes to you for financial planning, you are supposed to give the best SOLUTION for him. It is like a patient going to a doctor when he is ill. Patient goes with no idea on how to treat his illness and its the doctor who should prescribe the treatment in the patient's best interests. If doctor only thinks about his fees, then the patient is doomed.

          Its exactly what LIC agents are doing all these years. They don't tell any of the cons of this product. They don't tell the customers all other best options available in the market.
          As a CFA, you must have the best knowledge of what is available in the market.

          And for point #5, so the first timers should buy this product and get themselves locked for 12 or 15 years of paying premium? Are you joking? By the time this policy payment term completes, he would have completed half his career.
          Just count the number of people who want to surrender these kinds of policies after 2 or 3 years. They are so anguished to hear that they wont get anything back before 3 years completion. And after that only 30% excluding the 1st premium. Where did the remaining money go?

          For point #6, the premium is LOW? 30k to 45k is LOW premium for a 5 Lakh insurance cover? Seriously?

          As a CFA, are you not supposed to explain what are the expenses of this product? Have you explained this to you customers? Can you tell us in this forum about the expenses of this product? Why not LIC publish the details?
          When you go to a doctor, don't you ask for a bill with various details? You ask for a bill when you go to a restaurant.

          Your comments lack any substance.

          Basu,
          This product suits the LIC agents selling it. :) They get nearly 10% of the premiums as commissions.

        • Pradeep-That is why once I said, if you really need GOOD return by investing in LIC only, then be agent and then invest.

        • Sandeep-So according to you to whom this product BEST suites?

        • Sandeep=Great to know about your past and present profession. Now let us move on. Let me know in what way this product fulfill the long term returns and also one's insurance need. I never delete the comments which always heading towards quality discussion. I never do that. Instead promote you to validate your points with facts.

        • Pradeep-I completely agree with your views.

  • Sandeep-You will find thread of your earlier comment at http://www.basunivesh.com/2016/09/18/lics-bima-diamond-plan-no-841-why-you-should-avoid/#comment-155972. Don't try to promote your youtube here :) Instead come up with valid facts and show me the returns IRR. Can you please?

• I Can Bet with any of the above guys who challenged that 841 policy is better than any other policy!!

  Being Development Officer of LIC..This is only blog which showed negative reviews

  • Sai-Come up with facts :)

• Hi Basu,
  Nice post!!!
  Had a small confusion.
  Loyalty addition is like Final Additional Bonus, right? i.e. it is announced only in the year of surrender, maturity or death.
  It is not like simple reversionary bonus.

• sir i have taken online term plan of 60 laks in this month but i forgot to disclouse family history i.e my fathar death due to heart disese
  its consider a froud or misrepresentation?? plz reply i m very confusing..

  • Bhushan-It may and hence better to disclose it now immediately.

    • sir they accept it after issuying the policy....

• Dear basu,
  you should write, it is your prime duty to spread knowledge .

  But be clear,
  This mr. pradip is
  Against insurance?
  against LIC?
  against endowment policy?
  against agents?
  OR
  against agents income?

  • Punit-I completely endorse of what Pradip told.

• Dear Basu,
  I am sick of discussing with this guy who doesn't answer any of our valid questions but keep jumping from one point to another.
  Let me chuck this.
  I have a sincere request to you to consider writing a blog on agent commissions for various LIC plans with detailed illustration. Then attach it to every LIC plan you review, it should be the first information for each of your review blogs of LIC plans.
  Public need to understand how much of their money is looted by the agents before they read a review of the plan. You may also add what service these agents offer to a customer that commands such high commissions.
  You can do huge service if you can writ such a blog.
  Thanks..

  • Pradeep-I already wrote it long back (Do you know your life insurance agents commission?). But, yes from now onward I have to publish it whenever I write about LIC plans.

• dear pradip
  pls. update your knowledge or stop arguingFirst of all *
  *There is no policy having term of 10 years
  secondly
  *your money paid
  *the bonus declared and
  *the SA all are 100%guarantee by govt. of india, just like one rupee note (currency) pls. read the words written on it, if u have

  Insurance is a financial tool accepted worldwide, in India company like LIC is giving guarantee which very few countries have
  In insurance sector worldwide, LIC is amongst highest rewarding and claim sattleing company

  you should be proud of it being an Indian.

  • Punit-"the SA all are 100%guarantee by govt. of India, just like one rupee note (currency) pls. read the words written on it, if u have"-Who said Sum Assured is not guaranteed?
    "Insurance is a financial tool accepted worldwide, in India company like LIC is giving guarantee which very few countries have"-Insurance is a financial tool or risk mitigating tool? I am now confused :)
    "In insurance sector worldwide, LIC is amongst highest rewarding and claim settling company"-What about the size of the each claim, I mean average Sum Assured of all it's claim LIC settles?

• did you know pradip, what is your problem?
  you dont have proper exposure at insurance industry. see all the companies are recruiting more and more agents, so they publish each and everything in public.
  now, you said that where LIC is investing?
  you will get the details in IRDA website, just check LIC annual accounts and LIC profile as well
  It is not mendetory to disclose with each and every client because LIC is giving guarantee (sec. 37 of indian constitution) of the money policy holder paid, the SA LIC has assure and the BONUS LIC declared

  Is any other instrument of your type gives such guarantee?
  so, they need to declare where they invest people's money.
  Is it clear?

  each and every financial instrument has its own stand dont compare haphazard and bluff....

  Have a nice day

  • Punit-"It is not mandatory to disclose with each and every client because LIC is giving guarantee (sec. 37 of Indian constitution) of the money policy holder paid, the SA LIC has assure and the BONUS LIC declared"-What is guaranteed here can you explain in detail (compared to private players)?

    Whole India know how respective central governments using LIC as scapegoat everytime they need money and sell off holdings in public sector companies. It is open secret of LIC's style of investment.

    As per my knowledge secured product or guaranteed product is RBI's bonds (that too if you hold it till maturity), rest of all products have risk. So how can you explain it towards LIC's returns are guaranteed?

  • Punit,
    I wanted you to give details on charges, investment and insurance amount of LIC policies, you refuse to divulge any of it. Why?

    LIC guarantees SA, agreed. Please go ahead and calculate the Sum Assured, it will be less than the total premium paid.
    Its like you give me 10,000 Rs every year for 10 years and I will return you 100,000 after 10 years. I can do that as well. Why do you drag constitution in this simple calculation?
    Go read LIC brochure, none of bonus, FAB, Loyalty bonus are guaranteed. Its totally at their discretion. So dont hide behind the word 'guarantee'

    Investments are of two types.
    1) One type gives you fixed returns like FDs, Post office deposits, NSC bonds, etc. You dont care where they invest your money but they pay you fixed return of 8 or 9% when you invest and you get it
    2) second type, does not guarantee returns, but they are very transparent about the charges they deduct, show where your money is invested and you get variable returns. The returns as history shows us can even be 20-30% on good years like 2014-15 and 2016. MFs are prime example of this

    Insurance is only one type.
    You pay a small fixed amount for large sum insured for fixed number of years and they will pay your nominee if you die within those years.

    LIC plans don't fall into any of the above categories, its all fraud plans. You are one unfaithful agent to many of your customers with little finance knowledge and you are earning a lot due to many poor people ignorance.

    We can talk further only if you give details on LIC policy individual charges, insurance and investment details.
    A Rs.10 coffee packet sold at shops gives you the ingredients with %, calorie details etc but not your 1,00,000 Rs LIC policy.

• Dear Pradip
  clients of LIC knows very well what the agent get as commission. Lots of literature in print published regarding agent commission.
  Infact from 1st of oct. people will start surprising when they know how much you get as TRAIL commission on SIP and particularly Hybrid product

  • Punit-Commission structure of LIC is also going to disclosed in LIC Bonds? If so, then I welcome the daring step of toothless regulator called IRDA.

  • Punit,
    You are assuming that the LIC customers know what the agents are paid. Even worse, they don't know that the commissions are actually some percentage of their premium paid. So higher the premium, higher the commission.
    So its clear that you don't tell your client about this.
    Now lets talk about the charges. Can you give a list of all charges for LIC policies.
    Take New Jeevan Anand. As an agent, you must be knowing what are the various charges, what part goes towards insurance and how much is getting invested. Where does LIC invest the money, what percentage in stocks and what % in bond? What do LIC do with the bonus accrued every year until paid out after 20 years? Can you throw some light on it?
    You take an example of a 30 year old for 20 years, give all above details with source of information and then justify you commissions.

    Mutual Funds are way more transparent. They advise people to invest only your long term money.
    1) They publish expense ratio in % (both direct plans and regular plans) and most regular plans charge a max of 2,5% only. Direct plans charge around 1.5% only
    2) They publish where the money is invested (including individual stocks and % of investment)
    3) As you said, they will even publish absolute commissions paid going forward
    4) The exit load applies only for 1 year for most equity funds and that too only 1%
    5) You can redeem you fund any time, and you clearly know what you will get as returns
    6) Any day you can calculate whats you returns you investment has given
    7) You can rank the performance of your fund as per benchmark and other funds in same category

    What more do you need from MFs?

    See I give you so many answers, you don't give any answers for our questions much like your organisation LIC. Very opaque and does not want to go into details for any plan.

• Mr. pradip Now I got your confusion
  you are doing a very common but typical mistake

  Let me clear
  you derive at 4% or 4.5% return on lic policy
  how it comes
  it come that if SA is 1000 and bonus is 45 than it is 4.5%

  BUT
  BUT
  BUT
  dear Pradip here you makes a mistake,
  on what amount intrest should be calculated?
  on amount invested amount.

  agreed
  you are calculating on SA
  let me clear it also
  Sum assured is the figure which is guaranteed by the company to the payer (life assured) that on happenning of certain event the sum will be payable in lue of premium (a small amount in instalment)

  SA has nothing to do with return
  your way of calculating is just like mesuring cloth in litter....

  anyway thanks to you many of the blog readers confusion also got vanished regarding calculation of insurance returns

  good night

  • Punit-There is something called compounding effect when we calculate return on investment. If someone claiming 4.5% returns, then it does not mean that yearly bonus is Rs.45. But it is that LIC bonus may be Rs.50 or Rs.60, but such idle amount will remain with LIC up to the period of death claim or maturity without adding a single rupee to it. Hence, the effective return will come down drastically. Hope you got my point.

  • Punit,
    No blog reader here is confused, they are all very clear about the returns of LIC policies. Its no more than 5 to 6%
    Again, I will ask you this.
    Do you tell your clients that 10% of their investment comes to you as commission?