Today we will look into the features of LIC’s Jeevan Anand Plan. I will let you know why it is one of my favourite plan from existing LIC’s Plans. Before proceeding further we will first look into the features of it.
Suppose Mr.X whose current age is 30 Yrs, he want to invest in Jeevan Anand policy for the tenure of 20 yrs and the Sum Assured he chosen is Rs.10,00,000. Then his annual premium will be Rs.54,274. During this 20 years of period he have risk coverage of Rs.10,00,000. Suppose within this 20 Yrs period, if any untoward incident happens with his life then his nominee will get full sum assured+accrued Bonus till that period immediately and policy closes their itself.
But if he alive till the maturity period of 20 yrs then he will get total SA+Bonus. After that actual Jeevan Anand’s feature start. Means he still has life risk of Rs.5,00,000 till his last breath or Rs.10,00,000 life risk in case accidental death within his age of 70 Yrs. So without paying a penny he is getting his life risk after the maturity of the policy!!! One more good feature with this policy is, he can surrender the death claim amount which he is getting after his death in advance but after maturity. Now I think you got a fair idea about the features of the policy.
We will look into the returns on investing in this policy and is it worth to invest in. Just don’t go blindly on the brand name LIC have and its publicity. So look into it as any other product, like how much you are investing and in return how much you will get.
Suppose Mr.X survives till the policy period of 20 years then he will get around Rs.18,60,000 (Rs.10,00,000 SA+Rs.8,60,000 Bonus at the current rate of Rs.43 Per Rs.1000 SA per year)+if any final additional bonus at the time of maturity. Hence Mr.X will pay as premium in the whole tenure of the policy is Rs.10,85,480 and he will get Rs.18,60,000 as a return. Hence a return on your investment will be around 5.5%. So you may say is it worth when today Bank FDs are offering around 9% interest rate?
Yes, still it is worth for Mr.X. I will show you how it is. As I said above, he will get around Rs.18, 60,000 after the maturity of 20 yrs. But Jeevan Anand provided one more option to surrender the life risk which he get after the maturity period and within his last breath into cash. Suppose he waited for five more years and surrendered his life risk he may get around 60% to 70% of SA i,e. around Rs.3,00,000 to Rs.4,00,000. (The exact figure of this surrender value not known. Even I tried to get the information from LIC, but in vain). So return after using this option is around 6%.
Now with the kind of return 6% and life risk of around Rs.10,00,000 till his 50 yrs of age is good or not? Yes it is good but as the rule, he can divert his debt portfolio of investment in this policy instead of investing in Debt Funds or in any non risky product. Hence I will recommend you this plan to the tune of your investment amount of Debt. Not more than that.
Hope you understood what I am pointing. But as a thumb rule, don’t invest all your savings in such low yielding products. But need to divert some portion in such plans as the benefit of Life Risk with Returns.