Soon one more new plan is going to be launched by LIC in March 2015. This time again an endowment plan with limited premium payment option. This plan is called LIC’s Jeevan Lakshy (Table No.833). Let us see its’ features.
This is nothing but an endowment plan, but with only additional features being the premium payment option and unique death benefit. Below is the plan feature of this plan.
Along with these features, LIC also offers two riders to this plan.
1) Accidental Death and Disability Benefit Rider-This is exactly like accidental insurance of what you get from General Insurance companies, but with some limitation on the maximum sum assured.
2) New Term Assurance Rider-It is like opting higher sum assured life risk by paying additional premium.
I am against these two. The reasons are, in case of accidental death and disability rider, this feature has many limitations. In case of a term assurance rider, I prefer pure term insurance. So no great deal in opting these two riders.
Is it a great product to invest?
As usual, I have many reservations against this policy. I listed positives and negatives as below.
- This is the typical endowment plan. Therefore, returns will be around 5% to 6%. Can any agents differ and say that returns will be more than 8% to 9%? I know all agents accept it.
- They pitch you this product in the name of IMPORTANCE OF INSURANCE. However, this neither meets any insurance requirement nor beat even the inflation.
- They pitch you this product in the name of GUARANTEED RETURN. However, what is guaranteed in LIC policies? Bonus varies yearly. Guaranteed benefits are nowadays same after new IRDA rules. So do not go behind this tagline called GUARANTEED BY LIC.
- This plan claims to be limited premium payment. However, offers only less than 3 years of the policy period. So what is the use?
- The only feature, which looks attractive to me, is the death benefit. This I never saw in earlier plans. However, do remember that 10% of Sum Assured payable yearly means what will be post inflation? Suppose you buy this plan considering your current affordability of premium (Because this is not cheap term insurance plan. Instead, a typical insurance+investment plan. So you have to check your affordability) like Rs.10, 00,000 Sum Assured. Let us say after a few years you die and immediately your nominee start to receive Rs.1, 00,000 yearly till maturity of this policy. Whether this is suffice for the next years? Because this will not take into considering the inflated cost of each year. They simply pay 10% of Sum Assured irrespective of inflation or other requirement. So be cautious of being in this trap that you get double benefit if you die (Once in a yearly payment and second maturity benefit).
120 Responses
Wonderfull bolg, very well explained the truth.
Thanks for spreading awareness… Agents are looting peoples hard earned money
Your statement is right – all product having combination of investment and insurence are bad.
Investment and insurence should not be mixed…
For insurence take term insurance and then invest you money only for investment like mutual fund(SIP), PPF etc…
Dear Amaresh,
Pleasure 🙂
Hello Sir,
Many thanks for writing a wonderful blog to give us valuable information.
This is Vikas Bajaj, an NRI based in Japan.
Being graduated from Tokyo university, I also got in to trap of LIC, when I visited India in Jan 2017.
I have bought two policies and paying an annual premium of approx. 2 lac (approx.1 lac for each policy)
The policies are in force and unfortunately have already paid 2 years of premium (approx. 4 lac in total)
The policies are as below;
Start date: Feb 2017 (next premium to be paid by Feb 2019)
833 Jeevan Lakhhya (SA 20 lac, Term 25 years, premium paying 22 years)
836 Jeevan Labh (SA 20 lac, Term 25 years, premium paying 16 years)
If I surrender the policies now, I won’t get anything back as I have paid only for 2 years. It means I will have to suffer loss of 4 lac.
And if I pay 1 year of premium (approx. 2 lac more), I may have the policies paid up, but I am not sure what shall be the maturity amount as LIC doesn’t give future bonus (mention on their HP) on paid up value/ sum reduced.
Since bonus is not applicable, so total paid up value of the policy shall be 6 lac in total (both policies) and I would get 6 lac after 23 years from today, is this right?
Considering an alternative, if I have fixed deposit of 2 lac in any bank (rather than giving it to LIC), the value after 23 years will be approx. 9.5 lac (having return@ 7% p.a)
Please advise the following.
1.What shall be the approx. maturity value of the paid up policy?
If maturity value after paid up of policy shall be around 9 lac, I prefer to have the policy paid up after paying 1 year premium.
2.I prefer to have term insurance of SA 1.5 Cr with 30 lac coverage of critical insurance from ICICI Pru. Do you recommend this?
Vikas
[email protected]
Reply
Dear Vikas,
1) It is hard to say. However, if you pay for another year and surrender, then you will definitely get less of what you paid (maybe 50% to 50% of what you paid). Paid up is suitable when you are nearer to maturity.
2) You can.
First of all, many thanks for your reply & giving me time from your hectic schedule
I tried to check LIC maturity calculater of Jeevan Labh (also confrimed with agent), and it says I might get approx 54 lac (SA 20 lac, Bonus 25 lac, FAB 9 lac) at the time of maturity.
According to my calculation, the return shall be approx. 7.5% p.a which is not bad indeed if the same amount is paid.
I am not really sure, if Bonus & FAB both are paid as guaranteed amount, in addition to SA.
Lets says, if FAB is not paid, i would get only 45 lac and the rate of return shall be 6.5% p.a.
So my question to you is, please confirm if LIC pays bonus & FAB both?
and do you think above calculations are correct?
Dear Vikas,
Do you feel the 7.5% returns the BEST returns for your long term goals? A simple product like PPF can easily beat this complicated and illiquid product. Regarding calculators, I am not sure which one you used. However, as per me the returns will not be more than 6%.
Dear Basu,
I have read your blogs many times,it i s good that you are spreading the awareness regarding Insurance.
There are couple of points I think it also should be highlighted..
1) A product cannot be designed whether its in insurance ,mutual funds or any to every individual , so even if any insurance company if designing the endowment product it had given a thought about the target audience, so that targeted audience would really have achieved there dreams or goals (I have seen many of them). So giving a statement “All Products with Insurance +Investment are bad so do not buy” is not done.
2) I really admire and push Term Insurance religiously ,unfortunately I have observed that when an individual(IN MANY CASES) buy Term Insurance he is packed with full of commitment,knowledge and more of passion initially, but as time passes his passion starts fading away,by 6 to 7 years they stop the payment, even after numerous reminders and meeting them about there passion they think otherwise(There comments are “Leave any ways I won’t be getting any money out of amount”). So end of the day the entire plan goes on toss, they are neither covered by Term plan nor Endowment . If observed Endowment plans are more in force then Term.
3) I love the tag called “THERE ARE NO FREE LUNCHES” even if you would say that the blog that you have written is free to access,but brother Blogging also known to be a best marketing tool to increase the reach and believe me I really have highest regards for such knowledgeable marketing tool.Keep it up. Coming back to the topic So end at the end of the day every body out here is there to earn ,if an agent gets commission of 25+% in first year as you mentioned then that is remuneration of the work they are doing To Advise,Sell,keep policy intact till the goal is not achieved its a rigorous work .Somebody gets through company and some body through both CLIENT (As Fees) and also company. Understand one fact for agents its business with utmost self respect and service for the clients.Comparing commission between Insurance vs MF is ridiculous as both the products are different so as the ways to get there respective business.
4) A genuine request,if you writing on Awareness of insurance then kindly just don’t name any company (LIC) you could choose the words as INSURANCE COMPANY for reference.As most of the time for referring insurance companies you choose to refer it as LIC.As no body in this world would say he knows everything so there could be many fact which you won’t know about that respective Company(LIC).
Thanks for the platform
Stay Health Stay wise.
Shrikant Talikoti
Financial Advisor
Shrikant-1) Give a single PRODUCT which proves my statement wrong of “All Products with Insurance +Investment are bad so do not buy”. Don’t look at others, consider target audience as YOU and explain me please??
2) Do you have data to prove that term insurance lapsation ratio high after 6-7 years? Also, if he is buying online, then why an agent run behind him for premium payment? If agent is running behind him means it is an offline product, which in any case costlier than online. So the customer may already opted for online product. This also a possibility right?
3) Refer my earlier post, where I exposed from advisers, planners, CFPs to BLOGGERS. Hope you will get answers to your doubts 🙂
Who is the best financial planner in India?
4) In my view, the biggest culprit in spreading wrong message about meaning of INSURANCE IS LIC. So I love to refer LIC, at the same time, don’t feel I am fond of other insurers. I distance all of them equally.
It seems it hurted you a lot as you seems an LIC agent. But to your surprise, I am also an LIC agent since 2003 🙂
I completely agree with Basu and admire him for his such great articles. LIC has looted this country big time. Even i myself has been looted by LIC. ULIPs , endowment plans are such a sheer waste of money. I had Jeevan Anand policy which i went ahead and closed even in loss.
@Basu: You are doing a great job and keep on spreading the knowledge. Let LIC mend its ways or die sooner than later!
@Shrikant Talikoti: Dont get offended and accept the truth. Best way is to buy Online Direct good mutual funds and Online Term plans for insurance. Thats it. Simple and straight!
Gagan-Pleasure 🙂
Sir plz tell me which plan is better for me jeevan anand or jeevan lakshya.
My age is 26
Mohit-Both are same when it comes to returns and insurance with slight changes in plan features.
Sir i want to Know which is best to make investment for my sons future since he is 1 year old now and a want to save some money for his future, that is for his education purpose. Maximum i can invest Rs 15000 PA for 20 years, wether i have to opt RD or LIC,s or any other saving scheme. Please give me in detail.
Nagendra-Stay away from any product which combines Insurance+Investment.
exactly never mix insurance and investment ever!!!
Lic chalana h…..agent se milaya jat
To Basu,
I see a lot of people complaining as a group, it has become You vs LIC agents. A lot of people benefiting from your reviews would have least bothered to put comment for your service.
Everybody is entitlled to his opinion & no person (especially with vested interests) can dispute that.
Shiva-If someone really benefited from my blog then my goal achieved and that is what I think. Commenting for or against me is entirely their views and I will not bother.
Insurance and investment will never go parallel. They both are different, don’t compare it , well karan said that. In my field mostly are marwari. As you know they first calculate the “vyaj”” (interest). it is very difficult to handle them. can you suggest any LIC policy which can satisfy them ?
Sanjib-No LIC for that community if they start to think about Interest 🙂
Dear Basu
Any of the LIC plan is not good according to you as i know from your BLOG. Then tell the indian people wether the buy any insurance or run their life without INSURANCE
Pappu-Please let me know where I have written not to buy LIFE INSURANCE? I am not against LIFE INSURANCE, but against products which combines insurance+investments 🙂
I agree with you sir
Salman-Merely changing name and defending by the same name will not make a big group of defendent. There is something called IP Address to track who are behind and from where you people are commenting. You and Aakash seems to be one and same 🙂 Please avoid such tricks.
Insurance and investment will never go parrelal. They both ate different, dont campare it , imsurance is nothing but the income replacemwnt toolin india the mattter is most of the ppl are less insured, as comparwd to their HLV. Yess but they have some kind of premium capacity which they cant afford, but the true thng is tat ppl are underinsured .
Karan-I agree about your idea of underinsured. But it does not mean that you buy a product which combines INSURANCE+INVESTMENT.
Your discussion was started with LIC JEEVAN LAKHYA PLAN, Now I have a question to you sir, if I purchase Jeevan Lakshy with S.A of Rs. 10 lac with another riders available like New Term Insurance Rider Rs. 10 lac and Accidental and Total disability Rider Rs. 10 lac. Suppose if I die after 3 years paying full premiums . How much benefit my family will get. This is not for your any body can give the response
Gautam-It is Rs.10,00,000 and if due to accident death then Sum Assured+Accidental Rider Benefit.
I Agree sir
dear sir,
You told that insurance & investment are 2 different aspects. It is true. People here in our country tried other type of savings in non banking financial companies and lot of people not even get their principle amount which they paid . So the people are investing in lic even they receive 6 or 7 %. It is the trust on lic certainly they will get back their money. and they need safe investments for their earnings. any safe investment will not give much yield. Please tell us how many companies closed their doors cheating people with out giving their money.
Gopala-Why you felt that by saying not to combine insurance and investment, I am recommending to chit funds, NBFC FDs, money doubling schemes? There are many ways nowadays to earn more than LIC, and that too safely. For example PPF, EPF, Bank FDs and so on. Hence why risky products where your principle at stake??
Hi Basavaraj, is maturity amount of PPF, EPF and FDs taxable? I think Service Tax on PPF and EPF and TDS on FDs maturity is applicable. Please correct me.
Amit-PPF maturity is fully tax-free. EPF taxation depends on tenure and some other conditions. You may refer my earlier post “Taxation of Employee Provident Fund (EPF)“. FDs are not tax free. Interest accrued is taxable as per your tax slab.
I would just like to say one thing Mr.Basu, I am a CFP myself and no financial planner can degrade one product and talk about the pros about others, like your doing here. U r just trying to talk negative about LIC without having full knowledge about the same. A good financial planner would take into consideration all the aspects and give his client a mix of all the possible investments to maximise returns. It is very easy for you to say that there are many products which give more retuns than LIc , I agree but at the same they have their negetivities. So never ever degrade a product just because you did not benefit or had a bad experience on one instance. I hope all the readers would agree with me here. I can have a detailed arguement on all the financial instruments to LIC and we can see the difference. It is just based on point of view and especially individual needs. any product you sell first see whether if it suits your client and if he is in need for that, just don’t degrade a product for your selfish means
Aakash-It seems you are more of LIC agent than a CFP. Forget about business. Do you feel MIX of all investments must include LIC Products? what is the reason to stick to LIC?? I am not writing here because I not get any benefit or any bad experience. For your information, I am an LIC agent 🙂 Please put forth your DETAILED ARGUEMENT ON ALL THE FINANCIAL INSTRUMENTS OF LIC. Do you feel endowment or traditional plans are suitable to anyone? They are more dangerous than the earlier veriosns of ULIPs. Please share your views 🙂
Dear All including Writer of this Blog.
Lack of awareness in our india people are investing some chits and other funds and loosing the money, insted of doing that People are investing In LIC. so Some villages never seen the post man but LIC agents are providing service regarding insurance and investments, It is not a question of 6% or 10%, but who are dont know the post office or bank but they know LIC. LIC agent role is a one of the best proffession but some agents are misleading i agree. So please dont comment all lIC agents are fraud and cheaters. We are selling LIC policy, PPF, postal Savings, Suggesting sukanya scheme. Mutual funds, Term insurance everithing, so providing service door to door with free of cost.
So consider our service.
How many CFP are providing best advise they are suggesting some mutual funds and finacial produscts depends on client requirement where they are getting more brokerage, more up front and trial commissions. RAP points, Etc.
Why LIC returns are always poor compare to other investments?
Please answer me if ypou have any reason. LIC traditional policies investment will goes to central govt securities and Bonds and other debt investments so From there LIC will get 8% means they will deduct some charges and share the remaining moneyt as a bonus. So how can we expect double digit returns LIKe mutual FUNDs. So each investment have a different investment portfolio right.
LIC agents all are not fraud, there is some proffessionals in this industry to apply the valuse for this bussiness, Plese consider them and respect them.
Best regards
M SRINIVAS>
Certified Financial Advisor.
Mutual fund distributor
Mob: 9964752416
Bangalore.
Best insurance advisor award winner.
Srinivas-LIC agents selling LIC policy, PPF, postal Savings, Suggesting sukanya scheme. Mutual funds, Term insurance everithing, so providing service door to door with FREE OF COST??????
If you have questions about CFPs then why can’t one opt for Fee-Only Planners??? It is LICs problem where they invest and how much. Being an investor I have right to invest where it suites to my goal. Only because LIC invests in Govt and get return 8% mean I scarify my goals for the sake of LIC return?? What a logic to defend LIC 🙂
I never said all LIC agents are fraud but majority 🙂 I feel strange about your defense that one must look at company to invest. If it is more of social then invest and sacrifice goals.
Dear Basu ji,
Each product there is a positive and nagetive points,
I know and also you know why people are investing only in LIC, because of trust, Endowment policies have a strength to provide upto 6+% returns. But is there any insurance company to provide more then this return in traditional policies sector. Mutual funds How many funds are out performing and how many are under performing, Bank RD and FD rates are interest is better but post tax returns ?
LIC will provide 80C benefit as well as 10/10D . so client will get some more benefit under these sections,
Save tax on premium and save tax on returns, calculate the 20% tax bracket client investment in endowment policy for 25 yaesr term, concider 80C and 10/10D.
Better investment option, But i agree more investments in LIC plans only not good, asset allocation is required, MF, RD, FD, LIC also a part of LIC now a days,
Till today we are not shown any false statements to our clients,
Dealing with all asset class including MF also not charging single rupee.
I love this proffession and my clients are very happy with our advice and almost they compleated 45% of their goals.
Your reviews are helpfull to clients to analyse the product but highlight the possitive points as well as negetive. dont highlight only negetive points.
Best regards
Srinivas M
Financial planner
E mail: [email protected]
Srinivas-I agree that each product have it’s own positive or negative points. When it comes to investment TRUST matters more but at the same time how much I get and whether a product fulfills my requirement or not is also important. When you only claiming that these products gives you around 6% return for long term investment, then tell me from your own qualification or experience (I don’t know both of them), whether at any point of time is it worth to invest?
When the inflation itself hovering around 6% to 7% and your product giving you meager 6% return then are you in a positive real return or negative real return? Whether other insurance companies give this much return or not is not my headache. Because when I say INSURANCE then I look forward to cover my life risk alone, but not an investment.
When you said MF underperformance or over performance, do you comparing it’s peers or benchmark? Also what period you consider yourself to judge the performance of fund? Don’t use the tool as TAX SAVING…there is a wonderful product on this earth which gives more return than LIC products and also come up with pure tax benefit of what LIC provides. Why don’t you left PPF??
When you say “Till today we are not shown any false statements to our clients”, are you representing all agent fraternity??
I think you got answers to the LIC products POSITIVE POINTS 🙂
Dear Basu Sir,
No great thing in that ? The highest Sum assured in a death claim 2.24 crores was settled by LIC within 3 hours…..for this fiscal……..it is a record……………Good day Basu Sir !!!! Sell at least 100 LIC policies this March……..My request….No. of NOP/NOL has gone down in the last two years for the industry…. Good luck……
Joydeep-What is there to say it record? It is their duty which they did it with efficiency. Also the same LIC officials transferred my brother’s surrender amount to his friend’s account (my brother lost his policy bond and they requested someone to declare it as true. So he provided his friend’s name. They asked his friend’s income proof.That guy provided his salary slip, where account number mentioned. This is 2 Yrs back). They transferred the surrender amount to his friend’s account. Same officials… 🙂
Selling 100 LIC policies? I am not getting a single client. If you help me then I be very much happy 🙂
so was your brother benefited ?
Joydeep-BENEFIT from such service?? Only God can protect 🙂
don’t cling on to Term plans……. that’s the trick…….Get some leads……..
Joydeep-When I myself not ready to by any of LIC plans then how can I sell??
sir , please do not say you are LIC Agent , as any one who had questioned on your motive of being anti lic …you covered your self by saying your a LIC Agent, but when it come to sell the policy on trust of getting the claim amount guaranteed then u show your true color by saying u would not sell n god bless them…why can’t you be unbiased which you portray rather being a hypocrite.
Shrikant-I know the pulse of these agents 🙂 When I said like ‘when it come to sell the policy on trust of getting the claim amount guaranteed then u show your true color by saying u would not sell n god bless them”?? I am unbiased and if you come up with valid points to defend the reasons for investing in such product, then I always welcome for discussion 🙂 Can you please??
Dear Sandeep,
Good to see that you have learnt the new mantra- Insuring your life does not mean investing…..To become Life Insurance Advisers, any individual has to undergo the Pre Recruitment Test conducted by Insurance Institute of India or III in short. You will be given a book called IC 33. It is clearly mentioned in the book that Life Insurance is based on 2 tenets:
1. Living to long
2. Living too short.
The very definition of Life insurance is- ‘Life insurance is a contract between the Insurer and the Insured where the Insurer pledges a sum of money to the beneficiaries of the insured on the event of any exigencies during the contract period and also any moneys the insured may be eligible for if he survives the contract period……….
In section 80 d, you are eligible for a maximum deduction of Rs 25000( latest budget ) …the entire premium being Morbidity charges- Service tax….
In sec 80 c, however, in case of insurance policies it is ((Investible corpus + Mortality charges + Extra charges) – Sevice tax)…
When health plus was launched by LIC in 2009, all premium paid towards this policy did not qualify for deduction under section 80 D………Good day Sandeep and happy investing……..
dear basu,
as joy sir told the private insurers starts giving claims from bargaining sum assured. That’s how they are doing business. at least I am also a regular visitor of your blog. Please write about human life value. and also give some tips to calculate future inflation. how we should take this into account before savings
Gopala-Sure..I will write on these. Thanks for tip for writing.
Hi, I want to take insurance plans with an aim that my child’s future gets safe in any eventuality. Have considered Child Plans but confused. Pls recommend plans which I can take so that in case of any eventuality, premiums are waived off and he gets money after fixed intervals.
Dear basavaraj
I agree for what you say, it’s not suggested to invest all hard money to one single investment avenue.
To have a high return with high risk better to invest on shares and mutual
To have a return with hassle free, better to invest in banks and postal savings account
To have a risk coverage with return on which they have paid for covering the life, Life insurance product is suggested.
Chetan-Why one must COMBINE insurance with investment? When there are plenty of options to genrate of more than these typical insruance products, it is completely wrong to combine.
Sir i often see u always criticise each and every plan of LIC. I dont know why but u never spread knowledge about the better one than that of LIC. So this is a platform u made, to criticise the LIC only, and for nothing else. Where and how a investor should invest u never tell.
Regards
Rahul Kumar
Rahul-I never criticize the LIC’s few plans called TERM PLANS. LIC is an insurance company but not an investment company. That is the reason 🙂
rahul i agree with you. spreading awarness is one thing and speaking about negative points is another thing. from the day i visited this site i find only negative points. LIC has the highest claim settlement ratio and till now no FRAUD has happened here, i believe irrespective of what Mr basu says , PEOPLE TRUST AND WILL TRUST LIC”
Archana-I agree that LIC have highest claim settlement ratio and people trust. But no frauds? Can I give few examples where agents do daily?? At the same time can you view the claim settlement volume of LIC? It is too less. This means that number of claims settled by LIC are mainly endowment plans. So no great deal.
Well basu sir, as a financial major, the degree of corruption in LIC is pretty less….but not zero….. In FY 2012-13, LIC settled over 8 lakh death claims and repudiated 8000…ICICI settled 8000 and repudiated 500…..I am yet to memorize the figures of Death claims settled by Insurers in FY 13-14 tabled by IRDA………………………………………….
Yes in terms of amount per death claim settled LIC shows mere 1.17 lacs…… But LIC is also the country’s highest loan provider….
Joy-Loan provider is different matter. Here we are discussing how much claim LIC settles. Where LIC invests and gives loan is different ball game.
It was basically me who apprised you with the fact that amount per claim settles in LIC is just 1.17 lacs ….. in absolute volumes nobody is near to LIC……. LIC doled out survival benefits to the tune of 13000 crores this fiscal…….If all these figures look ‘dwarf’ to you …I can’t help things…………
Joydeep-I loved if number of claims lesser and sum assured at higher end. But that not happen. Because LIC survives on Endowment but not on Term Insurance.
Lesser no. of claims and Higher Sum Assured ..? LIC scored on both counts Basu Sir…….It’s only amount per policy settled that scored or scores a low….dear friend…… If Astrology was a sure shot , Ins Cos would not have existed….. Add to this LIC was the highest loan provider in the country and the amount of SBs or Money Backs doled out was close to 1300 crores…. …….Good night friend…….
Joydeep-LIC closed on both the score? I mean it settled higher sum assured policies? LIC has to give their accumulated money to someone to earn that. It is business cycle. No great thing in that.
Hi Basu,
I want to purchase pure term insurance policy. But confuse as many companies are today providing term plan with different options like Term policy with saving and retirement prospect.
I gone through many sites but not able to decide. So can you please suggest me which is best to select ?
My age is 35 and want 50 lacs to 1 cr term plan.
Regards,
Parthiv
Parthiv-Please refer my earlier post “Best online Term Insurance Plans in India for 2015-A comparative list“.
Parthiv, it is very easy to say……I will have a cover of 1 crore from a Term plan…but very difficult to purchase that risk… your earnings should justify the amount of cover you want to go for……..Hope basu Sir will soon write an article on- How much insurance is needed ? Thanks and Good day…….
Hi basavaraj,
This is chandrasekhar.I want to take insurance policy.which policy is good like good returns. And which is the best child plan?
Earlier i asked u which is the best term plan ?
Please reply….
Chandrashekhar-If you planned to buy term plan then why other insurance policies??
sir i really do not understand why people buy term plan? life can be divided in 3 stages 0-25 when we are dependent as a child, 25-60 when we earn and have family responsibility, 60-70, 70 and above…dont u need a cover after 65 , rather i suppose you need a cover after 65 also because avg life expectancy is now increased. just think when u are earning you have cover, when u stop earning you are not covered what is the logic??????? wont you need money in retirement, wont your loved ones need money after 65???? what is the logic????
Sorry Archana, I strongly have a counter point on ur comment…
Not sure what made you get negative vibes from here…
Main motto of this site is spreading knowledge about financial planning and Basu is recommending that all these LIC endowment plans should not be considered for financial planning…Are you happy with a returns of 6-7% after 20+yrs..?
Agree LIC has a very good claim settlement ratio, but his whole point is not to consider insurance for investment returns…!
Lot of other investment options (which gives better returns) are there, go n use it…but not a insurance endowment plan..!
Be insured, Be invested..but donot combine them…
– Sandeep
Sandeep,
I agree with you “Don’t combine insurance with investment”. I am following it strictly after understanding Basu articles.
Brahmananda-Thanks for applying it 🙂
Sandeep-Completely agree with your views.
Dear Every Body,
As an insurance salesman, I live on commissions. Well, months ago due to a software problem , my commission could not be generated. I have marketing expenses, I got a family to support, I even have to satisfy my tummy. Fortunately, I had a Survival benefit ( Money Back ) from a money back plan to the tune of Rs 60000 and I was able to meet my liabilities……….That’s a special journey called life…….
Joy-Only because you received your money-back policy at a time when you have no income means all must follow LIC Plans? One must also plan for emergency fund first.
If I asked for a penny from Mr x,y or zl , would have they given me ? Insurance means to compensate the LOSS…………..
Insurance plans also act as emergency funds, some times………
If Unit linked insurance plan is an option why not savings linked insurance plan……. ?
Joy-I am against BOTH.
I am not sir………. ………………………… …………….Life insurance is based on 2 tenets
1. Living too long
2. Living too short
Good day every body
Archana-First let me know which company offers an insurance to person who is NOT EARNING, whether the age is 25 Yrs of 65 Yrs?
Hey Basu,
One information required.
If someone (although I am one of them 🙂 ) already bought a endowment plan just to save some tax and later, reading this article, realized what exactly is the funda behind it, how can he get rid of it?
I am not sure if you shared this information in any of your article before but please do share this information.
Thanks
Sandeep
Sandeep-You have three options. 1) Continue, 2) Surrender immediately, 3) Paid Up. Choose the best option based on the values available for surrender and paid up.
Continue…..If the policy has qualified for section 45 of Insurance Act 1938…….
please send me the clarifications: premium payment terms of Jeevan Lakshya- whether it is 3years or 3years less than policy terms ie if policy term 13 years than premium payment will be 10 years or only 3years.
thanks
G.S.Hegde
Gshegde-It is 3 years less than policy term.
It’s a Real fun to watch the clash between Joy and Basu.. 🙂
Sandeep-Also it is never ending as and when LIC launches new plan 🙂 So enjoy Sandeep !!!
Dear Sandeep,
Let me share with all readers of this blog an interesting statistics. LIC claims that it is providing services to nearly 30 crore LIC policies… It is observed that LIC policy holders on an average have 2 insurance policies…. That makes total population of Indians insured with LIC to 15 crores… Pvt Ins Cos have either insured the already insured or let’s say Pvt Ins Co. have 2 crore individual insurance policies. Total insurance populace in a country of 50 crore insurable population is mere 17 crores…not even half of the country’s insurable population is insured……. According to a study by students of Delhi Univ on widows of Brindaban Bridhdhasram, 28 per cent are forced to flock there because their spouses or breadwinners did not have insurance…. I am deeply concerned about Insurance penetration in India….I think basu Sir, Srikkanth Reddy sir , Santanu sir all are equally concerned….. As CFPs they have a social duty to perform…….Alongside Health insurance has become a modern need… Life insurance is a higher social requirement of mankind…. In Iceland, right to Information Technology is a fundamental right……
Joydeep-Thanks for sharing data and yes, I deeply concerned. Because I personally know the importance of insurance from my past personal experience.
Basu Sir,
How life insurance could help you and why life insurance is necessary…..write articles on these….Narrate stories….Since life insurance is intangible you need to make them tangible and narration of stories related to need for life insurance is the best option. Subhas Ghai, film producer who purchased insurance of 18 crores in year 2004 thought for this dependents after being influenced by a drowning man while on a shoot…………… I think writing in favor of Term plans and inviting unnecessary criticism from blog readers is what you should avoid…. You should make ‘buying insurance’ famous but instead you are bringing a dis repute to LIC , LIC agents , LIC products and in many ways promoting Pvt Life Insurance Cos …………………… provided you are concerned about life insurance penetration in your COUNTRY and wanna do something ……about it………….. Thanks and good night ……………..Hope I have done no damage…or have hurt you in any way….Good night dost
Joydeep-I am not against LIC. But against the feature or business module where insurance companies sell investment products 🙂
Once more Basu Sir…
Life insurance is based on 2 tenets:
1. Living too long
2. Living too short………
Hence modus operandi is quite OK…… Good night……………
I bought a life policy from TataAiG paying a premium of Rs.1 lac. Death benefit is 7 lacs. I am supposed to pay for 10 years. If for any reason I fail to pay any further premium after the first one, will the policy lapse ?
Gourav-True.
Hi Basavaraj,
I like your articles on personal finance, But just want to know why do you review LIC plans when we all know their return and insurance capacity.
Thanks,
Shyam
Shyam-I know someone ask this specific question 🙂 Few CFPs or Bloggers feel that writing on LIC products is a taboo. I don’t feel so. Instead if you stay away from writing the true picture of such plans then you are doing injustice to society. At least by reading my articles by few, they come to know the real value of insurance and instead of such plans let them buy term insurance from LIC it self. That creates a greater satisfaction that I made someone to protect their life and family 🙂
Dear Shyam,
When we all really know and understand about what exactly is insurance, Basa will definitely stop writing reviews about life insurance products.
What do you say Basa?
I agree with you Basu. I came to know drawbacks of LIC policies Only because of basunivesh.com . Please go ahead and save us from useless products with your reviews.
Brahmananda-Pleasure 🙂
Sreekanth-Exactly 🙂 Let us hope that day soon will arrive !!!
Dear Basu Sir, The victims of Bhopal Gas tragedy have not been compensated after James Anderson led Insurance Co declared itself bankrupt a day after the tragedy struck Bhopal…..So Sum Insured or assured is a liability…….. The Central govt had to intervene in 2010 to give some compensation to the 1983 Bhopal Gas tragedy victims…..
Joydeep-Lot of things changed post Bhopal tragedy. Hope you and me know it well.
In that case Sir, why Life Insurance companies round the world are empowered to sell Pension plans….. ?
In countries like England, the concept of ULIPs was initiated……. The history of insurance suggests that the king of Babylonia had a dream that a giant elephant has devoured the entire paddy of that country and next day he asked his council of ministers …What’s the meaning of this dream ? To this a wise man replied- 8 months of prosperity taken away by 10 months of adversity….. Again , what that means…the king asked… ? SAVE SOMETHING FOR TOMORROW . IN CASE WE FINISH OFF WHATEVER WE HAVE GROWN THIS YEAR AND NEXT YEAR PROVES TO BE A DROUGHT, WE WILL STILL HAVE SOMETHING TO EAT…That’s how the concept of insurance grew…. Here the concepts of probability works…….Insurance literally means to make up for a loss…….Hope I managed to get my point across Reddy Sir…..
As regards Term plans, I would like to apprise one and all that Bima Kiran Plan no 111 and Bima Sandesh Plan no 96 were the first kind of Temporary Term Assurance plans launched in India.by LIC…. These plans were sold/purchased hugely and 90 per cent of First year premiums would be doled out by Agents on behalf of the party or Life Assured. After 5 years it was discovered that nearly 70 per cent of Temporary Term Assurance plans have been dis continued country wide…..Even LIC could recognize that huge lapsation actually does not let the FUND VALUE grow as because SUM ASSURED is a liability for any insurer. The concept of Solvency margin was introduced in 2009 that means….. DOUBLE HEADACHE….Firstly as an insurer you need to maintain YOUR OWN LIFE FUND and also YOU NEED TO MAINTAIN A FUND WITH THE REGULATOR…. Birla sun life has the best Solvency margin nearly 3.2 times of its liabilities…..LIC , in terms of per centage 150 % or 1.5 times of total liabilities. Now a days , LIC transfers 10 per cent of any Sum Insured above block of Rs 10 lacs to its REINSURERS……. Reinsurance companies charges have gone up by nearly 5 per cent and they grow every quarter. Therefore the investible corpus of premiums have gone down…….and rules introduced by the regulator …IRDA classification for compliance with Sec 80 c, sec 10 (10(D)), Section 194 DA have done more harm than good as regards the investible corpus……The Indian Average longevity has gone up…. Some say it is 72 years…some say it is 66 for males and 60 for females… reason why NPS was introduced……It is better to keep things simple……
Joy-Do we need to follow western in all? If the worst product ULIP sold easily in UK then we must also follow? Forget about your reinsurance, probability of claims and all. Simple thing being customer I expect from insurance company is coverage but not investment 🙂
No difference Basu Sir…..between you and me… I too have a Term Plan…… But I would like to assert on one point Sir…… Life Insurance is based on 2 aspects…
1. LIVING TOO LONG
2. LIVING TOO SHORT
Hence, some insurers have come up with Term plans with return of 110% of premiums should the Policy holder survive the term opted…. based on TENET NO. 2 ……….Sir…. Insurance means to compensate the LOSS…. Premium means- to add flavor to LIFE…. Good day Sir…. I have in fact, Temporary Term Plan, Pure Risk plans … I have diversified the risks….I have PPF, Fixed deposits too , NSCs and yes nearly 12 Money back policies… and a 5 lakh Jeevan Anand……Health plans to the tune of 15 lakhs but no Partial Disability Insurance Policy……I wanted to go for an insurance of 1 crore, but my earnings don’t justify that Risk…… In last 7 years I have not sold a single Term plan…..and that’s a slur on my career I feel. But I console myself saying that I am here to earn honestly…. Our division has for the first time sold more than 100 Amulya Jeevan I and nearly 150 Amulya Jeevan II policies this fiscal and the numbers could touch 200. The figures are impressive this year………We are trying hard to make people Insurance oriented……Let’s do the best…… But you know Sir, you can take Indians out of India but never India out of Indians……Stay insured Sir and never get me wrong………..I am at last, a good if not a great guy……. and you are a Genius……..
Joydeep-Thanks for your views. Hey…I am not genius and again don’t use the word SIR. I am not that much great 🙂
Sorry !!! in advance if I hurt any body
Mr.Joy, I think you have become a super AGENT.
So Please stop arguing on each and every comment. This all are his (Basu Sir’s) personal point of view. He does not write only on LIC, but on lot more topics. And if u have lot of love and affection about LIC Plans why don’t u start a blog of your own (Only For LIC Policies).
Basu sir you are doing wonderful job keep writing like this. And joy don’t worry he is not against all LIC Plans.
And for Archana I will say please think as you are taking a policy for your self only, don’t think about your commission only. It is very simple funda that if some one is earning, then only he required Life Insurance.
Life Insurance is Only Insure that if a breadwinner dies then his family members can survive, without any problem. when i will reach at the age of 65 my son will start earning. Then why should i worry about, insted of paying for non-sense LIC plans(return 5% to 7%) i will do FD’s For 8-9% OR Invest in PPF for +9%.
I will tell u my point of view. My age is 29, I bought (Forcefully by one of chipku LIC Agent who is also our relative) my first policy after i got married, SA 5 Lakhs For which i m paying around 25,000/= one is jeevan Saral and other is jeevan sathi (For Me and my wife).
when i become dad i started thinking for some more SA. but as i am accountant i cant pay more then 25,000/= each year as expenses are going higher and higher, when i come to know about term insurance, i collected information and took a policy for SA 30 Lakhs with where SA increase 10% after every 5 years (for 35 years) and premium just 5994/= which i can easily manage. Now when i travel in crowded mumbai locals i really don’t feel panic that if any thing wrong happened to me my son and my family can survive. Okay from then i requested to all my friend, co-workers even relatives, Yes each and every one whom i know that please go for Term Plans as it gives a higher sum assured in low premium. and please don’t ask a silly question that what if i will survive till policy term get over, because my policy cover ends when i will reach 63. I will waste only 2lakhs na, that will be okay for me, but what if i dies within next 5 years ?
till the age of 63 i will pay only 2 lakhs. So miss archana got the funda of TERM INSURANCE.
and joy i am not narrating any story ha, it is my real life.
So……As joy told how many indians have insurance…….bla bla bla.
Basu sir one question, Why don’t government don’t made Term insurance compulsory for each and every individual like they made rule for vehicles ?
Thank you, Thank you very much Basu Sir For All your suggestions.
Thanks A lot !
Ravi-They never made it mandatory. Because they need to run their scapegoat called LIC. They are hungry of money which LIC provides them whenever there is an issue with privatization and all. So the reason. If they made it mandatory then who buy LIC products?
Dear Basu Sir, First comments flowing in from me…. I think this policy is an exact sequel of Jeevan Ankur Policy launched 2 years ago.
Term policies are good… may be best….. But huge repudiation of early claims in Term Plans is a cause for worry. Yes… Sir… trust me….According to a survey done on 100 Prospective Term Insurance buyers….
1. 26 actually knew that they are investing in a right INSURANCE product
2. 10 were in a see-saw- whether to purchase Pure risk or Savings Linked Insurance plan
3. 54 of them were suffering from diseases and were on the brink of death………..and so Term plans were an obvious option……..Min Max theory==== Minimize your premium liability and maximize your risk cover…..
Yes, Today I will spill some beans much to the chagrin of many-
Whether or not insuring with LIC, HDFC, SBI life , ICICI, TATA AIA bothers the CFP fraternity but people in our area have an altogether different story to tell.
A man purchased a ULIP worth RS 1200000 in 2006. After paying 1 yearly premium he expired. Reliance Life Ins. settled the claim in a matter of 5 days…… The person had a policy with LIC also…mere 100000 insurance coverage… LIC settled the policy in 9 months , the claim was early and LIC investigated the claim properly….This infuriated the villagers and everybody in that village ( one of Asia’s richest ) began investing/insuring with Reliance Life…. I was also ridiculed by many villagers… I discreetly investigated the matter and found that the actual payment made by Reliance was Rs 500000 instead of Rs 1200000…. Yes, that’s a true story. The story began to unfold and people could understand how Reliance was trying to CAPTURE the market.
Dear Basu Sir, I feel your blog is slowly getting transformed into LIC HATE BLOG and you must change your stance…..you do speak the truth…….But there is always a Plan B for every mission….. I do love reading you… your blogs….but at times, you seem to get pushed off …. that’s scary…… You make anatomical examination of things…but deliver your own judgement and that’s where the readers get provoked…….Don’t get me wrong…..I wait for your posts eagerly…but at the end of the day, we don’t live in a Utopian society Sir….Good day Sir
Joydeep-I am never against LIC. But purely against mixing insurance with investment. So do keep in mind that I am not hating any LIC plans but bringing the true reality. If anyone interested in online or offline LIC term plans then I am very much push them to buy.
I like your blog as all the details about the news policies launched by LIC and people can decide whether to go for investment in such policies or not. But I never seen about the details of policies launched by private insurers so that the details of such policies can also know by the public. If so kindly send the path about your blog about private insurer’s policies.
Thanks
Anilkumar Nair
Anilkumar-I concentrate mainly on LIC not with any hidden agenda to spread against LIC. But considering it’s penetration in India.
Mr. Basu Should come up with his own insurer company….lol and then we will see how much profit he could make.
Mr. Basu, I respect you as a fellow person but you are not genius than the persons working in the insurance companies who make these plans. No offense brother but you should also respect people’s sentiments.
Mayank-Why should I? I see as a buyer but not a business tycoon 🙂 So when I need to buy something then every rupee I spend must have value in it. Why should I be scapegoat for survival of insurance business?
Plz do abreast me of latest develovepment in insurance policies and insurance sector.
Give me your email ID Sir…. or subscribe to Insurance Institute of India……. Basu Nivesh is also good if you want to know about Term plans………….
Oooohhhh ! All these LIC Agents are………………………………………….So joules.