LIC’s new plan Jeevan Shagun-Review and Features

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• Hello Sir ,
  I am Male, Single aged 41, I am working in a Software Firm. I have parents who are sick and dependent on me financially. There are so many private Insurance Body who are approaching me like Max Life, ICICI Prudential etc. Are you in a Position to recommend some Policies which would suit me .

  Regards,
  Venkat

  • Venkat-Apart from Term Insurance, no insurance policies or products required.

• what is the procedure for double accidental benefit with the policy? Tell me

  • Sanjya-Procedure to buy?

• I want to know that is there any health insurance plan in which i have to pay upto rupees 300 annual.For dis amount of yearly installment i m just expecting a limited claim amount. i will be thankfull to u if u provide me the related information.
  thank u

  • Ahmadkhan-where you heard about this?

• Dear Rohit,

  Please tell me about any investment plan (one time investment plan) so that ill get return after 10 - 15 years.

  My Age is 41 years.

  Regards

  Mustafa

  • Mustafa-Do you get prescription from doctor by texting him? Same applies here too. So hard for me to say the exact solution.

• respected sir,
  i am a private organisation employee and i am getting 30,000 and i have no idea whn my is left me so for my better future i want to invest so that in my bad period i can utilize the invested money so suggest me which plan is good for me eg investment+health+death benefit is jeevan sagun is good for me...eagerly awaiting for ur reply

  • Sandeep-First create an emergency fund of at least around 6-12 months of your household expenses. Then buy online term insurance for about 15-20 times of your yearly income. Finally opt for health, critical and accidental insurance. Once all these are at place then we discuss about investment.

• Hi,
  I am 31 yrs old and unfortunately had minor heart attack in 2013, none of the companies are providing me with Term insurance because of this attack..is there a way out you can help me get.

  Regards,
  Rohit

  • Rohit-Have you checked with all companies or selected few?

    • I have checked with almost all companies, can you help if any company does provide on these grounds.

      • Rohit-It is hard for me to suggest as it depends on individual underwriter's decision, which neither I know nor you.

        • Ok, I have another query on investment, While it is know that LIC gives around 6% return...can you suggest any better plans apart from Ulips where returns are more....may be a investment around 10 Lakh.

        • Rohit-Suggesting a plan without knowing your full requirement is most dangerous than investing in LIC products :) So hard to guide you in one or two lines.

        • I Agree, but as you have expertise in market plans, what is best and safe way to invest which has higher return also...can u help in that and suggest a few that come to your mind.

        • Rohit-If your time horizon is around 10 years then no doubt equity mutual funds are best. If less than that means you need to invest part in safer products like Debt Funds and Equity Funds. But how much you need to invest to which asset class again depends on lot of things. Plain speaking is most dangerous.

• Can you description about this policy plan

  • Manish-It is already there in above post.

• thank you very much for update us about the features of latest LIC plan jeevan shagun...

  sir,
  i am a 22yrs old government employee earning around 30000/- pm and wish to purchase a long term insurance plan with a good return..
  will you please advice me that may i prefer LIC jeevan anand for a period of 30yrs for Rs. 5lacs..

  pls also explain features & the maturity + survival benifits for above mentioned data...

  I have searched LIC website but couldn't found much to understand...

  regards

  • Rakesh-Everything is written above. Please go through it fully. But whether you are looking for insurance or investment?

    • sir,
      basically i'm looking for investment which can give gud return....

      • Rakesh-Then stay away from such plans.

• Guys, I reviewed Jeevan Shagun with live examples. Hope this helps people trying to get info on this.

  Basavaraj Tonagatti, Thanks for your excellent articles. I have been a silent reader for a while and they are indeed very very good.

  Consider a person with 25 yrs age planning for Rs. 2,00,000 MSA, the premium will stand at Rs.1,02,513(After Service Tax)

  Now drawing comparison with FD, today's interest range for 10yrs(Max available) is around a average of 8.25%(Could be little higher or lower but still I considered after averaging few banks)

  Investment = Rs.1,02,513
  Interest Accursed = Rs.1,29,465
  ---------------------
  Total (Before Tax) = Rs.2,31,978
  ---------------------
  Tax(Min Slab 10%) = Rs.12,946.5

  ---------------------
  After Tax Returns = Rs.2,19,031.5
  ---------------------

  Now Consider, you reinvest this same amount in a FD for next 2 yrs, Current FD interest rate stand at 8.75% for 2 yrs (again averaged, "Could be little higher or lower but still I considered after averaging few banks")

  Investment = Rs.2,19,031.5
  Interest Acquired = Rs. 41,407.5
  ---------------------
  Total (Before Tax) = Rs.2,60,439
  ---------------------
  Tax(Min Slab 10%) = Rs.4,140.75

  ---------------------
  After Tax Returns = Rs.2,56,298.25
  ---------------------

  Final Returns after 12yrs in FD is Rs.2,56,298.25

  Now let us consider on Jeevan Shagun for example,

  After 12 yrs, MSA = Rs.2,00,000
  LA @ 300/1000MSA = Rs. 60,000

  ---------------------
  Total return = Rs.2,60,000
  ---------------------

  Now here comes the interesting point, the payout is not as one go and it comes in 3 installments, meaning in 10th, 11th and 12th year

  So in 10th Year we get Rs. 30,000
  Now put this in FD for 2 yrs, after tax returns will be around(10% tax considered) = Rs.35104.8*
  (Rs.30000 + Rs.5,672(Interest*) - Rs.567.2(Tax @ 10%) = Rs.35104.8)

  In 11th Year we get Rs.40,000
  Now put this in FD for 1 yrs, after tax returns will be around(10% tax considered) = Rs.43254.4*
  (Rs.40000 + Rs.3,616(Interest*) - Rs.361.6(Tax @ 10%) = Rs.43254.4)

  *Considered 8.75% as interest rate for both 1 yr and 2 yrs (again averaged, "Could be little higher or lower but still I considered after averaging few banks")

  In 12th Year we get Rs.1,30,000

  So by this calculating Jeevan Shagun return,

  10th Year return after FD = Rs. 35,104.8
  11th Year return after FD = Rs. 43,254.4
  12th Year return = Rs.1,30,000
  LA @ 300/1000MSA = Rs. 60,000

  ---------------------
  Total return = Rs.2,68,359.2
  ---------------------

  Jeevan Shagun return(Rs.2,68,359.2) - FD Return(Rs.2,56,298.25) = Rs.12,060.95

  We have an assumed gain of Rs.12,060.95 from FD returns
  We by default throughout this 12 yrs, get an Insurance coverage of more than Rs.10,00,000(10 X Premium).

  So a Term Anmol Jeevan II for Rs.10,00,000 for 12 yrs will cost Rs.26,040(Rs.2,170** X 12)

  **Premium for Term Anmol Jeevan II for Rs.10,00,000 obtained from LIC Premium calculator.

  So the assumed gain is Rs.12,060.95(Monetary gain) + Rs.26,040(Term Insurance gain) = Rs.38,100.95

  So Jeevan Shagun does beat the FD+Term Insurance route by a comfortable margin. Even if LA is below 300, we have the absolute gain of Term insurance premium.
  As also one more issue considered is, if age increases, premium increases. By this we will also have to consider that the Insurance coverage also increases which is useful at older age, practically speaking.

  Note : I am no LIC agent, but a normal IT employee trying to same my taxes at the most :P

  Cherio!

  • Anand-Thanks for your elaborate work :) But there are some pitfalls in your calculations. Whether they are against this plan or FD. But you forgotten few instances.
    1) Bank FD taxation you considered flat. But if one is at higher tax slab then he/she need to cough more tax on that.
    2) Term Insurance plan premium-You are not paying the whole amount at once. But you are paying it yearly. So time value of each installment need to be considered than flatly considering it for calculation (This is for Bank FD+Term Insurance option).
    3) It may either beat FD or not. It is not an issue. But waiting for so long like 12 years and earning 8% return is worth for any of your goals like cost of education, retirement or any of other goals. So where is the consideration of inflation?
    4) I am neither for this plan nor towards FDs. Because both fail to beat actual inflation.
    5) Also nowadays filling the Sec.80C option is nowadays easy. So I don't think one must buy this plan only looking at tax.
    6) Also while comparing this plan to FD why you opted for offline term plan? Where as one can easily buy online at cheaper rate even from LIC itself.

    • Thanks Raj for the points... I love to keep the discussion alive so everyone can benefit... :)

      1 - Considered flat 10% as that is the minimum and is for sure detected by banks as TDS... so as ones bracket increases the tax is more in FD which as an investor we are not willing to pay.... :(

      2- Yes it is true that the term plan premium is not one time, but i accounted it for how much we totally pay.... time value calculation can help us arrive at a better figure.

      3 & 4- 8% returns is less than inflation, but i am a very conservative investor who dosent wanna a risk it @ MF, leave alone for equity. So for ppl like me, I think this should fit in. If there are any other tools that give more than 8% for a conservative investor,do let me know... will be very happy to explore.

      5- Yes Tax filling is easy, but we will need to see for avenues to save them. Like PPF, etc... I think LIC is one that could falls under that category if utilized correctly.

      6- well I went in for a offline plan because, LIC's e-term plan doesn't cover Rs.10,00,000 as the min amount starts from Rs.25,00,000 for which the yearly premium will be around Rs.2,800. Again time value calculation should lead us to the near little less figure.

      Cherio!

      • Anand-
        1) Let our discussion be legally :) So better to consider 10% TDS by adding point that this income is taxable as one's tax slab.
        2) So you need consider lesser amount actually than rounding of to like what you did.
        3) How about PPF? When you said conservative and very much happy with 4% to 8% return, I am not questioning like why you are conservative :) But to be calculative in our financial life, do you feel the kind of return you are expecting will suffice to meet any of your goals? To be specific in meeting goals and along with that being conservative, you have two options. One is to invest more which can easily takes care of inflation itself. Second is to opt for an asset class which beats the inflation of a goal easily. If both are not acceptable then your goals will be at terrible risk.
        4) Do you still feel with current take home of an individual (even for small Govt employee), filling Sec.80C is tough and one must include LIC policies to fill it properly?
        6) I accept your logic of selecting offline. But when we are considering the values then why can't opt for online minimum offerings?
        Please reply with your logic and let us see where we both head at end :)

        • Ha ha... I am a very upright man and i take it very strict to pay my taxes and make sure all people working with me pay their taxes! :) So it is always legal. But I want to utilize every possible way legally to save taxes which i think shuldnt be a problem.. :)

          I am a active PPF investor with SI to invest every month.

          I would Suggest LIC as a instrument for Insurance product as 1st and tax saver as 2nd. but when both can give some kind of return @ the end, It is ideal that I will be tempted to turn towards it. Its like a package deal, where i am not worried about the nitty gritty's of the stuff and pay LIC to take care of it.

          Well you are completely correct when you say that the returns from your investment do not meet inflation the capital itself will become irrelevent on the longer end, but I still see Equity and stuff as a high risk profile.

          Since we have a enhanced Tax bracket of 1.5 Lakhs, and I dont hve a housing loan for myself, I see this investment as a longterm stable returns provider and PPF as a long term cash back up. other tax saving instruments also return with the same 8-9% returns[Except ofcourse ELSS], so it is ok to go with anything. I am prefering this because it satisfies my risk coverage appetite of Rs.10,00,000.

          Ur thoughts...? :)

        • Anand-But being silent on 10% TDS when you are at 30% tax bracket is not legal :) When you say insurance consideration your mind when referring to LIC then why can't pure insurance with LIC itself? If you do so (buying full cover of life insurance) then you will sleep calmly. Do you feel 6% return will tempt you that much? Then how about NSC or PPF which provides more than these products?? Also it is no rocket science to buy term insurance and invest rest in PPF or some other tax saving instruments. When you say equity as risky, may I know which assumptions or practical experiences prompted you to arrive at this decision? May I know how you arrived at assumption of Rs.10,00,000 insurance cover will suffice your life risk need?

        • Well I haven’t got a package yet that will put me in 30% bracket yet!!(May be i should blame my manager for it :P).... But my point it whoever it may be whatever their tax is they must pay for sure without any fraud in it. Do all ur investments in all legal ways is my view point...:)

          Well I trust LIC as the best insurance provider in India because of its settlement ratio, which is a impeccable track record. I know a private XXX insurance player who tried to strike a deal with a widow to take Rs.10,00,000 less in Rs.30,00,000 policy showing complex terms to a grief stricken widow. This was even after the man had paid all his premiums correctly and the policy document showing clear cut view. After a couple of us looked into it and threatened to go to IRDA, the XXX insurance company paid the promised sum.

          So coming to the point about why not term insurance. The best example is Maruti ad which ask "Kithna dethi hai???". We Indians see value in every penny but want to make sure the capital is itself not lost. So when I prefer this plan, I see a return of 7-8% as per the calculation above (may or maynot change), but I have a guarantee that my MSA will come. Now why do I take the loss of .5 - 2% which I can get in PPF or NSC is I can consider it as the premium towards my insurance, which I cannot get in that instruments. Also this is Just one part of my Tax saving Investment, and I still have PPF running in the background. So I am balancing out.

          On the equity part, I should rather say I have been rather unlucky or had back experiences. I had lost money in equity/MFs and also ULIPs(But In my view ULIPs as a product itself is deceiving and lets the company take most of ur profits)

          My calculation of Rs.10,00,000 insurance is because of I am umarried bachelor in mid 20s with no financial dependents(My dad and mom have good pension and adequate medical coverage/Savings/Insurance). So Now I don’t see my necessity to take a Rs.50,00,000 insurance plan. As and when my dependency increases I always can get into any of the other products with LIC based on needs.

          So it again leads out discussion to the fundamentals "Higher the risk the possibility of higer the return." So It depents on the Individuals midset and capacity... :)

          Thoghts???

          Cherio!

        • Anand-Do you feel claim settlement ratio really gives you clear picture of insurance companies claim settlement process? Do you in LIC's claim settlement how many claims are less than Rs.2,00,000 or Rs.5,00,000? The ratio itself have lot of flaws. So depending on this criteria is not fair.
          What happened to that widow applies to LIC also when agents blindly sold few ULIPs stating that investors money doubles within 5 years. You visit any nearest branch and ask for horrible experiences of claims settled under ULIPs after so much of quarrel with investors, then you will come to know that LIC is no different.
          Do you ask the same question of "kitana deti hai?" when you buy vehicle insurance or health insurance?? Please understand the importance of INSURANCE. Only because of "kitana deti hai?" such low yielding products exists in insurance industry and insurance companies forget what their sole motive is.
          Balancing your investment within same asset class??? Please understand the basics of investment. Read...read...read the basics then decide.
          Can you elaborate more about the how you lost in equity/MF? Because today itself I met a senior investor who bought Herohonda at it's IPO and sold it when Hero and Honda parted their business. Lucky guy right? We hardly understand how equity works but we judge it is worst and risky. For your information this senior investor is still active in equity market and surviving on dividend he earns :)
          Well currently your need may be that much, but after few years if you try to buy then do you feel the same premium applies to that time also? Buying insurance at younger is again saving than buying at later stage of life.
          I totally agree that higher risk leads to higher return. But problem is definition of higher risk... :)

• Sir
  I want to buy LIC policy which policy is better?

  • Savita-What is your goal? Whether to cover insurance or for better return?