Life Insurance Corporation of India announced a new insurance policy called ‘Jeevan Ankur’. This policy on the outlook seems to be aimed at attracting those parents belonging to the age group of 25 to 40 years. The official sales brochure of LIC on this product goes on mentioning that “LIC’s Jeevan Ankur is a conventional with profits plan, specially designed to meet the educational and other needs of your child”. Well, I shouldn’t miss this opportunity to congratulate LIC’s marketing team for coming up with such a catchy plan to attract the not so ‘financially literate‘ masses in India!
Let us get in to details of ‘Jeevan Ankur’. In this plan, life of the parent will be insured to cover the risk in favor of a named child (nominee). The policy term depends on the child’s age at maturity, which can be a max of 25 years provided the parent buys this policy as soon as the kid is born! Since the policy will be in the name of the parent, there won’t be any death benefit if the nominee (child) expires except that the policy can be continued in other kid’s name if there is one. On death of the life insured parent during the policy term, basic sum assured shall be payable to the nominee by LIC. Also, an income benefit equal to 10% of sum assured will be payable on each policy anniversary, from the policy anniversary coinciding with or next following the date of death, till the end of the policy term.
Another good thing about this policy is that there are riders to top up the insurance. The plan provides accident benefit rider and critical illness rider, of course these riders come with some special clauses which I am not going to mention here. Feel free to read up the sales brochure on official website of LIC for more details. Also, you may want to refer to the ‘benefit illustration‘ on their site for a reasonable understanding of how this plan works.
Since they have illustrated various scenarios so well with an example, I don’t want to repeat it all over here. Instead, I will do a better illustration to make you understand how pathetic the plan is in terms of benefits it offers when compared with that of ‘Term Insurance‘ (pure life cover) products by LIC.
|Jeevan Ankur||Anmol Jeevan||Amulya Jeevan|
|Sum Insured in INR||1,00,000||20,00,000||25,00,000|
|Age in Years||35||35||35|
|Policy Term in Years||25||25||25|
|Payment Term in Years||25||25||25|
|Premium in INR||3,587||11,068||9,925|
The numbers shown above are obtained from the official premium calculator provided on the LIC website. There will be advantages and disadvantages of each product when compared against one another. There wont be any benefit upon survival in case of term insurance policies. Similarly, you may not have any riders on some of the mentioned plans above. But the insurance is supposed to be for handing risk incase of unfortunate scenarios and not to be used as an instrument for investment.
I would still go with the thumb rule of not to combine investment with insurance, which is fundamentally wrong in my view. Separate out investment and insurance for reaping the best benefits out of every rupee you have earned. If you are not sure about whether your investments are in the right direction or not, read this article titled ‘Are you Investing in the Right way?‘