Jeevan Aastha is the new insurance policy by LIC (Life Insurance Corporation of India) that is being much talked about offlate. I went through LIC’s website to understand the product better.
Before taking up the policy, there are a couple of things one should keep in mind. 
One should clearly understand the difference between Basic Sum Assured and Maturity Sum Assured. For this policy, Basic Sum Assured is 6 times the Maturity Sum Assured. Also, it may be noted that Basic Sum Assured is applicable for the first year of the policy. Apart from these two terms, there is also ‘Guaranteed Return‘ in case of death or policy maturity upon survival. LIC has put up benefit illustation details as well. Let us understand what this means in lay man terms with respect to what is good and what is not.
First the Good:
1. Tax benefit under Sec 80C on initial premium.
2. Maturity benefit is non taxable under Sec 10(10D)
3. On death during the first policy year.
4. Guaranteed Addition at two rates for 5 and 10 year terms.
5. Loyalty Addition – a variable component based on company performance.Keeping aside LIC’s service quality and track record in claim settlement, here comes the bad:
1. Guaranteed additions are not on the Basic sum but on the Maturity Sum assured.
2. Insurance benefit decreases drastically after first year.
3. This policy looks like more of an Investment scheme than an Insurance cover.Now lets see the returns of Jeevan Aastha in comparison with Fixed Deposits and PPF.
Plan (for an individual of 31 yrs) Investment
AmountReturn Amount Risk on 10th year 10th year on maturity LIC’s Jeevan Aastha 53,625 1,65,000 1,07,184 Fixed Deposit 53,625 1,05,814 1,15,338 Public Provident Fund (PPF) 53,625 1,01,525 1,10,155
Disclaimer: I am neither an insurance agent nor an investments advisor. All the info provided in this article is based on my understanding of the policy after going through LIC’s website.
{ 85 comments… read them below or add one }
Sir\Madam, I am lic holder. But i need for some info for lic money plus plan 180 please this is right pay 30,000 for 3 years and after 20 years you get 16 lakes please clarify .
Dear Mr Mohan,
First of all,this is a great blog for people to clear their doubts and put their minds to rest. Great job!
I have taken Jeevan Asta policy for 5 years with single premium of 300411.00.My maturity sum assured on the policy says 290000. Shouldn’t maturity sum assured say 300411+290000= 590411. Also, is this tax free?
Regards,
Sharad
hello,The new jeevan astha policy announced in Oman for a period of 2 months now in Feb—– how good is it?How does it compare with the earlier jeevan astha policy?
Hi Banu, I am not aware of the Jeevan Aastha being offered in Oman. This article is about the LIC plan in INDIA. Please go through the policy details and compare yourself.
Sir, I would like to know about money plus (lic). I investing 10000 rupees every year.
Is it good policy? kindly let me know all details
Thanks and regards
Naaz
Mohan
Excellent. Thanks for your effort.
Hello Mohan, Thank you for the reply. I too have one site for financial articles.
You are most welcome! All the best with that.
Hello Mohan, Thank you for the good article. Is the plan not available now? It shows that it is only for the 45 days. Please confirm me. Is there any new policy introduced by LIC?
Hi Krishna, you are most welcome. I am glad that you liked this post. Jeevan Aastha is not available any more. It was offered only for a limited period of 45 days during last financial year and this policy availability ended on March 31st of 2009.
Yes, there is a similar new policy by LIC called Jeevan Nischay. You can read my review on that plan here.
You can keep yourself updated with this blog by subscribing to email notification. If you haven’t subscribed yet, please feel free to do so by clicking here
Sir I have invested 24900 single premium for jeevan astha a now after 10 years want to close the policy.
Vishal, please check with your agent or the regional LIC office to know the returns. I don’t understand what you mean by close the policy after 10 years.. it is anyways going to mature by then!
I have invested 36,000 per year in LIC Jeevan .. , now after 4 years want to close the policy.
How much I will get back the amount
I am a Govt. employee. Recently I am taking this policy with 20 years plan and premium Rs. 1885/- for quarterly. How this is called money back and I much money back to me after 4 or 5 years. My LIC agent call me that after 5 years when money will come if I invest it to LIC for next years then no other money required. I mean to say actually 5 year due for receiving this policy. Please explain how much I get after 20 years(my plan is for 2 lacs).
Dear Mohan, you are doing a great job with your blog. Keep it up.
Mohan, don’t you think that going for a Term Insurance and investing the difference in either Mutual Funds or ULIP is much better idea than investing in these products like Jeevan Aastha…
Regards,
Srikanth
I am all game for pure insurance products like term insurance. People don’t buy insurance, they go for products that save them income tax. But the fact is, they are loosing more money on these kind of variants of insurance products. Keeping those in mind, i wrote this article to find out the good and bad of the product.
ref:
http://www.incometaxindia.gov.in/Acts/INCOME%20TAX%20Act/10.asp
The Following clause 10(D) of section 10 by the Finance Act, 2003, w.e.f. 1-4-2004:
(10D) any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than-
(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA; or
(b) any sim received under a Keyman insurance policy;or
(c) any sum received under an insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured:
——–
my comment:
Pls note the words, “any of the years during the term” and “exceeds twenty percent of the capital sum”. So, if this policy covers 5x in one years and drops to 1x next years, the 10(10D) exemption is not available. LIC agents and Managers have target to achieve and they would easily overlook few things to sell..
There is a good confusion abt sec 10(10D) implcation even CBDT is not clear on this issue. Alike Jeevan astha some companies like IDBI Forties wealthassurance offers a sum assured of only 1.10 times and relaince total investment plan and other single premium plan gives minimum sum assured of 1.25 times only. Its still not clear as for Single Oremium policy whut is the minimum sum assured requries for 10(10D) benefit. u can see CBDT(central board of Direct taxes) in this regard . I am still not clear as whut is the min SA required.
You mention Maturity benefit is non taxable under Sec 10(10D)for jeevan astha; but that is not mentioned anywhere in the LIC Jeevan astha website
i dont know english plz send in kannada language what uses this plan plz
you are cleared my doubts very well… Thanks….I have Jeevan Aastha policy worth Rs. 100000
I have Jeevan Aastha policy worth Rs. 30000/-
Can you please let me know how much i get after 10 years?
@Gopakumar
Dear Mr. Kumar,
I think you have clarified every thing one wants to know about TAX benefits in Jeevan Astha Plan. I am my self is an agent of LIC sitting at LIC’s Divisional Office-1 in new delhi,where Sr. Div. manager sits. I had a long discussion regarding Tax with my Branch Manager and he has confirmed to me that sec.80c and 10(10d) is applicable in this plan. Thanks Cheers…………..
@Sanjay
You can view the soft copy of that mail here.
@satyabhama
yes, this plan was closed on 21st Jan ’09.
@Mohan
can u give me scan copy of that letter
regards
sanjay
information to all friends…. jeevan aastha was closed for sale on 21st january.
I want to ask that if i invested 26198(25000) in this policy. How much tax deduction i get this year as this one time premium policy ? I am confused with term basic sum assured , maturity sum assured and capital sum assured ?
I get information from lic site that section under 80c get deduction of 20% of capital sum assured ?
Please give me information.
As per sec 10(10(d)), to get tax exemption the premium should not exceed 20% of capital sum assured. To understand what is meant by Sum assured one should look at the various insurance documents.One such document is the premium receipt wherein LIC clearly states the sum assured, which is 6 times(approx)of the single premium.The next thing is the policy document. As per the law each insurer has to affix stamps based on the sum assured of policy. Here again LIC instruction says that stamp is based on the basic sum assured.(first year sum assured). Therefore it can be concluded that the sum assured under this policy is the sum assured at the time of signing of contract.Accordingly jeevan aastha policies will get the benifit of sec 10(10(d)).It may be noted that there are many life insurance policies currently in the market with variable sum assured during the term.
not convinced about the tax free status as sec 10(D) says “any sum received under an insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured”.
if i invested 48975,then my coverage after 1st year is 1,10,000.So the premium payed ceases to be les then 20% of sum assured.So how can the returns be tax free?
@Raj
you are cleared my doubts very well… Thanks….
dear sir,
when a sr manager is not sure of the terms and conditions, how they are giving full details regarding a policy. even in the policy bond of jeevan aastha l i c is silent on this surrender value.
@vivek
I have a mail from Sr.Divisional Manager @ LIC stating that IT Rebate available under Sec. 80C & 10(10(d)) for this plan. Not sure about the terms and conditions you are referring to. I have no information on that at this point of time.
Dear Sir,
everybody (including LIC) is undfer impression that the returns from Jeevan Aastha is Tax Free. However, as Sec10(10D) the maturity proceeds of insurance policy is tax free only if the Life Insurance Cover is 5 times of Premium. However in Jeevan Aastha after first year insurance cover is equal to premium. Hence, the returns are taxable.
Wow you guys are the best…i invested today as my uncle is an LIC agent. But then i wasn’t sure whether i had made a wise decision…looking at ur post looks like i’m on the right track…thank you guys for clarifying.
You mention Maturity benefit is non taxable under Sec 10(10D)for jeevan astha; but that is not mentioned anywhere in the LIC Jeevan astha website.
Please clarify.
can we believe the statement given by satyabhama. can anybody clarify….mohan sir, please clarify this
To all friends. This is an attempt to show you the surrender value figures under jeevan aastha policy.
Ex- age-35 yrs basic sum-150000 and maturity sum-25000 and term 5 years. Year premium payable surrender value payable
2009 26265 Nill
2010 Nill 23639
2011 Nill 23639
2012 Nill 23639
2013 Nill 24953
2014 Nill 36250 ( + loyalty )
Note : except maturity after the close of the term, the surrender value at any point of time is less than the premium paid by the policy holder. Note that no loyalty is payable on surrender. No LIC agent or development officer will give you the above facts to the public. You can get this from any administrative officer in the office.
Maturity amount is totally tax free. There will be no TDS. LIC’S prevailing rate of loan interest is 9%, same will be prevailing for J Aastha, if not changed otherwise after one year.
@S.Goswami
No penalty for early surrender. But if you complete the term you will get loyalty addition/bonus. If you surrender the policy after 1yr, you will get 90% of your invested prm+G.Addition of one year. Policy is available at 5yr and 10yr term. Both will get tax benefit at entry and exit.
Dear all,
I have a confusion, can any body clearify this ?
As per my knowledge and according to the website of LIC maturity of jeevan astha can be taxable because at maturity the sum assured is decrease it is less then 5 time of premium which is primary requirement and important clause of Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D)
“All the benefits payable under a Life Insurance policy are tax free. However in cases the premium paid in excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The benefits from a key man Insurance policy and any sum received under Sec 80DD, Sub-section (3) are also taxable.
After reading this clause Do you think the maturity will be tax free ?
can any body clarify me about the rate of interest on the loan under jeevan aastha? one of my agent friend told that l i c has not sofar declared this rate of interest and expected that it will be more than 10.5% as l i c is already allowing 7 to 8% as guaranteed rate of return. and also request you to clarify that whether the maturity is exempted under sec 10 (d) or not?
Hi,
I have few queries regarding FD-
1. Does the maturity amount of FD attracts and TDS???
eg- If I invest RS 50000 in a FD for 5 yr term then considering 9% interest compounded yearly then I should get RS 76931.19 at the end of 5 yrs or some TDS will get deducted???
2.If I Close the FD before 5 yrs for (for the above eg) then will there be any penalty/deduction??? eg- If I close the FD after completion of 1 yr then how much I will get (for the above eg)??
3. does 5 yrs fd comes under 80C ie- will I get any tax rebate? If so what %??
dear mohan
thanks for a detailed report. this was an innovative idea 2 collect huge premium in only 45 days….. i felt the LIC mode seem shifted towards better benefits to its customers as it waived 80c and tax free returns. when we consider both tax aspects and product its BETTER OPTION towads those who want 2 invest in FD. as the post tax effect at ages 13 to 40 would be about 12% if the person is in 30% slab…….
please show in your comparision post tax effects as that will give morew better view
Basic Sum Assured not only applicable to 1st year but will be all along the term but from 2nd year onward @1/3 of BSA. Plainly speaking the amount of life-cover you choose in J.Aastha is your BSA(min 1.5 lac). Maturity Sum Assured will be 1/6 th of BSA(roughly equals the amount of premium you are paying). Guaranteed Addition and Loyalty Addition will be counted on MSA. You will get good premium rebate if BSA is above 3lac. BSA will increase in multiple of Rs.30000. Loan facility and policy mortgage facility available 2nd year onwards.
One more thing agent will get Re.-0.02/- as commission per Re-1/- you invest as premium in this policy, and also no bonus commission is there.
@Niyati Katial
Basic Sum Assured is the amount to which an individual will be insured for the first year of the policy. Where as Maturity Sum Assured is the amount that you would get without any benefits by the end of the policy term. Usually, Maturity Sum Assured would be almost the same as the premium of the policy.
I agree with you Suman. The FD interest is taxable. Doesn’t matter whether TDS is there or not. If you split the FD amount, then TDS will not be deducted. But, If you do not pay tax, it is considered as Tax evasion, and treated as such. So, take your decision accordingly..
Thanks,
Ashish
Can someone explain me what is the difference between BASIC SUM ASSURED & MATURITY SUM ASSURED?
@Rajeev
@ Rajeev: Can you help me with the Link of the article you have mentioned
This does not look like a promising instrument in my asset column. I would prefer PPF as it yields 8% compound interest. Jeevas Astha clearly mentions Loyalty Additions will be given only on the basis of company’s performance.
“PPF > Jeevan Aastha”
I believe there is an article in today’s times-of-india (bangalore edition) which compares this policy with NABARD and one other from Tamilnadu bonds.
@ Vijay, Ashish
I agree with the fact that ELSS tax-saving funds are capable of delivering better returns. However, the catchword here is ‘Guaranteed”. I have lost some of my risk appetite in last one year and would prefer safe investment like Jeevan Aastha(with assured return) over equity-linked ones (unpredictable returns). Also, my tax-saving requirements are fulfilled through instruments like PF/PPF etc, so I am not looking at tax-saving per se and rather tax-free returns upon maturity.
On TDS, it does not matter whether banks would deduct TDS or no, but on any FD interest income is taxable.
It is a common misconception that people think they have been insured 6 times the premium amount through out the term. This is not true. Insured amount is 6 times only for the first year. Be aware of this. Many LIC agents are mis-guiding people on these lines. If you are not aware, this is for your information! Insurance agents would pocket Re. 0.30 of the Re. 1 you would invest with LIC.
@GAUTAM RAY
Mohan has already indicated about this loyalty addition in his review. However, there is no clarity on how much LIC would return as Loyalty addition as it depends on the company performance.
dear Vijay , you have no idea about loyalty addition that is also there . have u any idea ? LIC gives very good loyalty addition . so first go through and then pass comment .
Do not get fooled by this scheme. My in laws work in Sate Bank of India and this is what they explained. Its better opening an FD in any bank for 5 years as long as the amount is less than 1,00,000/=. This is because bank will give you a return of 9% compound interest ( as against LIC’s 7% ). Also, the bank FD will not come under TDS as TDS applies to interests of Rs 10,000/= per annum and more ! Got it ?? LIC sucks…. go for bank FDs.
@Suman
you should invest into Tax saver mutual fund of Birla sun life tax relief’96 without any hesitation specially for 5 years period
@Shankar
dear if your age is less than 40 years than you must save your tax by investing into tax saving mutual funds which also gives the benefit of tax on maturity with tax free returns….jeevan asatha will provide you cover of rs. 1 lac only which is not very attractive at this return of 9% simple interest…..you can take an term insurance of rs. 1 lac by paying rs. 200 only…so why shoul compromise with returns……you should not buy peanuts in the price of almond…..
@Kunal
daer kunal you please check the returns of ELSS mutual fund schemes for last 10 years….Birla sun life tax relief’96, sbi magnum tax gain, icici prudential tax paln, princial personal tax saver…..you’ll find your answer…
@sally
yes its foolish to invest into jeevan astha plan because its not an insurance plan…you have lot of other much better investment options for tax saving u/s 80 C…..the best option is ELSS mutual funds…..
don’t you think it’s not the right time to invest into this policy….if anybody wants to save tax he/she must invest into ELSS Tax saving Mutual funds at this point of time because equtiy is available at very cheap rate..last year when the equtiy were on very high side LIC has promoted and sold millions of market plus (ULIP) policies…but at this time when market is very much attractive then LIC and other companies are selling and promoting fix return plans…..i’m sure ELSS mutual funds can give much more returns than LIC Jeevan Asatha plan. so one should invest into ELSS mutual funds of Birla Sun Life Tax Relief’96, ICICI Pru Tax Plan, sundaram BNP Paribas Tax Saver, SBI Magnum Tax saver Fund……these funds are having tremendous track record of returns….even after so much fall into market still 5 years market returns are into positive side…..
I am interested to invest in Jeevan Aastha purely from tax-free investment perspective. I fall under the 30% income tax bracket and for any bank FD with 5 year’s tenure (interest rate of 9.75% or so), the effective rate of return will be less than 7% (even with all annual or quarterly compoundings. With jeevan Aastha (5 years, @9% simple rate on Maturity Sum assured which is 1/6th of Sum assured), the effective return will be around 8.6%. Makes perfect sense , right ?
@Raj
What is the rate of interest of FD you have considered.
@Mohan
I have made up my mind to invest in LIC Jeevan Aastha. Though all the 3 instruments like FD, PPF and LIC are giving more or less the same returns, only in PPF and LIC we have the tax benefit after maturity. Another add on is Jeevan Aastha provides insurance cover. Hence I see all advantages with LIC’s investment policy.
@Vashishth
in ppf you can invest only 70000 per annum. In LIC this limit is very high. In LIC entire amount is available after maturity; in ppf I believe its not.
@sally
Like I had mentioned earlier, I am not an investment advisor. However, this is my personal opinion.
The interest rate on the PPF has been gradually lowered over the years (much to the dismay of millions of investors). It was initially 12% per annum. It dropped to 11%, then 9.5% and is now 8%. This rate of interest is fixed (and changed) by the government. The decline in the PPF’s interest rate was in keeping with the change in the economy. Interest rates have decreased over the years and it was only natural that the PPF followed suit.
Also, the limit that you can put your money into PPF is Rs. 1 lakh since that is the max cap under section 80C. When you think of Jeevan Aastha, it is not only promising the ‘Assured Returns’, but also an insurance component to the money you are going to invest. So, it is your take, you need to consider all these factors and make the best choice.
Sir,
please let me know if i can put 25000 in jeevan aastha. I alsi have ppf account and put 70k per year. i fall in tax bracket.
will it be foolish to invest in jeevan aastha as some comparison says PPF is better. but i cant invest more in ppf also. should i go for FD or jeevan aastha.
please respond
@Vashishth
How can any aspect of PPF fill for life insurance risk
The main article mentions about risk on 10 th Year FD . Can you tell me which FD provides Life cover?
Hi Vipul,
LIC’s Jeevan Aastha is a single premium policy – meaning you will have to pay premium upfront, only once. This is just liks an FD wherein you pay the principal amount only once.
At the end of the selected tenure (5 or 10 yrs) you will get Maturity Sum Assured + Guareented Additions + Loyalty Addition. For FD, you will get back Principal + Accured Interest at the end of the selected tenure.
One catch in Jeevan Aastha is Loyalty Addition, which is variable & can be a decider between this policy & FD. If the Loyalty Addition is equal to the amount mentioned in benefit illustration (on http://www.licindia.com) the returns from this policy turns out to be higher that post tax FD returns for the same tenure. If Loyalty Addition is any lesser, it depends on which tax bracket you fall in cos FD interest will be taxed depending on your tax bracket.
@Vipul Darji
I think you have NOT understood the Jeevan Aastha policy properly. It is a one time premium policy which ends on or before 21st Jan 2009. There is no option of investing on a yearly basis in this policy.
It seems that LIC only making Guaranteed Return illustation taking some assumption which are of variable in nature and which is always confusing for lay man to understand & if you require to clarify detail from LIC agent they often tried to mislead you by hiding some of the fact or misleading by making false claims
Pls Let me know? – If i invest Rs.30000 every year for 5yr in jeevan aastha does LIC Convey in there policy document (like FD’s) that after maturity i will get the principal amt+ interest in written ?
If I am already putting the maximum amount in PPF annually and am in a high tax bracket (taxes would be high on FD’s). Would it make sense to invest in this vehicle, specifically if I want to say invest 10Lakhs as premium. Or any other suggestions for a 100% safe investment.
While the review was good, comments added much more value bringing out hidden aspects… Good work..
@Raj
Thanks for putting up comparative amounts. I have updated the post with your inputs.
@Raj
Very good comparison. Thanks Raj.
@Raj
Good comparison. That makes sense.
@Sudheer S
If you are a 31 year old person and invest 53,625 in FD, PPF and Jeevan Asta for 10 years simultaneously today. After 10 years you will get 1,15,338 from FD, 1,10,155 from PPF and 1,07,184 from LIC. If risk occurs with 12 months, your family gets 53625 from FD, 53625 from PPF and 3,30,000 from LIC. If risk occurs at 10th year your family will get 1,05,814 from FD, 1,01,525 from PPF and 1,65,000 from LIC. Now you decide which suits your requirement best.
@Jagan Nair
@Chintan
Yes, your arguments look very valid!
@Satyabhama
Good catch. Certainly that is where you need to learn about differentiating between an insurance and a fixed deposit. Here you get Insurance while in FD you get the interest :)
Another bad point in jeevan aastha is its surrender value. I came to know from an officer in lic that the surrender value is jeevan aastha at any time is less than the premium paid. It is too bad. If in bank f d any person wants to terminate his deposit he will get his deposit amount plus a reduced interest rate, but in jeevan aastha he will receive only 90% of single premium paid and no interest what so ever. This is tooooooooooooo baaaaaaaaaad.
The hype of giving 100 rs bonus for every 1000 sum assured is only for the maturity sum assured.
Suppose you are taking a policy for 6 lacs, then maturity sum assured is 1 lac and yearly bonus of 10,000(10%) will be accrued to your account and NOT 60,000. Also on casualities, only 1/3rd of the basic sum assured + bonus is given and not the entire sum assured. So this is purely a investment product from LIC and brokers will definitely mislead the customers with 10% addition on basic sum assured. So dont get deceived.
An FD for 10 years in current rate scenario gives you 9% and thus 2.36 x (multiplier) . So a simple FD works better than this policy. To avoid TDS, you can always split your FD n deposit them in diff accounts. So rethink before you sign up for this policy.
@Vashishth
Yes, though PPF yields almost the same, insurance cover is what the add on you get with Jeevan Aastha.
@abilash
Since LIC is publishing the terms and conditions as well as the returns etc., I don’t think LIC is misleading. However, the onus is on the person who wishes to invest in LIC to completely understand the policy better and the set the record straight than feeling sorry at later time.
LIC seems to follow a deliberate policy of misleading innocent investors. They say 9.5% and 10 5 Guaranteed Returns every year. This is less than 7% Annual Compounding. In terms of actual returns jeevan Aastha is inferior to its competitors. Secondly the drastic reduction in the Sum Assured from Year 2 onwards is yet another instance of misleading the public. Thirdly every one knows LIC is on the downhill. The management hopes that somehow it will shore up its sinking position(IRDA Monthly reports) by peddling investment schemes as insurance schemes.
SHAME!
“Jeevan Aastha is not better than PPF as investment vehicle:”
One direct observation is that Jeevan Aastha gives “Simple” interest. If you put your money in PPF account that gives compounded interest of 8% p.a. (compounded annually), you will get the same benefit in 9 years (1 year earlier than Jeevan Aastha). PPF yields are also tax-free.
Only thing better is that there is a little insurance that PPF does not have. So, for investment purpose PPF is better, but for additional & little insurance Aastha looks better – Take your pick!!!
@Sudheer S
@Ved Prakash
@Sivaji Ganganathan
Good summarization! Thanks :)
@Chitra
Sure, glad that my article made you understand it better!
@Kunal
Again, individual perceptions and the need based requirements are the deciding factor. No doubt LIC is promising good returns through this plan.
@Amar
I have written a new post on IDBI’s Bondsurance plan. I have tried to compare and differentiate this plan with LIC’s Jeevan Aastha. Also included a sample calculations to understand them better. Go through that article. It might help you.
I came across IDBI life insurance’s policy of similar nature. They have made it very clear that it is an investement policy with an insurance cover of 5 times what you pay as premium. They are also offering similar assured money towards the policy maturity. I am confused on which one to go for, any suggestions?
Me & my colleagues have reviewed this policy in detail in past few days. We concluded tat its a good “guaranteed” investment option, and better than an FD. The latter is because there are no tax liabilities on the returns unlike an FD. Moreover the annualised returns are also coming out to be more than that of an FD (by adding the 80C benefit + returns + bonus component).
Flip side is that for those who are under-insured there are better policies than this with greater time horizons.
I would say it is timely for many of those who are planning for their year end tax submission. Most of the salaried employees need to submit their proof of investment within next two months. Keeping those people in mind and also to encash on the stiff economic conditions LIC has bought up this policy I belive.
What ever the reason may be, like mohan has mentioned I would take it as an investment stuff than as insurance ;)
for me it looks like a good option to save your hard earned money from tax man. why to invest in other markets like stocks, mutual funds etc., this is a very good option which provides both assured money back plus insurance coverage.
Hey Mohan, Thanks for the detailed review. My dad was talking about this policy few days ago. I never bothered to find out more. Now I have good amount of info to tell my dad. Thanks for putting both good and bad sides of this policy together.
This is what I conclude from your review. It is a nice policy if you want don’t know where to park your money safely for 5 or 10 years with assured at a simple interest of 7% pa. I agree with you in saying that it is more of a investment policy than an insurance cover.
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