LIC has bull dozed it’s way in the month of March with the launch of a life insurance plan named LIC Jeevan Vriddhi. Needless to say, it will sell like hot cakes because of the fact that it is from LIC which still boasts of a massive army of agents.
With tax planning on everyone’s mind, people will buy this in hordes.
Another reason it will sell is because it has the catchphrase guaranteed attached with it. But does it make sense to even think of LIC Jeevan Vriddhi in your financial planning exercise ? Let’s quickly look at its review, features and then the calculations.
This is a single premium plan which offers a guaranteed benefit on maturity. Loyalty additions, in any, are also applicable.
The sum assured is at 5 times the premium chosen by you, so if you want to pay a premium of Rs 10,000, the sum assured is Rs 50,000/-.
To be more explicit, the death benefit will be the sum assured while the maturity benefit will be the guaranteed benefit along with loyalty additions, if any.
Minimum premium amount is Rs 30,000/- which means that the minimum sum assured will be 5 times of this – Rs 1,50,000/-.
Policy term is 10 years and age of person who can take this policy can be between 8 and 50.
Note that the guaranteed maturity benefit (sum assured) will depend on the single premium payable and the age at entry of the life to be assured.
The premium that you pay is eligible for Section 80C deductions. The maturity amount you receive from this plan is tax free as well.
While you can hop over to the LIC website and check on the other features of this policy, let’s cut to the returns.
Assuming the minimum premium of Rs 30,000/-, let us see what the guaranteed benefits are after 10 years.
GMV stands for Guaranteed Maturity Value.
|Age when taking policy||Premium of Rs 1000/-||GMV for every Rs 1000 premium||GMV for premium paid||Returns|
Note – Service tax has not been considered.
The returns are nothing to cheer about. This is what all the endowment polices will offer you.
Do the returns become any better with loyalty additions ? Yeah they should but not by a huge margin.
Look at the illustration of this policy at the LIC website. If you consider the loyalty additions there, then the returns are as follows :
|Age at entry||Premium||GMV||Loyalty||Returns without bonus||Returns with bonus|
Should you invest?
There are loads of other products out there which will return you more than this. Don’t buy it simply because you need to do tax planning at the last moment or because returns are guaranteed.
Just avoid. Even if your dad’s best friend wants to do your tax planning this year and even if you are caught in the “investment is insurance” rut – just avoid LIC Jeevan Vriddhi !