Review of Jeevan Tarang Policy from LIC

We will discuss about LIC’s Jeevan Tarang Policy today , One of the readers asked me my review about Jeevan Tarang in “Ask a Question” Section . I thought it would be a good idea to discuss it with every one here . So lets see Whats the policy and lets evaluate and answer the question “Is Jeevan Tarang worth consideration or Not” ? Also see How can we beat this Policy by huge margin .

Jeevan Tarang Policy Highlights

  • Jeevan Tarang is a Whole Life Plan from LIC , Whole life plan means that you are insured for whole life (max age 100) The plan offers three Accumulation periods – 10, 15 and 20 years. A proposer may choose any of them. This is the Tenure by when your Policy Matures.
  • Whenever you die , you will ge the Sum assured and then the Policy Expires . This policy will expire if you are at age 100 .
  • If you Die before the Maturity , you will get the Sum Assured + All the Bonus Accumulated till date .
  • The yearly Premimum will depends on two things , your Tenure and your Age . It can range from 11% (Policy for 10 yrs) , 7-8% (Policy for 15 yrs) or 5-5.5% (policy for 20 yrs) .
    For exact numbers see here. The percentages are with respect to your Sum Assured , 5.5% premium means 5.5% of your Sum assured . so Rs 10,00,000 of Sum assured means 55,000 of Premium each Year .
  • Incase you surviuve till your Policy Tenure , then at the end of your Tenure , you will get Bonus accumulated (not the Sum assured) and an annuity of exact 5.5% each year after the Policy Matures . One will get 5.5% of the Sum Assured each year till his death or upto age 100 whichever is earliar .
  • If you can not pay the Premiums and want to stop the policy (only after 3 yrs) , you have two choices , either make it a Paidup policy or take back the Surrender Value . This is explained in detail later , so move on .
  • These are the main basic and approximate points of the Policy , for exact detials see the policy page at LIC website .

Let us now see an example with different Scenario .This will help you understand it better. Read Important of Life Insurance
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Now let take Scenario’s

Ajay’s age is 30 and he takes Jeevan Tarang Policy for a tenure for 15 yrs with Sum Assured of Rs 10,00,000 (10 Lacs) . His Yearly Premiums will be 71.40 for every 1000 sum assured , which is 7.14% . Which comes to 71,400 per year .

If Ajay dies before 15 yrs

In this case he will get Sum Assured + Bonus Accumulated till date. The Bonus amount is not fixed and we can not tell how much it will be now , But on LIC webpage its mentioned in range of Rs 20-88 . Lets take a good figure of Rs 30 . In that case Per year it would be 30,000 more . So If he dies in 8th year , it would be 10 lacs (Sum Assured) + 2.4 lacs (bonus for 8 yrs) = 12.4 Lacs and the policy Expires .

If Ajay survives the Policy and does not die at all

In this case , Ajay will pay his premium upto 15 yrs and then in 15th yr , he will get back the Bonus accumulated (not sum assured) , so may be it would be 4.5-5 lacs assuming Rs 30 as Bonus for every 1000 SA . Also he will get 55,000 per year(remeber 5.5% of Sum Assured) as annuity till he dies or upto age 100 . He will also get Loyality additions , this will again be a very small amount just like Bonus , but this is not assured at all . Read this for same concept : Term Insurance with Return of Premium

If Ajay survives the Policy and Dies Later .

Its almost the same case as above , in this , Ajay will get Bonus at the end of 15 yrs and then He will start recieving 55,000 ever year . And suppose he dies before age 100 , he will receive the Sum Assured of Rs 10 lacs and thats it .. The game is over and then LIC doesnt recognise him there after .

Ajay is not able to pay premiums because of some problem and wants to stop .

This is possible only after 3 yrs of taking the Policy , If he wants to stop it before 3 yrs , then sorry buddy , just forget your Money and go home cry . If its after 3 yrs , then He has two choices

  • Make the Policy Paid up : In this case , you stop the Premium payments and you will get your Premiums and Bonus Accumulated will date at the end of the Maturity . You Sum assured will also reduce in Proportion to Premiums Paid, so if you stop the policy in 6th year , your Sum assured will reduce from 10 lacs to 4 lacs (40%) , as you have paid the premium only for 40% of the tenure (15 yrs) , thats 6 yrs .
  • Take your Money Back : After 3 yrs of completion , the Policy acquires a Surrender value , generally its the Net Present Value of money in todays term what you are going to get at the end . See this post on Net Asset Value . So if you are going to get 5 lacs at the end of 15 yrs and todays worth of that money is 2 lacs , you will get 2 lacs today .

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What is the Return of Jeevan Tarang Policy overall ?

Even if you receive all the annuity upto your age of 100 , the CAGR return for this policy using IRR Analysis comes to mere 4.72% . I have taken the above example and assumed 5 lacs of Bonus and no loyality additions , even if we consider 7-8 lacs of Bonus and Some loyality additions, the CAGR return Does not cross 6% CAGR .

Why this Policy excites people and general people get fooled ?

These kind of Endowment policies make sure that you concentrate too much on numbers and it traps your mindset in the present moment , One who is able to forsee beyond “now” can understand the real value of these Policies .
We concentrate on numbers, If we get something for a long time and we pay for less time , it appeals to us , and hence this policy takes care of that very beautifully , You pay for 10 , 15 or 20 yrs and you get back till you are Age 100 , Sounds great !! . Psychologically our mind is programmed by nature to think about the best case for ourself , but how many of us will survive upto 100 yrs to get annuity back, The average person thinks emotionally , Insurance Companies work on Data ,Statistics , probability Theory and complex calculations , which tell them that average person will die at 60-70 , and only 1-2 will survive till 100 years of their age .

Most of the people see Numbers and Present , The policy will demonstrate how much You will get at the end of the Maturity but it never tells you how much will it be worth then and how much will it help you in your Financial goals . We never think that Rs 100 today can buy much more than Rs 100 after 15 or 30 yrs . We know this somewhere inside us , but out mind just doesnt feel everytime the same way , thats the reason you need to calculate things by hand , on paper or computer and do some small analysis like I did on this article . Then you get the clarity

Trust and Blind Faith , We trust companies because they have been in existence from long time and our parents were made to beleive that these are the best friends in our life , they will protect our Future . Love and “Taking Endowment Policies” in India has similiarity . I grew up hearing Love is Blind and experienced it too , and I feel that its same with Taking Endowment Polices . People just take it blindly , some new Policy comes up and bang !! , it has to be great , no matter what , because it comes from the GOD company !! . No one will concentrate on 4 important features of his portfolio and how that policy fits in, Look at GFactor of a product to find if it suits you .

What are the Limitations of the Policy

  • Why age 100 ? How many people are going to live upto age 100 , why putting that number at 100 , why not increase it to 500 , even though life expectency is just 60-70 . Not more than 1-2 in 100 live upto 100 .
  • In case of Ajay , if his monthly expeses is 30,000 (considering married ,even though I doubt he will ever get any one) , after the accumulation period of 15 yrs , he will start recieving yearly pension of 55,000 per year , read it again , 55,000 per year , but now after 15 yrs , even with 6% of inflation his monthly expenses has gone upto 72,000 . And his policy pays him 55,000 which cannot even take care of his 1 month of expenses . Now i can see him pulling all his hairs .
  • If he is dead at age 70 , His family would get back the Sum assured of 10 lacs and at that time , it can only pay for his family’s 3-4 months of expenses and his Funeral cost , thats it .. Aha .. atleast something , so one this is confirmed , There will be no financial burden , pun intended .

Have a question in Mind , Ask a Question from Jagoinvestor Here .

Can we do better ?

This is the question which we should always ask in every situation of our life , not just Financial planning . Lets take care of Ajay’s situation in Jagoinvestor’s way and plan him something better than Jeevan Tarang .

With Rs 71,600 per year to pay for 15 yrs , lets see what can we do .

First thing First , Lets cover his Family first from the Mishappenings of life an secure his dependents , Lets take a Term Insurance of 50 lacs for maximum tenure of 30 yrs , Premium would be close to 13k or 14k approx , lets assume 14k . So out of 71,600 , 14k is gone and we are left with 57,600 .

Now lets put 21,600 each year in PPF for 15 yrs . We are now left with 36,000 to invest , we will start Rs 3,000 SIP per month (Rs 1000 each in 3 different Equity funds) for 15 yrs . See list of some good Equity Mutual funds for 2009 .

PPF will accumulate to 6.3 lacs in 15 yrs and Mutual funds will accumulate to 15 lacs in 15 yrs assuming a pessimistic return of just 12% (Historical return has been more than 17% and last 5 yrs return are more than 25%) . Lets assume just 12% and not 18-20% even though its possible because our aim is to do better than Jeevan Tarang and achieve our goals and not compete with some one . So total amount will be around 21.3 lacs at the end of 15 yrs . Now lets visit and see our Scenario’s again and hows does it compare now .

If Ajay dies before 15 yrs : Gets 50 lacs from Term Insurance and also the money from PPF and mutual funds , which will be more than 50 lacs :) . We beat Jeevan Tarang by huge margin in this case .

If Ajay survives and Does not Die at all : In this case he already has 21.3 lacs accumulated and now he can use this amount to buy an Annuity which will pay him more than 1.6 lacs Per year , much more than what he was getting in LIC policy . As a topppings , he also has a 50 lac cover for another 15 years . We can generate 3 times more annuity than Jeevan Astha here , again beat by huge margin .

If Ajay survives the Policy and Dies Later : In this case if he dies in next 15 yrs , his family would get 50 lacs from Insurance (10 lacs in LIC) , apart from this he will have his 21.3 lacs growing every year . If he dies after 15 more year , There will be no Insurance money , but his money would have grown a lot by now .. If he dies after 15 yrs (total 30 yrs from starting) , his money would have grown to 1.17 crores assuming 12% return per year (no annuity every year) . and if he dies after 25 years (total 40 yrs from starting , means at age 70) , his money would have grown to 6 crores . Now incase you dont want to faint , dont ask me how much would have he had if he lived till age 100 and left his money to grow , Its 13 crores :) . I have not assumed any annual annuity here , we can do that but the result would remain almost same . We beat Jeevan Tarang by hugest margin in this case . See how we can create Wealth using Equity in Long term .

Ajay is not able to pay premiums because of some problem and wants to stop .

His money will still be in PPF and Mutual funds and keep growing , there is no liquiditity issue with Mutual funds , he can withdraw from mutual funds anytime ,even from PPF he can withdraw partially . If he has limited money , he can atleast pay his Insurance premiums and still get covered for 50 lacs , no big deal there . In every aspect it beats Jeevan Tarang

Note : For doing better than Jeevan tarang we have invested in Mutual funds which are risky instruments , but anyways we are not in great position with Jeevan Tarang .. so taking risk is worth it . If one is too concerned about risk , then even plain PPF will be better .

Conclusion : Think Logical , Think mathematical , Think smartly and atlast THINK !! .

Note : The figures have not considered the rebate provided by LIC , and hence the actual figures can deviate a bit from the actuall numbers used here , but it wont be significant and the review still holds . ahh .. tired now !!

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447 CommentsAdd Comment

  1. dinn

    excellent analysis, i always think this way though was not doing such precise analysis. i hope someday insurance cos themselves come with such product(same co. owns insurance, MF and Govt bond trading), thereby increasing returns for consumers and could charge little extra exps for themsleves

    • I fear that our excellent analyst of jagoinvestor needs to come out his surrogate marketing, roughly speaking, selling something and giving something else otherwise he would not have had jago-investor agents network. Dear viewers u shold apply ur mind before going to this websites advice. beacuse he is not here for charity he is obliquely and solely for business. The mis-leading analysis of LIC’s Jeevan Tarang policy suggests how this team is skewed to sell private compaies policies. Thanks to their right caculartion that Jeevan tarang gives 4.72% interest rate. tell me any bank, not even RBI, SBI, Bank of America, america’s federal bank or any bank of the world wpho is guranteed 4.72% return and that too for next 100 years. I think everybody bellies that we are going to be dveloped country in next 20-30 years. all developed countries show lower yeild in G-Securities from where all insurance companies derive their bonus and distribute to policyholder. If u look at yeild of G-Secs of developed countries as on date, it is meagre half percent or even negetive i japan and china. Beacuse of this, Insurance companies promote term assurance policies i developed countries where cos does not give maturity, they provide only riskcover. Kindly consider this scenerio that if India becomes developed nation India will also follow league of negetive returns on G-Sec on account of developed countries becomes more comsuming and less producing due to high per capital income hence returns on G -Sec arte bound to fall negetive due to huge GDP deficit to agar LIC ki jeevan tarang agar 4.72% gauranteed returns that too for next 100 years and along with risk cover at the death of policy holder to kya bura kaiya bhai.

        • Ramesh

          Hi,
          It was really great to read the article on jeevan tarang plan. A real eye opening.. Thanks alot. I need guidance on how should i go abt. i want to plan for 10years where i can get good return i can invest Rs.15,000 per year. I have been a real bad planner and have no plans and i know its too late i am already 47yrs old. Thanks alot

        • Rajni Kant

          Dear Manish…….

          I would like to quote some facts related to JEEVAN TARANG……

          First of all I am agree with the fact that every product is not suitable for every one…… Just as JEEVAN TARANG……as if u give this product to a new born baby or specially girl child of age less than 1 yr…..thn its a very good product…… its not suitable for people age more than 25 or 30…….. let us c how??????

          Praposer …. Parents or Grand Parents of any age
          LA Age 0 yr
          SA 1000000
          Term 20

          As per LIC website ( http://www.licindia.in/bonus_info.htm )
          bonus for JEEVEN TARANG for a term of 20yrs avg is Rs. 48.

          than at the age of 45yrs of proposer and at the age of 21 yrs girl.

          at a premium of Rs. 48,220/-
          Term 20 Years

          Then Bonus amount will be… 1000 * 48 * 20 = Rs. 9,60,000/-

          which is approx u pay till the term……. which is Rs. 9,64,400/-

          which means that you save ur 960000 in ur piggy bank at ur home and get a insurance cover of rs. 1000000 at a cost of 4400.

          and after that that girl will earn Rs. 55,000/- per year till 100yrs.

          So, my conclusion for JEEVAN TARANG is suitable for a baby girl as a financial gift able product from her parents or grand parents. (as it is available in single premium also.)

          • Rajni Kant

            Totally disagree !

            You have not shown why its better than a even PPF + term , You can get better result with Term insurance + PPF . You have not even insured the person well . Why 10 lacs, is it enough for the child if something happens to the parent ? It should be around 50 lacs suppose for a person around 30 yrs, you can get the same insurance at 10k per annum these days and invest rest 38k per year even in PPF , that would give 20 lacs+ to you . thats the safe way of getting 20 lacs.

            But do you want to invest in pure debt like PPF or Endowment for next 21 yrs in INDIA where you can see amazing growth ? Better invest 38k per year in balanced funds which even at 10% would give you 26lacs +

            What do you feel about this case ? What does this PPF + Term does not have which endowment would provide ?

            Manish

            • Rajni Kant

              Dear Manish…

              I am totally agree with ur point….i m saying tht Jeevan Tarang is nt a investment pdt… it is a PIGGY BANK saving….for ur baby girl earning after marriage with PWB rider benefit…..its only a life time annuity plan against ur piggy bank saving…one can go for various option also. And one more thing….whts ur idea about risk diversification??? i mean if a person is in need of 50 lakh of risk cover & he hv a small baby grl thn is it better to take 10L J Tarang + 40 L Term Insurance?

              • RajniKant

                Piggybank should be used only for initial 1-2 yrs for a child , not 21 yrs, PiGGY bank does not have any growth , we use piggy bank only for short term requirement of a child and only to teach him about how to save , when it comes to actual savings in life , it should be debt products for short termr , but for long term like 21 yrs , anything other than equity is not suggested .

                For insurance we can diversify the risk of cover but not in term + endowment , it should be term + term only . it can be from other insurers or any other product like ULIP is also fine . but pure endowment plans are a strict NO NO , This also depends on a person style of investing and belief and hence I am against those plans . I see no situation where JEEVAN TARANG will compare to other combination of products .

                Manish

                • Kamal

                  Dear Mr.Manish

                  You replied to Mr.Rajni Kant that the investment in balanced funds will yield a return of 10%. In such case a minimum ten years investment inJeevan saral LIC policy will also get a minimum return of 10%.so, is it a right option to Invest in Jeevan saral where you get both insured and fixed return of 10%.

                  Further, when we take a Term polciy with the insurance company what is the surety getting paid the claims whereas the claim payment of LIC is good

                  • Kamal

                    I will give you the reasoning of why I said balanced funds would get around 10% in long run , if you see last 15 yrs history of mutual funds , balanced funds have give excess of 15-20% return , So in future this can continue , and one can get even 15% return just from balanced funds .

                    So when I say 10% from balanced funds, I am being very conservative . 10% will be worst case with all probability .

                    Why do you think you will get 10% return on CAGR bases from jeevan saral ? Do you have any calculations or reasoning to show that jeevan saral provides 10% return on assurity basis .

                    Manish

                    • Rajni Kant

                      Dear Manish

                      I am agree with you…..As Jeevan Saral is specially designed for encourage monthly saving like RD in post office which provides 250 times of insurance cover of your monthly saving……with the facility of reduce or increase your saving as well as ur insurance cover……

                      But at maturity it doesnot provide anythng as of now……bcz at maturity policyholder will get MATURITY SUM ASSURED ( Not SUM ASSURED) + LOYALITY ADDITION (LA is one time bonus at every 10 yrs of term , which is not decleared as of now since it is less than 10 yrs old ploicy , and my be it will be around Rs. 150 to Rs. 300 … no body knows even more )…..

                      in that case JEEVAN SARAL will not garuntee you 10% CAGR.

          • Priyank Doshi

            Hi Rajni,Manish,

            I was just blessed with a beautiful baby girl.

            So even I was under impression that this was the best policy if we take right away for an amount of 1lac per year for 20 years. So I have paid 20l in total and I get that 20l back in my piggy bank. So the additional point is at that time I can invest this 20l in ppf or any other saving plan.

            Additionally I’ll be getting 1lac every year so if we consider that a person will be alive for 50 years so I’ll still get more 30lacs.

            And after death also will get 20 lac to the nominee.

            So that comes to 20 (+ppf interest for the next 15 years or any other term plan for that 20lac amount which would give me much higher return )+30+20

            so total investment of 20 lac but returns more than 70lac.

            Let me know your thoughts please.

            Thanks
            Priyank Doshi

            • Hi Priyank

              The problem in the way of your thinking process you are adding the numbers which are in distant future, you should not do that and actaully look at returns got , thats all . If you give Rs 10,000 to a friend today and he promises to pay Rs 10,000 every year after 100 yrs forever. It means you give Rs 10,000, and get back unlimited money later , but its of no worth , right .

              In the same way its here .

              Manish

      • Rajni Kant

        Dear Saurav,

        Sorry for late reply….as per ur need & taking best retn into mind i wld like 2 say u can’t get 3 in 1 policy which gives u Tax saving+best retn+insurance only solution is u hv 2 opt for 2 policy if retn & insu is ur 1st pref the only best policy which gives u all 3 benefit(Tax saving, whole life insurance,retn but low) is JEEVAN ANAND but retn is low u’ll get 8 to 9% only other way is u’hv 2 take term plan which privides u tax saving thn u can go 4 ELSS if u wnt more tax saving or eqty MF

    • arun k sharma

      I fear that our excellent analyst of jagoinvestor needs to come out his surrogate marketing, roughly speaking, selling something and giving something else otherwise he would not have had jago-investor agents network. Dear viewers u shold apply ur mind before going to this websites advice. beacuse he is not here for charity he is obliquely and solely for business. The mis-leading analysis of LIC’s Jeevan Tarang policy suggests how this team is skewed to sell private compaies policies. Thanks to their right caculartion that Jeevan tarang gives 4.72% interest rate. tell me any bank, not even RBI, SBI, Bank of America, america’s federal bank or any bank of the world wpho is guranteed 4.72% return and that too for next 100 years. I think everybody bellies that we are going to be dveloped country in next 20-30 years. all developed countries show lower yeild in G-Securities from where all insurance companies derive their bonus and distribute to policyholder. If u look at yeild of G-Secs of developed countries as on date, it is meagre half percent or even negetive i japan and china. Beacuse of this, Insurance companies promote term assurance policies i developed countries where cos does not give maturity, they provide only riskcover. Kindly consider this scenerio that if India becomes developed nation India will also follow league of negetive returns on G-Sec on account of developed countries becomes more comsuming and less producing due to high per capital income hence returns on G -Sec arte bound to fall negetive due to huge GDP deficit to agar LIC ki jeevan tarang agar 4.72% gauranteed returns that too for next 100 years and along with risk cover at the death of policy holder to kya bura kaiya bhai.

      • chandan

        Arun,
        I am financial novice…but I think you have a point. If you look at devleoped countries..you get at max 1% or 1.5% return on your investment…
        We all know India is devloping. and after 20-30 years if we are on same league as of Developed nations…then..??
        doesnot anybody think that return in PPF was reduced from 12 to 9 and then to 8..
        Interest rate in Bank FD was reduced with time…
        Mutual Fund..SIP market ..they will continue to grow..but will they continue after 15years and 20 years..does anyone see same trend in developed countries sensex…

        @Manish,
        you explained everyone point but not of Arun…
        i think he has a point…
        everyone talks how sensex went from 6k-8k to 20k ..and talk about trends…
        should we go back 10-20 years…and then try to make a trend..

        • Chandan

          Its a matter of view .. I am of the view that you will be in league of Developed nation only after 25-30 yrs , not before .. So whatever Arun has said applies not in next 25-30 yrs .. thats my personal view .

          Also Mr Arun has made that same comment atleast 6-7 times by copying pasting on various articles .. I have replied him for the first 2-3 times , still he copy pastes the same thing every where

          Manish

    • dhiraj

      I think Writer is litttle phsysic , with all incorrect data, if u check records with AMFI not even 5 % of MF investors continue of 5 year

  2. Mohan

    Hey Manish, Good exhaustive study and you have taken a note of most of the cases. I am half the way through my review on this policy and will publish mine pretty soon :)

  3. White Lotus

    Good one! Thats why Warren Buffet likes insurance companies. They keep all the profits and give a inflation-adjusted negative return to the customer.

    Anyone analysed insurance companies for investing on Indian stock market?

    As for mutual funds, Peter Lynch says investing in Mutual Fund stocks would have given greater returns than the Mutual Fund itself 😉 .

  4. Gupta

    Good detailed analysis as ever. One point worth mentioning was that – in case of term insurance, premium amount of 15 additional years was not calculated for comparison.

    • arun k sharma

      I fear that our excellent analyst of jagoinvestor needs to come out his surrogate marketing, roughly speaking, selling something and giving something else otherwise he would not have jago-investor agents network. Dear viewers u should apply ur mind before going to this website’s advice. beacuse he is not here for charity he is obliquely and solely for business. The mis-leading analysis of LIC’s Jeevan Tarang policy suggests how this team is skewed to sell private companies’ policies. Thanks to their right caculartion that Jeevan tarang gives 4.72% interest rate. tell me any bank, not even RBI, SBI, Bank of America, america’s federal bank or any bank of the world that provides guranteed 4.72% return and that too for next 100 years. I think u will agree that we are going to be dveloped country in next 20-30 years. all developed countries show lower yeild in G-Securities from where all insurance companies derive their bonus and distribute to policyholders. If u look at yeild of G-Secs of developed countries as on date, it is meagre half percent or even negetive in case of Japan and China. Beacuse of this, Insurance companies promote term assurance policies in developed countries in which companies do not give maturity, they provide only riskcover. Kindly consider this scenerio that if India becomes developed nation, India will also follow league of negetive returns on G-Sec on account of that developed countries become more comsuming and less producing due to high per capita consumption hence returns on G -Sec are bound to fall negetive due to huge GDP deficit. In such scenerio, if LIC’si Jeevan Tarang gives 4.72% gauranteed returns that too for next 100 years and along with risk cover at the death of policy holder what LIC’s Jeevan Tarang has done wrong????

      Let me tell you, why ULIP policies entered into Indian market. In developed countries, their are no bonuses accumulation on insurance plans because the central banks of developed countries do not give more than half percent returns on insurance companies’ investments. therefore they popularized the concept of term assurance and ULIPs where these companies invest funds in to share market. After collapse of several corporate houses in developed countries and huge deficit they conspired on flourishing and huge savings market i.e. India, They forced the govt to launch reforms in insurance sector and our share markets soared with huge FDI and it was hoisted from 6000 mark to 21000. After a shortwhile in late 2007 it took away the hardearned savings of Indians through capital flights to developed countries and we Indian lost almost Rs.10 Crore lacs of savings which could have been utilized to giving world class infrastructure to Indians. Let me give u an example why instruments like PPF, Post Office Invetments, NSC are not safe as they seem. U go to the post office, ask at the counter to deposit Rs. 10000 for next 20 yrs or 50 yrs or any long term periods. Post Office or any bank will deny, Why…..they should accept capital available for such long term. The reason is no economy can surely manage returns on long term more than 5-6 yrs therefore only 6 yrs or 5 yrs FD/RD invetments are available. So if developed countries are showing less than half % returns so as India will do in next 2-3 decades. So if Jeevan Tarang gives guaranteed 5 % returns with risk cover alive after maturity, what’s the harm??? So dear viewers please save urself and ur money from such propoganda. Next logic is supposing u have a term plan of Rs.10 Lac starting at age 0 and covering till age 100 it would cost atleast Rs. 20000/- per annum u might be paying Rs. 20 Lac in 50 yrs but surely there is product exists and no company can afford to have such a long term assurance plan. Secondly as suggested by jago investor analyst , that u invest in 8% RD than u get roughly 24 lac( After tax 16 Lac only) after 20 yrs. Jeevan tarang retunrs they roughly Rs. 10 Lac and rest in yearly money back with 10 Lac riskcover and loyalty addittion. If total moneyback taken by investor is 40 than he gets 22 lacs tax free and still 20 lac riskcover. U I deny to accept the baseless analysis done by website’s analyst. I am sorry but I could not resist

  5. Anonymous

    Manish,

    I am fan of your writing. In simple language you explain all the critical terms. This is one of your good thing. Its the best blog on insurance I seen. After visiting your blog I take a Term Insurance for Rs.50 Lacs and secure my family. Also taken Accidental Insurance from general insurance company as compare to life insurance company it is more cheaper.

    Keep it up n spread the education.

    Vivek

  6. Venkatesh Kumar

    Manish,
    Very well captured. I too (unfortunately) have been a victim to "my Uncle is a LIC agent" virus, and have taken a Jeevan Shree policy for myself over 8 years ago.
    How many countless people have taken an Endowment/Money back policy..

    Thankfully, i woke up about 4 years ago and took to Term policies (with ULIP) So, i'm now happily insured for upto 1 crore.

  7. Manish Chauhan

    @Dinn : You raise a good point , We still need good products in india and world may be . I am sure there can be a master product which can take care of Life Insurance + health Insurance + Investments in one go :)

    @Mohan : Great .. i would love to read it .. I am sure I will come to know some of the things I have not covered here .

    @White Lotus : I am sure Warren Buffet likes Insurance companies if its name was not AIG :) , But definately if its LIC .

    @Gupta : Gupta , which case are you talking about , the term insurance i tool for example was for 30 yrs and contract ends after 30 yrs . please give more details

    @Vivek : Thanks for your kind word , I am happy that my blog is changing people perspective towads Term Insurance and making them understand its importance . Keep visiting :)

    @Venkatesh : you cant beleive this conincedence , i was evalutaing Jeevan Shree for one of my Clients for Financial Planning . I came to know that its Returns are not even 4-5% . Good to know that you now have a term policyy …

    Manish

  8. Vibhav

    @Venkatesh: What do you mean by Term policies (with ULIP)?

    @Manish: Excellent review of Jeevan Tarang.. Im expecting a review on Jeevan Anand (another gullible product from LIC) too, as I told you earlier..

  9. Manish Chauhan

    @Venkatesh

    Yeah .. even i missed it .. what is Term insurance (With ULIP) ?

    @Vibhav

    Thanks , I will try to write about it .. keep bugging me if i forget :)

    Manish

  10. Amarnath Awargaonkar

    Dear Manish,
    You are great advocate of term plans and so i request you that you write about a new term plan from sbi known as Life shield.
    It has a increasing cover options
    1) Sum assured increases 5% every year.
    2) Sum assured increases 50% every 5 years.
    The second option is so good that it is unbelievable and is there any catch please go through the policy and write about it in detail.
    Regards.

  11. Manish Chauhan

    @Amarnath

    Ok .. let me try some time on this .. If you want to have a great sleep tonight , I should tell that I personally have the same policy :) for my self .

    However , That does not mean that its the best .. Term Insurance itself is great .. which company you choose will add just a cherry on top of icecream :) .

    The premium also depends on what age you are . Different company have different rates .. In isolation , its the best one available ..

    Manish

  12. Ganesh

    Good work! Hopefuly more and more people will read your post before they get into such policies.

    A couple of other things that could make insurance policies better:
    1) Government: Make it compulsory – Set a minimum limit for any one with a dependent family – Double or triple the tax exemption.
    2) Insurance Regulators/ Companies: Promote term policies as gifts – for weddings, first jobs, etc. or by selling insurance vouchers

  13. yaavarumkelir

    Hi Manish.

    Incisive analysis debunking the myth of insurance marketing.

    The false notion of combining insurance with investment/financial planning was broken to shreds by your analytical approach.

    Keep up the good work.

    Elaya kumar S

  14. Udaya

    Hi,
    1 small question. I have taken a Jevan Tarang policy for 12 lakhs for a period of 20 yrs. I pay a premium of 60,000 per annum. I have completed paying the premium for 3 years. What is the amount i will get if i surrender the policy?

  15. Manish Chauhan

    @Ganesh

    But what about

    1. People who are not able to afford the premiums ? How will govt decide if someone has the ability to pay or not ?

    2. Very very nice idea .. but for how long ? For 1 yr or whole life ? If just 1 yr , how do they make sure that it will be continued later also ?

    @Elaya

    Thanks

    @Udaya

    Surrender value is generally around 30% of total premiums paid when the tenure is around 3-5 yrs ..

    So it would be around 55-60k for you . For exact details contact your LIC agent .

    Manish

  16. Information Admin

    Manish,

    Very nice work. I am becoming a fan of your work.

    I would like to know what my options are

    Req:
    1) Kid is 1 yr old. Need to give my kid a financial instrument that gives
    her fixed amount every year from her 20 years of age and up to 50 years preferably. I am interested in 1 time premium payments.

    I have bought some of Jeevan Tarang as a result of marketing of LIC person. However I would like re-evaluate and decide for further investments.

    re-evaluation points

    1) Is LIC a correct instrument for these type of requirements ?
    2) Ignore question 1 for a moment, would like to evaluate a policy for the above requirement from a insurance product, what would be your recommendation ?
    3) If I have to keep my eyes open on the market and products. What are the things need to be considered to avoid getting into bad products ?

    Regards,
    KCB

  17. Manish Chauhan

    @Information Admin

    Regarding your Kid , You want a sort of pension for your kid , You can do this in this manner .

    invest in PPF + Mutual funds and when she is 20 yrs old , buy some monthly income plans for her.

    Regarding your Jeevan Tarang thing

    Forget LIC , for Insurance requirement any kind of Endowment or Money back policy is wrong . buy a pure term plan for your insurance requirement .

    for not getting into a bad product , make sure that the product meet certain criteria , do a G-Factor analysis on the product , Read about G-factor on my blog .search for it .

    Manish

  18. Information Admin

    Thanks a lot Manish for the information.

    I see you might have some postings recently on r2iclubforums.com Jeevan Tarang policy post. I started it there.

    As per your suggestion PPF is not a option for me, since I am an NRI. wondering if only Mutual funds are the options now. Please advice.

  19. Manish Chauhan

    @Information admin

    Mainly Equity is what you should look for , Reasons

    – You are anyways not going to monitor the investments on regular basis , so long term Equity investing if for you .

    – Do SIP in mutual funds

    How ever , why do you say that PPF is not an option for you , NRI's can invest in PPF . No issues :)

    Manish

  20. Yogesh

    This is an very very nice article Manish.

    Today i took Jeevan Tarang policy (PPT: 20 years & yearly premium 60,000 with pension of Rs 66,000 per year after 21 years) from LIC.
    After filling the form and paying half-yearly pay cheque i read your article (google zindabad). And now i have changed my investment plans.
    Your article is worth thinking for anyone doing investment. Instead of just thinking life insurance & tax benefit, we should think about the value of money after 15-20 years. It will be far lower than today.

    PF & PPF are really a good instruments in the money market and it is a great option for long term investment. I would prefer not to go for this policy and try to invest the way you explained above.

    Thanks for sharing your valuable thoughts which helps a lot to investors.
    Happy blogging!!

    • Yogesh

      Nice to have you here at Jagoinvestor. I am glad that you are powered by Knowledge now and take your decisions on your own . thats the motive of this blog :) . Good luck . Make sure you subscribe to the blog and dont miss any updates 😉

      Manish

  21. Niranjan

    Hi Manish

    Excellent fantaboulous number crunching solutions !!!! After long time I could find such a grate place for insurance. I have kid of 10 month and monthly income 30K . I have not gone for any kind of insurance so far except LIC jeevan Anand. Please guide me the best way through which I can secure my daughter’s education/marriage as well as secure my post retirement life if i survive .

    Thanks

    • Niranjan

      I am glad you liked the article :) .

      Your Insurance : Term Insurance is the right answer for your Insurance needs . Calculate your cover , split it in two and take it as soon as possible,. cheap premium , high cover , can be stopped anytime , what else one needs :)

      Your Daughter Education and Marriage : This is not as easy as its sounds , We need more details like your risk appetite , the kind of money you want , what are your savings , your current knowledge ,your wish and abilites to contribute in spending time in managing your investment . overall you should use PPF + Mutual funds (SIP) to acheive these goals

      Your retirement : Find your retirement corpus and use ETF’s , Index funds and equity funds + PPF + EPF (your company PF) for this .

      Overall , if you want to deligate all this process and planning part , you should see a financial planner , but make sure you are educated for the basic level in all these areas . :) . Btw , I take Financial Planning projects on paid basis in case you need . but first educate your self some months and then think about it .

      Manish

  22. Sachin

    Hi Manish,
    Though i was aware about term vs endowment, your simple explanation with an example helped me get a better understanding.

    have some some endowment policies 5yrs back..guess its time to re-evaluate the options.

    thanks
    – Sachin.

    • Better to make then Paid up or better surrender them .. You will get rid of those policies + you can also use that money for planning a better future .

      Manish

  23. Excellent review. I only question is that do you think that we can disregard every single insurance product except term insurance products? Is there even one insurance product other than term insurance worth investing? Does this review only pertain to Jeevan Tarang?

    • Yes , I think every other product other term insurance should never be considered for Pure protection purpose .Other things are either total junk or are suppliment tools for insurance . So i think only term insurance should be used ,

      This review is particularly for Jeevan Tarang , but almost all the endowment policies work the same way .

      Manish

  24. Himanshu

    Dear Manish,

    I was searching for something else on google but got into your writings. Its simply amazing and the langauge is so simple that gives a feeling of live talk. In short, I have become your fan.

    Now, can you please advise me on how to plan my investments. My details are –
    Age – 29
    Martial Status – Unmarried
    Monthly Salary – 35K
    Monthly exp – 12K

    I have few insurance policies from LIC (premium 6331 p.a.), Relaince Life Insurance (15K p.a. – thoroughly useless policy) and every year I buy NSCs. I want to know
    – which insurance co. is good to go for Term plan (coverage??)
    – good funds for SIPs and how much would you advise (does this give any tax relief)
    – any alternate for PPF?

    Trust me , this will really help.

    Thanks for all free advises buddy !!

    Himanshu
    (Delhi)

    • Thanks for your comments

      Here are the answers

      Q : which insurance co. is good to go for Term plan (coverage??)
      Ans : Depends on how you define “Good” .. If you are asking in Price term , then Aegon Religare is the cheapest (I would prefer to take from them) . If you are talking about Claim ratio then LIC is the best right now .. but i think thats obvious , we dont have others history , we dont know the claim settlement of Term Insurance , so i cant say anything .. its now a question of how comfortable you are with Pvt companies .. which i feel can be considered (should be considered) . Insurance sector is seeing some huge shifts now and IRDA is the bid daddy making sure there is no problem . So i recommend that you can just go for the cheapest one . Split your cover into 2 .

      Q: good funds for SIPs and how much would you advise (does this give any tax relief)
      A: There are ELSS funds (Tax saving mutual funds) which comes under sec 80C and give your tax benefit .it will get locked for 3 yrs . some good funds are Sundaram tax saver and HDFC taxsaver , you can also see other non tax saving funds at my article http://www.jagoinvestor.com/2009/08/list-of-best-equity-diversified-mutual.html

      How much you should invest depends on your goals , classify each goal and find out what is the target amount and time and how much you need to invest per month .. you can find that info on my blogs itslef .. find it 😉 ,

      Q : any alternate for PPF?
      Ans : EPF (your company PF) is another option , make sure you put max into your EPF , but still open a PPF account , 500 a year is nothing :)

      Manish

  25. Avijit Pramanik

    Hi Manish,
    I am a victim of LIC Jeevan Tarang policy, I was not well aware of these facts that you discussed thoroughly. Thank you very much for your explanation. After reading your article I am going to withdraw my policy as I have already completed 3 years on that.
    I have a question for you. As you discussed that some of the money we can put into PPF, Instead of paying the amount in PPF, do u think that “The Endowment Assurance Policy” from LIC will be a better option?

    • Avijit

      any thing which is Endowment word related to it will probably have same kind of features like Jeevan tarang . So you can take the decision

      and by the way , congrats for taking wise decision of getting out of it .. not all are courageous :)

      Manish

  26. prashant mayekar

    hi manish
    First of all thnk u for this site,i mean for giving so much valuable information to all in simple language,i love to read this site and recommended this to many of my frnds.
    here is request to review LIC MONTHLY RECURRING TYPE SCHEME (JEEVAN SARAL) as by looking policy seems to be nice ,kindly suggest weather its worth taking it or not???

    http://www.licindias.com/jeevan-saral-by-lic.html

  27. prashant mayekar

    ok manish i will wait for ur post …thnx 4 reply…..really appriciate ur efforts in personally replying to querries…u r too good buddy…

  28. Krishnendu

    Hi Manish,
    First of all thank you for the detailed analysis of Jeeven Tarang Policy.
    I am interseted to know how did you calculate the CAGR return for this policy to be 4.72% .

    Thanks,
    Krishnendu

  29. Nadeem

    Dear Manish,

    Thanks for your review of Jeevan Tarang. Today only I paid Rs. 34 K for 20 yr plans.
    Fortunately, bacause of Moharram, tomorrow is holiday and i can ask the agent to stop the payment and will invest it in some better policy.

    With Regards,

    Nadeem

    • Good .. you should be under free look period of 15 days anyways so even if the agent has put your money in the policy , you can cancel it :)

      Better take a term plan + MF

      Manish

  30. Atul

    Hi Manish
    Your articles have been really wonderful and honest. I appreciate your work on financial awareness.

    General question about term insurance.
    1. Is the insurance still valid if a person dies on a foreign land.
    2. What if the person meets an accident and disabled. How can he continue his term insurance then. Suppose he is not able to pay 12k annually for insurance. You might say that he is not valuable to his dependents anyways then, so whats the use ? I see some disability riders in ICICI insurance. Are they useful concept ?
    3. Sorry to mention this, but the icons on the left of the screen of various sites (twitter, facebook etc) are quite irritating and block the view of article. Consider to place them somewhere else .

    BTW, how can i contact you for some paid financial advisory.

    • Thanks Atul

      here are the answers

      1. Yes
      2. You need to take accidental rider if you want to get some income because of disablement .
      3. I am sorry you feel that way .. Once i receive 1-2 more comment on that ,. I will remove it . bear with me for now :)

      You can mail me at manish@jagoinvestor.com for paid services .

      Manish

  31. Anil

    Hi Manish,
    good analysis. Found your page while looking for exactly this kind of info about jeevan tarang. I have decided not to go for this policy. Noticed one difference between your post and what my LIC agent quoted for the bonus rate though.
    My LIC agent quoted the assured bonus rate as 48 for every 1000 Rs (you mention 20-30) and as per that the yield calculated over for full term (i.e. up to 100years) comes to around 7.5%. Your post is dated Aug 2009, has anything changed in Jeevan Tarang since then?

    Thanks for a good analysis.

    • Anil

      48 for every 1000 can be the current year bonus . I have taken a general average case of 20-30 . Even with 48 , the situation does not improve significantly that your decision should change :)

      What is your other choice if you are not going for this policy . Dont you think you should look at Term + MF option or a ULIP incase you are a swithcing pro :)

      Manish

  32. Akhilesh

    Hi Manish,
    Thanks for a good review of LIC JT. I have a question for you that, while you proposed better plan for Ajay in above review, he invests Rs. 21600 every year for next 15 years – How can 21600*15+21600*(1.08)^15 become 6.3 Lac. similarly investing in MF : 36000*15+36000*1.12^15 become 15 Lac in 15 years.

  33. Swapnil

    My Agent confirmed to me that even after maturity eg. 10 years term and if I have taken the benefit of 5.5%pa for “n” number of years, I can withdraw the policy subject to 90% of the Sum insured.
    So it means I take the benefit of 5.5% on the Sum Insured and also I have the option of withdrawing 90% from the entire Sum Insured as and when required… this sounds good, but want your opinion.

  34. As per JT rules.. you get the policy SA at maturity and then Annuity thereafter .. How come your agent says that you will get the 90% of SA anytime you want .. Not sure

    Ask him to show that thing written in policy document .. please make sure you dont take agents words . please recheck .. be suspicious :)

    Manish

  35. S.Sivakumar

    Hi Manish,

    Excellent review, apologise for taking a deviation, got some questions about term insurance. Is it better to take a term insr. policy in your early forties or late thirties considering the fact that most term insurance contracts expire after a 25-30 year period.

    eg; (current age)35 + (insurance period)35 years = 70. An age when we will be more susceptible and health becomes more fragile.
    compare this with someone who takes term insurance at an earlier age say 20 or 25, (just to pay low premiums), then the contract comes to an end by the age of 55 or 60, an age where we are nearing retirement. Wouldnt it be self-defeating then, to think of a new life insurance policy at that age (if someone is willing to sell it that time) and pay astronomical premiums?

    Remeber the average lifespan of an indian (men) is 65-75 years.

    Hope u got my point….

    Regards
    Shiva

  36. Manish

    I am yet another fool of endowment policies. I realize my return of investing 2.5 lacs over past ten years is 3.25 lacs. It sucks big time and I think I’d have made much more by way of equity notwithstanding the risks.

    Srikanth

  37. Mukund

    Hi Guys, Recently i came across the Reliance Life insurance policy(Policy name is Reliance Traditional Super InvestAssure Plan ) they are giving the guaranteed CAGR of 17%, also the 250% guaranteed return on your first year premium.
    Please suggest me shall i go for this policy, as i am planning to take it for my child.
    I am also the victim of LIC Jeevan Anand 5years back with sum assured of 10lacks, is it a good deal or so shall i stop this policy and go for some term insurance.

    Awaiting your valuable comments.

    • Mukund

      I saw the plan details on their website , there is no mention of 17% CAGR . that cant happen !! .

      Who told you 17% CAGR thing , is there any written proof in policy document ?

      Manish

  38. Chakrawarty

    Manish

    Just a query on paid up bit. I have made up two of my LIC policies paid up. The lady at the desk said that if I have stopped my premium payments, (after 3 years of policy in force), the policy automatically becomes paid up. I was bit surprised to hear this as I always thought that there is a difference between policy lapse and paid up.

    Is this the right process or is there something more that the lady didnt share with me.

    Regards
    Chakrawarty

  39. Renji

    Hi Manish,
    Thanx for publishing the result of your excellent analysis.

    Need your help in making a decision. I joined jeevan tarang on 2006 december (20 lakhs, 137k yearly payment, 15 years). So far I have paid 4 premiums. I got similar kind of feedback from my friends also abt jeevan tarang.

    My agent told be that I can opt for closing everything at the end of 15 years. That is take sum assured + bonus at the end of 15 yrs and not opt for life long income from this policy. Could you please tell me if this is true or not.

    Now I felt trapped and want to discontinue this policy and start investing on better options. Am not sure how much amount I’ll get if I opt to discontinue now. Could you please give me a rough amount that I’ll get if I discontinue now.

    If I weigh the options of losing some amount by discontinuing now and the lose I will have if I continue for 15 years. Which one would you recommend.

    Really looking forward to your valuable advice. Thank you in advance.

    Regards
    Renji

    • Ranjith

      You should surrender the policy , you will loose a big chunk because of surrendering , but it will be beneficial for long term , you can divert the future premiums or money to better things liek Equity MF or ETF’s or anything else but not Endowment policies .

      Your surrender value should be around 30-40% of what you have paid till now except the first year premium so total 30% of 4 lacs (3 yrs premium) = 1.2 lacs . around 1.2-1.5 lacs total , i know its disheartening ,but thats how this bloodsucker policies work out :)

      You can find out the surrender amount roughly at :

      See http://www.jagoinvestor.com/2010/02/prevention-is-better-than-cure-even-in-personal-finance.html#comment-4808 for some good discussion on this topic between me and Srinivas :)

      Manish

  40. Renji

    Thanx a lot Manish! Its better to do it now and accept this loss rather than waiting for more time and suffer a big loss.

    Regards
    Renjith

  41. Mukund

    Dear Friends,

    Could you please suggest me how is this new “Reliance Super InvestAssure Plan”, as they are saying there is guaranteed annual compounded return of 17.5%. Does is really a worth plan of higher returns.

    Thanks,
    Mukund

  42. V2

    HI Manish,

    I have Jeevan tarang and Jeevan Akshay VI policies taken in oct 2009. Is there any way to have these cancelled?

    Appreciate your response on this.

    • V2

      You can just stop paying the premium and those will get converted to Paidup , you can also surrender them, contact your agent and be ready to face some brainwash .

      manish

  43. A.Narasimha Rao

    I have taken Jeevan Tharang Policy in the year 2006 and have paid an amount of Rs.68490/- (Rs.7610/- per half year) as Premium. Now I want to stop the policy and want to take back the amount which I was paid so far.

  44. A.Narasimha Rao

    I have joined in Jeevan Tharang Policy in February 2006 and so far I have paid an amount of Rs.68490/-(Rs.7610/- per half year)as premium. NOw I want to stop my policy and wants to take back my amount. Kindly furnish me the details whether how much amount will be paid to me by the insurance company in this case.

  45. A.Narasimha Rao

    If I have paid 30-35% amount among the premium amounts paid upto 4 years in Jeevan Tharang Policy, what about the remianing 70-65% amount.

  46. Sagar

    Great Job Yar! If you dont want invest in MF some good bonds and Bank FD and other debt investment available.
    Thanks a lot for good article.

      • Sagar

        Manish yar! please advise..
        I m 29 now, want term insurance (10 lac for 10 years), SBI Life Swadhan )

        SBI Life Swadhan (Rs.3441 x 4 x 10 years = 1,37,640 get entire premium back after 10 years without intrest) 0% growth but your money back, means almost free insurance.

        SIP Rs. 500 x 5 funds for 10 years (Birla Sunlife Frontline Equity, Franklin India Prima Plus, HDFC Top 200, ICICI Prudential Dynamic, Sundaram Select Midcap) Atleast 15% intrest.

        Rs. 3600 investment per month

  47. vimal

    Great Article…. am really late to see your article becz in jan i paid 35 k (70k pa)for jeevan tharang. 15 yrs term am @30 now . seems i should stop the policy right ?
    hope you can advice me abt some good funds which i can proceed with,,,

    Thanks in advance

  48. Nayandeep Saha

    Hi Manish,
    I have found in you the perfect person to ask my questions.
    I have a moneyback LIC policy with yearly premium of 30000. Tenure is 25 yrs and sum assured is 6 lacs. I have paid for 10 yrs till date. I have got one money back and nother I will get in Feb’2011. Will it it be benificial if I discontinue my policy, but do not witdraw my fund until the matured date. In a paid up policy do we get any further bonus?

  49. Nayandeep Saha

    Hey Manish, I have one question,
    When we put a policy in paid up mode after paying for min 3 yrs, when do we get back the amount? Is it after the maturity date only.
    Also what do get back? GSV+proportionate surrender value+ accrued bonus till date?
    Or just the GSV?

  50. vishwambhar singh

    I hav taken a Jeevan Tarang policy and paying half yearly pre. Rs. 12434 for 20 years. I hav already paid three half yearly premium. What should I do? Should I continue it for next three premiums and make paid up policy OR should I forgot about my money and start investing in MF?

    • Vishwambhar

      Continuing it for total 3 yrs and then making it paid up means spending more 37k and then getting total 74k at the end of 20 yrs .

      Or

      you can forget this policy and invest thost 37k and will get more than 1 lac after 20 yrs if you invest this in someplace even if it gives you 7% for 17 yr .

      >>> 37 * (1.07)**17
      116.87616280570458

      Manish

  51. u chakraborty

    for a 20 yrs LIC (endow) policy, if i stop paying after the first year premium; when it will be paid up and what i will get after 20 years. (not considering to close formally rather stopping payment)

      • Ashok

        Hi Manish, Nice thoughts about Jeevan Tarang, Kash i would have known these facts 3 yrs earlier, I had taken Jeevan Tarang Policy in 2007 for sum assured 5 lac & 20 yr,pays premium of 24000 anually.
        That time i was new to money maters, but as time gone i realised importance of equity so i started SIP(Rs.2500 each) of Birla Sunlife frontline equity & HDFC top 200 six months back, also invested some money in SBI, DLF stocks.
        I m unmarried doctor of 27 yrs will be marrying in next 2-4 months.
        Please suggest me some financial plan about future life& what shold i do to this Jeevan Tarang?
        Please help Manish………..

  52. Pradeepkumar

    Hi Manish,
    You have nowhere mentioned about eh different riders this policy has. And as the inflation is set to increase the same year, so does the life expectancy of human being due to advanced medical technologies. How many people these days are living upto 90 years. 10 years ago, you could find 1 in 100. But today, it has increased by more than 50%.

  53. Pradeepkumar

    LIC is the only company which covers the risk associated with terrorists attacks. During the mumbai terror attacks no private insurance company came forward to settle claims of the dead. LIC was the one who has settled the claims. Because it is a indian company and understand the emotions of Indians, unlike the other private insurance companies.

  54. Mahesh

    Manish,
    Here is my big problem, Sorry this may be a big story :(
    After reading your articles I came to know that i am in loss by taking LIC policies and also they will not give the good returns as compared to the inflation. So Called the Agent and discussed with him:
    My agent gave me 3 policies before 3yrs :
    1. Jeevan Mitra (Tenure- 21yrs), Premium= 20554/yr, Sum assured- 420000/- + Double Accidental benefit of 420000, Maturity after 21yr and Amount I will get is 970620/-
    2. Jeevan Mitra (Tenure- 21yrs), Premium= 21692/yr, Sum assured- 420000/-, Insurance of 8 lacs till 100 of my age(which is of no use). Maturity after 21yr and Amount I will get is 970620/-
    3. Jeevan Surbhi(Tenure- 18), Premium= 58978/yr, Sum assured- 750000 + Double Accidental benefit of 750000, Maturity after 25yr and Amount I will get is 970620/-
    This policy is Money back and will give me 1.5 lacs every time after 4 yrs(Total money back I get is 7.5lac)

    In Short my yearly premium is 101224/-
    Total Investment 1948770/- till 21yrs.
    Accidental insurance is 21 lacs from day 1 and then it start increasing till 21 yrs to 32 Lacs.
    Return I am getting(will not include thousands in it):
    after 21 yrs= 19 Lacs + after 25 yrs= 10 Lacs + the money back returns which I got after 4yrs is 7.5 lacs
    So Total returns= 36.5 lacs after 25 yrs
    Agent told if I am investing the 1.5 lacs which I am getting every 4 yrs then the Returns will be 80 Lacs and you are getting 12% returns( I did nt understand the calculation and also if it is really 12%).

    Due to Money back policy I am not able to calculate the returns.
    But here is what I showed him the calculation by using MF via sip for 25 yrs (this calculation i have done after reading your several article, Thanks to you again)
    Yearly 101224 I am investing but will take one lacs for easy calculation.
    15K in Term Policy for 25 yrs only where I will get around 50 Lacs Insurance. So till 25 yrs =15K*25= 3.75 lacs gone with no returns.
    85K in MF so my monthly will be 7K for 25 yrs
    So as per our Sip calculator and considering 12% as returns then it gives me 1 crore 32 lacs
    Agent told me that this Calculator is giving wrong amount and he calculated with his some chart and told you will get 1 crore 10 lacs still high then LIC.
    ( He said his chart is calculated very correctly and used by all LIC agents)

    Below was the discussion between him and me :

    Agent: what about the 15K interest for term policy
    Me: Told to calculate and subtract from 1cr 10 lacs
    Agent: IT is around 10 lacs(including 3.75 lacs) approximate cost taken.
    Me: so the amount is 1 crore still high then LIC
    Agent: But for 20 Lacs you are taking risk by investing in MF where in LIC no chance of Risk. will get peace of mind.
    Me: what if I am not able to pay premium or if I lose my Job or I am suffering with some disease for several months may be yrs who knows then who will pay my premium and even you will not return my invested amount back..In this case LIC is just bringing me on road :( Also where is the liquidity in this?
    Agent: (No comments) Loan is available with them. Also what about your Tax?
    Me: Taking my money and giving me loan on 9%. No way. For Tax problem I will adjust them in ELSS :)

    Completed 3yrs and 4thyr premium is next week. I took out surrender value and that is going to be 80K only ..can’t even think of it that they are just giving me 80K. OR shall I think of not paying the next premium.
    so really worried what to do also I am getting 1.5 lacs next year(on 7 July, 7 Aug is due date to pay premium) that after paying more 2 premium(half yearly 50612/- i.e. 101224/-).

    Sorry Manish, I know this will take your Valuable time but need your help to know if my calculation was Right as I have learn all this just in few days by reading all your articles.
    Please let me know how shall I go ahead in this situation?

    • Mahesh

      You are thinking on the right direction . And dont listen to agent as they dont know much about maths anyways .. A person who can challange mathematics in front on LIC papers are to be stayed away from .

      Agent is right when he says about the risk you will be taking with Equity . However you must be clear about how to deal with long term investments in equity and how to resturcture your portfolio every year . atleast portfolio rebalancing would be of good help .

      Now your doubt is what to do next , You are at a very painful stage right now , you will get much much lesser than what you have paid if you surrender the policy (only after 3 yrs , else forget what you have paid) .

      So do one thing , do the calculations yourself for all the scenarios for both the cases LIC and Mutual funds+Term route .

      – If you continue
      – If you surrender after 3 yrs
      – If you stop it now .

      You will get the answer .

      Manish

      • Mahesh

        Thanks for the advice Manish. Is there any article on how we should balance our portfolio once in year and what care should be taken?

        • Mahesh

          Right now we dont have anything like that , but its pretty simple, See your funds and ask your self if you have to buy them fresh , will you buy or not ,

          If yes , then keep it , if not , then throw it

          Manish

  55. adrian

    Manish , you have given an illustration of 15 yrs ppt, what about single premium and 10 years term for jeevan tarang.
    Also if your aim is to educate investors about investing why is that no lic official has commented on your site.
    EITHER OF TWO IS CORRECT
    1..YOU ARE TOO SCARED TO CHALLENGE THEM
    2..THEY ARE TOO SCARED TO REPLY

    but either ways TRUTH WILL REMAIN THE TRUTH.

    • adrian

      I am not sure what you mean exactly , are you agreeing with the analysis or not , Also why LIC officials have not comments , I am not sure .

      Either of two is correct .

      1. They are too scared to comment and clarify
      2. They know it would not affect them in anyways because educating few thousands out of millions will not create any issues for them

      Manish

      • adrian

        Manish,

        An analysis always helps, as it works like the opposition that keeps a check on the ruling to function better. educating people is quite a mission i must say Manish. but truth is truth so which insurance companies can be trusted and why new ones are allowed to start operations?

        • Adrian

          I am not sure what point you want to make ? Insurance is a business and we have rules for who can do that , so if some one wants to do it and it qualifies, how can we stop them ?

          Manish

          • Rajni

            Dear Adrian,

            On behalf of Manish….i would like give ur answer……first of all if u go to any LIC office thn only u come to knw that why LIC is lagging…..and u knw even LIC’ SDM don’t knw hw their policy works……u knw how JEEVAN TARANG cheating customers…..

            For a Sum Assured of 10lakh in for single premium LIC is more than 5 lakh for 20 yrs term……and after 20 years they will return u approx 9 lakh 60 thousand….

            u knw wht they did in these 20 yrs…. they doubled ur amount at erery 10 yrs and they earn 20 lakh on ur premium….and returns u less than half…..and on rest half they are paying u 5.5% interest…

            similarly if u invest that amt in any MF + TERM thn u will get more thn this benefit till u term.

            Rajni

  56. Jacinto Godinho

    Dear Manish,
    Thank you for your selfless work in helping others. God bless.

    I made a jeevan tarang policy for SA 20 lacs (single premium) around mid July 2010. After over 3 weeks delay, I was informed that because I was overweight (I am 80 kg) I had to pay an extra premium of 40,100 or reduce the SA to 19 lacs. Although I wanted to cancel the proposal, I still went ahead and agreed to proceed after the advice of my agent. After another week when the policy was issued, I was informed that 38,095 extra premium has been charged to me due to the overweight issue. I immediatley sent a cancellation notice to the LIC branch (999, in Goa), since I was within the cooling off period of 15 days. I was told that if cancelling the policy LIC would not pay me back the extra premium charged. I understand this if I was surrendering the policy (as per legal regulations), but here I am cancelling within the legal period of 15 days. Why should I lose 38,095 rupees? Besides this, I have not signed any legal document agreeing to the extra premium.

    Please advice me on how to proceed. I wish to file a lawsuit against LIC for the money I have been cheated out of, and I need to know if LIC has any “fine print” stating they can keep this extra premium even though I am with the 15 day legal cooling off period.

    Appreciate any suggestion you can give me.

    Thank you
    Jacinto Godinho

  57. Mahesh

    Hi Manish,
    I have one question for you ? I am about to surrender my Jeevan Mitra and Jeevan Anand Policy but my agent is saying that “don’t surrender now you will be in a big loss( which i know) surrender it after 5 yrs then there will be in no profit and no loss.”
    Is it true?
    I have paid 3 yrs premium till now.

      • Mahesh

        You have to define the meaning of “Loss” here. If you mean getting less than what have paid so far is loss , then yes , you will be in loss. After 3 yrs , when you surrender, you will get approx 40% of your paid money + Bonus , thats all .. check exact number :)

        Manish

        • Mahesh

          Hi Manish,
          Thanks for your valuable reply.
          Loss= Yes I mean will I get less money even after 5 yrs.
          I know currently i will get very less money then what I have paid but my agent told that surrendering the policy after 5 yrs will be no profit no loss. So was thinking whether to surrender now or after 5 yrs.
          You are correct I am getting only 40% if I am surrendering all my policies (checked on LIC site only), which I took 3 yrs back.
          So shall I surrender the policies after 5 yrs or its better to do it now?

          • Mahesh

            Ask you Agent to prove it to you that it makes more sense to surrender after 5 yrs ? You have to consider two scenarios

            1. You surrender after 5 yrs and get Amount A
            2. You surrender now and get B at this moment and then Invest B for next 5 yrs and get amount C

            All you have to ask yourself is can you create a situation that C is more than A , if yes you can surrender now , else surrender after 5 yrs .

            Do this exercise ,you will be amazed :)

            Manish

            • Mahesh

              Hi Manish,
              Yup, I was thinking to do same exercise which you told but I am not sure what amount I will get after 5 yrs.
              I don’t know how Agent will prove but he just said surely after 5 yrs I will get the total invested amount in hand if I think to surrender.
              Even I asked in LIC office, if ever I can get any approximate amount after 5 yrs, but they denied to give.

              • remember that in surrender value , first year premium is not included .

                so you will get around 40% of 4 premiums , that is 32% of your money . Also you will get some bonus accumulated with it , so over all I can see approx you will get 60-70% money

                Manish

  58. Jay

    Hi Manish,

    I started a Jeevan Tarang in 2006 and should have read your article much earlier.
    I believe my agent had informed me that I could surrender after 3 years. I am stationed out of the country at the moment and so the question I have is how much can I expect if I were to surrender my Jeevan Tarang policy today?

    Thanks,

    • Jay

      if you look at policy page on LIC website : http://www.licindia.in/jeevan_tarang_plan_007_benefits.htm , its written

      “For Regular Premium policies – After completion of at least three policy years and at least three full years’ premiums have been paid, 30% of the total amount of premiums paid excluding the premiums for the first year and all premiums in respect of optional benefits and extras will be payable. ”

      So you will get 30% if 2 yrs premium , which means 20% of what ever you have paid till date = 80% loss at this moment, but even if you dont surrender the picture is not much rosy later

      Manish

  59. rajesh

    Hi Manish:

    I liked your illustration and would request you to suggest a suitable option for me. My age is 30 years and I can afford to spare only 50,000 p.a. Can you suggest a policy which is a combination of lic policy + ppf +sip?

    tks

    • Rajni

      Dear,

      if u r restricted to lic policy only thn u can opt for new LIC’s new policy
      ENDOWMENT PLUS….but remember opt for ECS Mode only for benefit of SIP….charges is also low…..read n investigate b4 u invest.

      Rajni

  60. Jayashankar

    Dear Manish,
    Thank you for your selfless work in helping others and blogging! God bless.
    I was invested LIC endowment plan sum assure 3 lacs in 2003 for 18 years and invested LIC Jeeval Komal for my kids since last year!
    Those policy good? I surprised to see ur blogging that LIC are not good policy?
    Advance Thanks
    Jayashankar

    • Jayashankar

      You can try to find out what are the returns from your LIC policies and you will come to know if you like it or not :)

      do IRR analysis . The returns would come hardly 5-6% on higher side . It might go upto 3-4% also

      Manish

  61. Jayashankar

    Dear Manish,
    Thank you for your selfless work in helping others and blogging! God bless
    Thanks positively reply me and i will look for return details
    Thanks
    Jayashankar

  62. Kamal

    In case of jeevan tarang policy is taken in the name of my child who is 8 years old for 15 years then with a premium of 33000 then atleast after 15 years can get a accumulated returnof 5lacs then 27500 for his lifetime and there is a covrr without payment of premium
    so please advice and clarify

    • Kamal

      I hope you know that Incase you surviuve till your Policy Tenure , then at the end of your Tenure , you will get Bonus accumulated (not the Sum assured) and an annuity of exact 5.5% each year after the Policy Matures . One will get 5.5% of the Sum Assured each year till his death or upto age 100 whichever is earliar . So inyour case if your sum assured is 5 lacs, you wont get that at the maturity , you will just get bonus money and then yearly pension, 5 lacs will be given only on death .

      Manish

  63. Avinash

    Hey wow, the more i read your articles the more i laugh at myself for being happy with what i have done with my life. Thanks for great info buddy. I have about 2 Endowment policies (So foolish of me!!!!) worth Rs 90K per annum. One from PLI & other from LIC. We call ourselfs educated, wow such a fraud education. it does not teach us survivability!!!! Anyways its never too late , to start once again. Hopefully we all have our share of misfortune, one more added to mine . GOD bless you buddy! Keep up the good work.

  64. Gautam

    Under the new DTC (which is coming effective from April 2011), only sums paid towards a contract for an annuity plan of any insurer (subject to it being an approved plan) is eligible for a deduction of up to an aggregate limit of 1 lakh (along with other approved funds). So my question is : Can we count Jeevan Tarang as eligible approved annuity plan under the proposed DTC? I am thinking this to know whether I can use my existing jeevan tarang policy under new tax code.

  65. Saurav Sinha

    Hi Manish… Is there any LIC policy which is worthy from investment point of view? Like SIP, or term insurance with good money back etc etc.. Thanks

    • Rajni Kant

      Dear Saurav

      If you are looking for all the three benefits….in LIC only thn you can look for LIC’s NEW POLICY ENDOWMWNT PLUS……..

      But if u r not willing to pay any type of charges thn u can go for

      MF ( MIP or SIP as per ur need) + TERM INSURANCE

      • Saurav Sinha

        Hi Rajni… Thanks for a prompt reply… can U plz elaborate a bit…. I have Rs 20K to invest yearly…n I want an investment option wherein I get gud return on my investments + Life cover….

        Manish … can U help?

        • Saurav

          I have already shown the returns of Jeevan tarang policy , you can do your own math now based on this analysis for other policies, I personally do not recommend any endowment plans from any company .

          You should rather be investing through mutual funds , if you are risk averse better get into balanced funds or ETF’s . Get a term plan .

          Manish

        • Rajni

          Dear Saurav,

          Sorry for late reply….as per ur need & taking best return into mind i would like 2 say u can’t get 3 in 1 policy which gives u Tax saving+best return+insurance,the only solution is u hv 2 opt for 2 policy if return & insurance is ur 1st pref the only best policy which gives u all 3 benefit(Tax saving, whole life insurance,return but low) is JEEVAN ANAND but retn is low u’ll get 8 to 9%…..(For 25 yrs of age premium amt is 21127 Term 40yrs, as i am taking insurance is a long term product and considering tax saving is primary concern till service period and return will be 60 lakh at retirement age i.e at 65 years of age and after retirement u’ll be benefited with free insurance cover till the age of 100 at free of cost….)…….. only other way is u’hv 2 take term plan which privides u tax saving thn u can go 4 ELSS if u wnts more tax saving as well as return otherwise go for equity diversified MFs….which provides you good return in log run….12 to 15%.

          You can break up ur amount as per ur perf into TERM PLAN + ELSS/ ED-MF….as per ur insurance need…….

            • Rajni

              Dear Manish……

              It’ll be my pleasure to discuss on this with u…..as i am supportive of only one product of LIC ..which is JEEVAN ANAND, which is a combination of endowment and whole life…..

              As u knw insurance is a long term product…..and as early u start it , good benefits u’ll get….

              I am doing calculation on 25 yrs of age……

              LA Age = 25 yrs
              occuption = Service
              Goal = RD + Tax Saving + Return + Whole Life Insurance

              (As my only concern is life cover after retirement bcz for service period i already taken TERM PLAN till service term….)

              Product Selected = LIC’s JEEVAN ANAND
              …….. Zindagi ke saath bhi Zindagi ke baad bhi
              Sum Assured = 10 Lakh
              Term = 40 Years… i.e till retirement

              Benefits = An additional Sum Assured of Rs.5 lakh is payable in a lump sum on death due to accident up to age 70 of life assured. In case of permanent disability of the life assured due to accident this additional Sum assured is payable in instalments.

              Yearly Premium = Rs. 21127/- for 40 years for age of 25yrs

              Total Amount Paid = Rs. 8,45,080/-

              Toal Return at the age of 65 years. = Rs. 60,00,000/-

              ( Sum Assured = Rs. 10,00,000/-
              Bonus for more than 21 yrs term @
              Rs. 45 * 10,000 * 40 = Rs. 18,00,000/-
              Final Additional bonus for one time at maturity
              @ Rs. 3,200/- * 10,000 * 1 = Rs. 32,00,000/-

              Total Amount = Rs. 60,00,000/-)

              Here i would like to quote as of now since JEEVAN ANAND policy is new FAB for more than 21 yrs is not declear…. as for now it is Rs. 2,600/- but for JEEVAN ANAND it may be Rs. 3,200/- bcz for every new policy FAB is increases at a rate Rs. 1,000/- if term is more than 21yrs)

              Now…..if you calculate the yield for a regular investment of Rs. 21,127/- for 40 year with a only a monetary benefit of Rs. 60,00,000/-

              Then yield or IRR will be 8.06%.

              Note :- Yield may be vary as per age and term selected.

              So, I would like to recommend JEEVAN ANAND for whom who would like to start early can go for this product as this provide return more than FD or RD in Bank/Post office…with various benefits which not any other product can provide.

              Regards,
              Rajni Kant

              • Rajni

                How do you get the info of FAB ? Can you give a link or some resource to read details and rules about FAB ?

                Is it fixed or can change in future ?

                How do you get FAB of 2600 for Jeevan Anand ?

                Manish

                • Rajni

                  Manish

                  FAB is FINAL ADDITIONAL BONUS which attached on maturity only and varies plan to plan….U can search the info on LIC website under BONUS option…

  66. Kratar Singh

    Dear Manish,
    I hav taken Jivan Tarang policy in 2008 for 20 years at a half yearly premium of Rs. 12434. I hav already paid 5 half yearly premiums. Please suggest me what should I do? Should I continue or quit?

  67. Saurav Sinha

    Rajni… r U connected with LIC in someway?? gimme Ur blog/website coz I dont think discussing on LIC specific policies is a gud idea here… anyways Im 28 yrs, can invest 2oK pa…. can I take JEEVAN ANAND cover for 1 crore ? Only thing is I need 2 invest 4 more than 50 years I guess 😀

    • Rajni

      Dear Saurav,

      First of all i am not connected with LIC…. since INSURANCE is my core subject thts was dicussing ur quary (I want an investment option wherein I get gud return on my investments + Life cover….on November 14, 2010 at 2:08 pm )….. and I discussed LIC’s policy only bcz ur main concern was LIFE INSURANCE….

      i don’t have any blog or website u can contact me at
      rajnikant.lic@gmail.com

      Regards

      Rajni

  68. Praveen Jain

    This is an excellent post on insurance.

    The problem is most people cant distinguish between risk cover and investments and insurance companies work on this mentality.

    On Arun Sharma’s comments at the beginning of the post, i dont think that Manish is having any propoganda. it appears Arun is having a propaganda.
    Even LIC has a term policy (albeit is expensive). Manish is saying buy term policy only from private insurers. he is recommending a superior product, not endorsing any brand of insurance company.

    Just like with the basic principle of finance of spreading your risks and not putting all your eggs in one basket, one should also look at diversifying your risks with insurance companies. Insurance products are bought for the long term. Large Insurance companies were never supposed to fail, but we have seen cases of almost failures.

    I have taken a portfolio approach to my life insurance needs.
    I have 5 Lakhs Jeevan Anand Plan (my first plan when i started working and recommended by my father’s insurance agent). premium – 17k
    i have taken a 25 lakhs Term Plan Amulya Jeevan -premium -9.5k
    i am taking a 50 lakhs term plan from a private insurer -premium 8.5K.

    while the term policy from LIC is expensive, i am ok for 2 reasons:
    – given that LIC has the highest number of endowment/money back policies being sold, it is going to make superior profits for itself compared to pvt insurers giving it a “relatively” higher financial stability. if a situation like uti happens, political compulsions will force govt to bail-out LIC. hence i am ok with a higher premium.
    – the most important attribute of a life insurance is that i am not buying it for myself but for my dependents after i’m gone. The LIC agent is likely to be far more helpful in settling the claim than the pvt insurer.

    i have taken pvt co. cover to optimise on costs and have more surplus available for investing in mutual funds while i am alive and be able to get the fruits if i survive the policy period.

    One question to all reading this thread:
    – you have taken a policy and paid the premiums. but will it serve the purpose it was taken for? have you educated you dependents/nominees on what to do in case of your demise. are they aware of the policy/papers/claim process?

    Regards
    Praveen

    • Praveen

      Not sure where did I mention that one should buy term insurance only from pvt insurance companies , thats not true , One can buy term insurance from LIC as well and I feel its a good idea to have LIC as one of them , It all depends on your trust and comfort with pvt companies

      Manish

  69. Naresh

    Manish,

    Thanks for the detailed summary. I am thinking of converting my Jeevan Tarang Policy as Paidup. I ahev so far paid 4 years of premium.
    My question is: What would be the surrender value after the policy is converted to PaidUp?
    Since Bonus accumulated is also accounted for, how would the surrender value be calculated? Will accumulated bonus also be returned back?

    Thanks
    Naresh

    • Naresh

      As per LIC website “After completion of at least three policy years and at least three full years’ premiums have been paid, 30% of the total amount of premiums paid excluding the premiums for the first year and all premiums in respect of optional benefits and extras will be payable. ”

      So you will get just 30% of 3 yrs premium (first year is not included) , which is nothing but 22% of total premiums you paid till date . Bonus is not given unless you complete 5 yrs.

      manish

      • Jayaprakash Kanreddy

        You mentioned in the above reply, that bonus is not paid till you complete 5 years. Are you sure about it that they will pay bonus along with 30% total premiums excluding first year on surrender?

        I’ve Jeevan Anand policy and I’m thinking about closing it but not getting any information about surrender value from anybody. If I go to the branch I’ll will get those details but that’s not feasible for me. I’ve taken Jeevan Anand policy 5yrs back (Nov, 2005) and I’m paying yearly 15916 premium and got bonus of 67000 till now. They will announce another bonus in march. If they pay bonus as well then I’ll surrender it in Apr, 2011. Please let me know are sure about it?

      • Jayaprakash Kanreddy

        Manish,

        Can you reply to my question? You mentioned that you will get bonus as well if you surrender your Jeevan Anand policy after 5 yrs. Can you please confirm it? Also where did you find this information?

        • I just saw this

          “# Aviva Guarantees a minimum Guaranteed Surrender Value for regular premium policy which will be equal to 30% of total amount of premiums paid excluding the premium for the first policy year and also excluding the extra premium paid for increased mortality and taxes if any, if you decide to terminate your policy after 3 year’s premium are paid.”

          Manish

        • What is Surrender Value?

          The cash value payable by LIC on termination of the policy contract at the desire of the policyholder before the expiry of policy term is known as the surrender value of the policy. A policy can be surrendered provided the policy is kept in force for atleast 3 years. The bonus is also added to the surrender value if the policy has been in force for atleast 5 years.

          You can see this at http://www.capitalmarket.com/personal/insurance/insurance.asp?opt=licfaq . I remember that I read this somewhere in LIC website also , but right now i am not finding it !

          Manish

          • JayaprakashReddy

            Thanks Manish, that is really big information for me. This way if I surrender my Jeevan Anand policy in next April then I’ll be getting same or more than I paid as premium till now including first year premium. No loss at all if bonus is added to surrender value.

  70. Jobin Cyriac

    Dear Manish,
    My querry is regarding the choise between surrender and paid up.
    I have a Jeevan Tarang with SA – 5 lakh, Tenure – 15 yr, Annual premium -34718/- Age at entry – 25 yrs, Entry date – Nov 2007.
    I found this product is not suitable for me and decided to quit. Which type of exit would be benefical, Surrender or paid up? Please give your suggestion.

    Thanks,
    Jobin Cyriac.

    • When did you start paying for it? Making it paid up might be a good idea if you have completed more than half tenure is passed . If you have not completed even 3 yrs, you will not get anything .

      Manish

      • Jobin Cyriac

        Dear Manish,
        Thanks for your comments.
        I completed payment for 3 years , fouth year premium is just due. Tenure is 15 years and paid only for 3 years. How can we calculate the surrender value for this policy?

        Regards,
        Jobin Cyriac

          • Piyush

            Dear Manish,
            I am also in similar situation as Jobin. I dont have Jeevan Tarang but have Jeevan Anand and Jeevan Mitra and I have completed payment for 3 yr, fourth year premium is going to be due in some days. Tenure is 21yrs and total Annual premium for both policy is 40,000/yr . I am getting the surrender value around 60k. Very big loss :( Do you know what will be the surrender value if I think of closing it after 3-4 yrs? Still I will be in loss ? I will appreciate if you could help me in this situation. Just to let you know since 4 month I have started investing in Mutual fund.

            • Piyush

              For almost 60-70% of the tenure , you will get surrender value less than what you have paid , so you will be in “Loss” . Now even if you get little more than what you have paid after 10 yrs , do you call it “not in loss” , all you have to see is what is the return , at no point , it would give you more than Bank FD ! . You are in a dirty situation and the hard reality is you have to face it !

              Manish

  71. Piyush

    Hmm . …Its really a painful stage for me :( Before I make more loss I should take decision to surrender this policies . I think in 10 years if I invest in MF it will be doubled then what I will get from LIC in 21 yrs 😛
    Thanks Manish, for your advice. Your website Rocks :)

    • Piyush

      Yes , Make sure you understand the volatility part and the risk in short term , Its a very high probability that you will make more from mutual fund and have other advantages like liquidity etc

      Manish

  72. Ajay Chouksey

    I have taken2 Jeevan tarang policy for :

    15 YRs covering 50 lacks premium 86437 per quarter
    20 Yrs covering 50 lacks premium 62812 per quarter

    Paid premium for lat 1 yer which is almost 6 lacks – want to know if I stop this policy how much I gte back and also If I want to reduce the covergae and change/reduce the premium will it be possible.

    • Ajay

      You have invested in very low return paying policy for such a big amount , From the view you might have figured out that these are all endowment plans whose return turn out to be very low llike 5-6% , at best 7% in worst case .

      For you its a very tough situation , as getting out of the policy in the middle would mean you have to face a big loss in terms of money , but from future point , it might make sense .

      When did you invest in this , which year is this ?

      Better start a thread on our forum and we can discuss more in detial there : http://www.jagoinvestor.com/forum/

      Manish

  73. NIRANJAN

    Hi Manish,

    I started LIC Jeevan Tarang policy in 2006, at the age of 26. My Sum assured is Rs.800000 & yearly premium is 56000 approx. After reading this review, I came to a conclusion that I should stop my policy & invest in Term insurance + PPF + Mutual fund.

    Is it a wise decision to surrender this policy? If there is a loss, how much will it be? And should I go ahead with Term insurance + PPF + Mutual fund.?

    • Niranjan

      You will get around 30%-40% of your Premiums paid till date (excluding first year premium) , So yes , surrendering will result in loss, but continuing might be a bigger loss.

      Manish

  74. I have heard about some LIC plan (Jeevan Anand Probably) where you have to invest 1 lac per year only for 6-7 years and you get the whole money back at end of 6-7 Year and then risk cover continues till some 65-75 age or else at end of it you will get the good amnt (nearly 4-5 lac)..how is this plan? Please reply.

  75. Durairaj P

    Thanks a lot Manish for your detailed analysis. I was about to go for Jeevan Tarang as suggested or forced by an LIC agent. I started analyzing about other invested options (Term INS, PPF, MF). I have shared this with all my friends which will help them a lot to plan for their future…

    Continue to write. Thanks a lot once again.

  76. Anil

    Hi Manish,

    It is good that you have mentioned about the growth of 12 % return for the PPF + Mutual fund amount of 21.3 lakh. Why can’t the bonus accumulated (Rs.40 on average of 1000SA) after 15 years from Jeevan Tarang be invested in the same fashion for 12 % return after the policy tenture and more over, I can increase my investment by 5.5 % which i get out of Jeevan Tarang which on a 15 year period would be equal to the amount mentioned by you even with investing in mutual funds.

    I think you didn’t mentioned about the re-investment which we can do from Jeevan Tarang and went about the 12 % growth in PPF and Mututal funds alone.

    It would be good if you can do a similar calc for the Jeevan Tarang and see that there wont be a big difference as shown by you.

    I am also not a big fan of LIC policies but still feel that the calcs should reflect all the scenarios tackled rather than being optimistic on one product and totally pessimistic on the other.

    Anil

    • Anil

      I am still not sure how it will help , can you show me some calculations which supports your argument . The main point is all the time you will spend on LIC jeevan tarang is a valuable one and should not be lost

      Manish

  77. arun k sharma

    I fear that our excellent analyst of jagoinvestor needs to come out his surrogate marketing, roughly speaking, selling something and giving something else otherwise he would not have jago-investor agents network. Dear viewers u should apply ur mind before going to this website’s advice. beacuse he is not here for charity he is obliquely and solely for business. The mis-leading analysis of LIC’s Jeevan Tarang policy suggests how this team is skewed to sell private companies’ policies. Thanks to their right caculartion that Jeevan tarang gives 4.72% interest rate. tell me any bank, not even RBI, SBI, Bank of America, america’s federal bank or any bank of the world that provides guranteed 4.72% return and that too for next 100 years. I think u will agree that we are going to be dveloped country in next 20-30 years. all developed countries show lower yeild in G-Securities from where all insurance companies derive their bonus and distribute to policyholders. If u look at yeild of G-Secs of developed countries as on date, it is meagre half percent or even negetive in case of Japan and China. Beacuse of this, Insurance companies promote term assurance policies in developed countries in which companies do not give maturity, they provide only riskcover. Kindly consider this scenerio that if India becomes developed nation, India will also follow league of negetive returns on G-Sec on account of that developed countries become more comsuming and less producing due to high per capita consumption hence returns on G -Sec are bound to fall negetive due to huge GDP deficit. In such scenerio, if LIC’si Jeevan Tarang gives 4.72% gauranteed returns that too for next 100 years and along with risk cover at the death of policy holder what LIC’s Jeevan Tarang has done wrong????

    Let me tell you, why ULIP policies entered into Indian market. In developed countries, their are no bonuses accumulation on insurance plans because the central banks of developed countries do not give more than half percent returns on insurance companies’ investments. therefore they popularized the concept of term assurance and ULIPs where these companies invest funds in to share market. After collapse of several corporate houses in developed countries and huge deficit they conspired on flourishing and huge savings market i.e. India, They forced the govt to launch reforms in insurance sector and our share markets soared with huge FDI and it was hoisted from 6000 mark to 21000. After a shortwhile in late 2007 it took away the hardearned savings of Indians through capital flights to developed countries and we Indian lost almost Rs.10 Crore lacs of savings which could have been utilized to giving world class infrastructure to Indians. Let me give u an example why instruments like PPF, Post Office Invetments, NSC are not safe as they seem. U go to the post office, ask at the counter to deposit Rs. 10000 for next 20 yrs or 50 yrs or any long term periods. Post Office or any bank will deny, Why…..they should accept capital available for such long term. The reason is no economy can surely manage returns on long term more than 5-6 yrs therefore only 6 yrs or 5 yrs FD/RD invetments are available. So if developed countries are showing less than half % returns so as India will do in next 2-3 decades. So if Jeevan Tarang gives guaranteed 5 % returns with risk cover alive after maturity, what’s the harm??? So dear viewers please save urself and ur money from such propoganda. Next logic is supposing u have a term plan of Rs.10 Lac starting at age 0 and covering till age 100 it would cost atleast Rs. 20000/- per annum u might be paying Rs. 20 Lac in 50 yrs but surely there is product exists and no company can afford to have such a long term assurance plan. Secondly as suggested by jago investor analyst , that u invest in 8% RD than u get roughly 24 lac( After tax 16 Lac only) after 20 yrs. Jeevan tarang retunrs they roughly Rs. 10 Lac and rest in yearly money back with 10 Lac riskcover and loyalty addittion. If total moneyback taken by investor is 40 than he gets 22 lacs tax free and still 20 lac riskcover. U I deny to accept the baseless analysis done by website’s analyst. I am sorry but I could not resist

  78. “I fear that our excellent analyst of jagoinvestor needs to come out his surrogate marketing”

    Arun , this is not a reply to your comment . I just want to know that in your last 3 comments you started all of those with the same punch line, why ?

    Please try to change it , it looks very odd , its not a natural way of commenting .

    Manish

  79. Praveen K

    Hi Manish,

    Appreciate your service and efforts to share your knowledge for free and educating others in financial planning. Hats off to you!!

    I went thru this “jeevan Tarang” article and all the comments and discussion from 2008 to 2010 in this post. its was really educative especially your comments and that of Mr. Rajini’s.

    I’m a new bee on this subject and only recently I was thinking of getting a life insurance, met a agent who explained me patiently of some of the policies. I was surprised to see so many types of insurances and their varieties from different companies. So, before taking a decision I thought of do a search on the net to educate my self of all the options available. I learnt a lot of basics from your articles, like ULIP, deciding on insurance, MF SIP, PPF etc….

    I thank you for that….. Knowledge should always remain for FREE and should be available for the ones who seek it…… in that, your website really serves the purpose.

    some feedbacks,
    1. you can delete some spam mails like arun K sharma’s , cause he is just ‘cut-copy-pasting’ from his previous posts.
    2. consolidate all the similar kind of emails like “i want to terminate, what is my return?” into one and reply as one.

    reading all this I’m convinced that i must go for a Term plan + PPF at first, then after learning about MF, i must go for SIP MF.

    I plan to read all your articles and the comments following it,
    Thank you again for educating me!
    K. Praveen

  80. SATISH

    OYALTY ADDITION IS NOT GUARANTEED BY L I C. AGENTS ARE GIVING ASSUMPTION OF 10% P.A. AT THE TIME OF MONEY PLUS PLAN SAME FUNDA PUBLISHED BY AGENTS AND OFFICERS OF LIC FOR THEIR OWN INCENTIVES.

    NOW MONEY PLUS IS GOING IN MINUS.AGENTS AND OFFICERS EARNED HUGE COMMISSION AND INVESTORS ARE LOOSING THEIR HARD EARN MONEY.

    DON’T TRUST JEEVAN SARAL AS GOOD INVESTMENT.

    ALL INSURANCES ARE GIVING ONLY 3to5% return. NOT MORE THAN THAT.GO FOR LONG TERM RECURRING IN BANKS.

  81. Pradeep

    Hi Manish,

    Any updates regarding LIC’s jeevan saral policy review?
    I am eagerly waiting for it as it seems to be a good option or the agents are misleading people?
    Please clarify.

  82. moonlightdriver

    Hi All,

    I stumbled upon this conversation on internet while doing some research on Indian financial markets and the future outlook for next 15 years.

    A bit about myself I am a Trader have BSE member ship age 33, and have some experience investing and would like to give my thoughts to you all including Manish.

    First of all you all should always remember “over analysis is paralysis”.

    As Manish says Insurance is not investment that is correct however every individual is different and so are his needs and circumstances.
    When you invest there is no magic trick even if you go for SIP in any mutual fund overall return in next 20 years on your total investment will not be more than 15% considering the rate of inflation (I firmly believe inflation is here to stay for long term) and time value of money unless you gradually increase your SIP amount over the years.

    Also always consider we live in a dynamic world with financial systems more linked then ever and as India opens more we will integrate more in world economy.

    When we invest for long term, in addition to analysing the economy & company or fund house we would like to invest, also like to give thought on :

    1) Impact of events like Tsunami is Japan or 9/11 etc ….. there probability in next 10 – 15 years in India.
    2) Delhi is in seismic zone 5 any disaster there will have a deep impact on our financial system.
    3) Our relations with neighbour countries and possibility of conflict in next 15 years.
    4) Over all changes in earth… shifting of earth’s ,magnetic field, Climate and possible effect on agriculture, if at all etc
    5) Overall political scenario.

    This helps to create a balanced portfolio.

    For a retail Investor

    (1) Out of 100….. 60% in Mutual funds, this 60 should be purely equity diversified funds no need for balanced as out of total 100 , 40% is going in for fixed instruments which is giving quite a lot of stability to your portfolio.

    (2) 40 in fixed .
    Out of this 40 if my 70,000 limit is exhausted in PPF then for long term view I do not mind going in for endowment policy considering the yield after tax benefits and all I know its not that high but i do not see any other option or may be post office schemes all are same …….. the emphasis is also on consistent savings……

    And if a person does not expect to double his income in next 5 years I think he should think about getting a insurance policy which is a combination of term and endowment such policies are expensive than term but cheaper than endowment, as in term after the maturity there is no maturity benefit and no return of premiums paid, which might be considerable amount of money for a number of people in India .

    Oh one more thing ULIPS personally are strict no no for me !, never mix your insurance and investment .

    Always seek professional help do not just go in for any insurance from your
    ‘Uncle’ because he will give you back some commission amount ……………. remember there is no free lunch……………. :)

  83. moonlightdriver

    Hi All,
    I stumbled upon this conversation on internet while doing some research on Indian financial markets and the future outlook for 15 years.

    A bit about myself I am a Trader have BSE member ship age 33, and have some experience investing and would like to give my thoughts to you all including Manish.

    First of all you all should always remember “over analysis is paralysis”.

    As Manish says Insurance is not investment that is correct however every individual is different and so are his needs and circumstances.

    When you invest there is no magic trick even if you go for SIP in any mutual fund overall return in next 20 years on your total investment will not be more than 15% considering the rate of inflation (I firmly believe inflation is here to stay for long term) and time value of money unless you gradually increase your SIP amount over the years.

    Also always consider we live in a dynamic world with financial systems more linked then ever and as India opens more we will integrate more in world economy.

    When we invest for long term, in addition to analysing the economy & company or fund house we would like to invest, also like to give thought on :
    1) Impact of events like Tsunami is Japan or 9/11 etc ….. there probability in next 10 – 15 years in India.
    2) Delhi is in seismic zone 5 any disaster there will have a deep impact on our financial system.
    3) Our relations with neighbour countries and possibility of conflict in next 15 years.
    4) Over all changes in earth… shifting of earth’s ,magnetic field, Climate and possible effect on agriculture, if at all etc
    5) Overall political scenario.
    This helps to create a balanced portfolio.

    For a retail Investor
    (1) Out of 100….. 60 in Mutual funds, this 60 should be purely equity diversified funds no need for balanced as out of total 100 , 40% is going in for fixed instruments which is giving quite a lot of stability to your portfolio.

    (2) 40 in fixed .
    Out of this 40 if my 70,000 limit is exhausted in PPF then for long term view I do not mind going in for endowment policy considering the yield after tax benefits and all I know its not that high but i do not see any other option or may be post office schemes all are same …….. the emphasis is also on consistent savings……

    And if a person does not expect to double his income in next 5 years I think he should think about getting a insurance policy which is a combination of term and endowment such policies are expensive than term but cheaper than endowment, as in term after the maturity there is no maturity benefit and no return of premiums paid, which might be considerable amount of money for a number of people in India .

    Oh one more thing ULIPS personally are strict no no for me !, never mix your insurance and investment .

    Always seek professional help do not just go in for any insurance from your ‘Uncle’ because he will give you back some commission amount ……………. remember there is no free lunch…………….

  84. Nagaraj Bhat

    Hi Manish,
    First Thanks to your excellent analysis. I did not understand the following situation “If Ajay survives the Policy and Dies Later” – So lets say he dies at 75th year – what would he get – would he get bonus + 55 K per year and at the end of 15 yrs and at 75th yr, he will get sum assured i.e 10 lacs.

    Thanks,
    Nagaraj

    • Nagaraj

      In that case , He will get bonus at the end of 15th year (when policy matures) , then he starts getting 55,000 per year as annuity and when he dies , he gets the Sum Assured

      Manish

  85. Karthik

    Manish

    Excellent work…Keep it up!!!

    Following is my scenario. Need your advice.

    Policy Taken : Jeevan Tarang
    Policy Taken on : 31.03.2008 (three premiums paid till date and the fourth is due on 31.03.2011).
    Premium amount : 34200.00

    I am now looking at stopping this policy. Wanted your advice on what would be the best option (with the least possible loss) – Full closure or fully paid up.

    Thanks!!

    • Karthik

      Fully paid up will give you some instant gratification where you will think that you will “atleast” get your money at the end , But it would be worth less after 15-20 yrs .

      Surrendering will give you some loss , but it would be for good .

      Manish

  86. moonlightdriver

    Hi Manish,

    I have a request if you can consider it will be good for all of us.
    after reading your post I went to LIC website and looked at the bonus information on Jeevan Tatang and the bonus on this policy is as follows :

    10 year Period Rs40
    15 year period Rs44
    20 year period Rs48

    the figures mentioned above are Simple Revisionary Bonus there will be a final bonus on maturity can you to this may i ask you to please to do the calculations again? Thx

    again i wana say that conceptually what you say is correct about insurance but always use correct figures ………

    Also can some one recommend me any good ‘Term life insurance policy’ I have looked into many but all exclude ‘Terrorism’ etc have a long list if ‘exclusions’ however in a practical scenario the probability of death from a terror incident is as real as death from heat attack ……..

    Just tell me the name of the policy rest i will see myself it suits my requirements.

    THIS IS FOR ALL THE READERS ON THE POST I HAVE SAID IT EARLIER AND I SAY IT NOW ‘APPLY YOUR MIND’ do not just believe what others say blindly investigate and decide in your won ……

    The problem in our country is every 3rd guy is financial planner ……… this site has opened my eyes how ignorant people are am not sure how many bothered to go lic website after this site and actuality bothered to look at the bonus info themselves ….. am gonna do something about it soon -) !!

    @ Karthik before you surrender your policy i hope you have already taken a ‘term insurance’ can you please share which policy you are considering or have taken already! also would you or give a hint share how you plan to use the money you get when you surrender the policy considering the fact that the rate of inflation is above 10% now i am of firm believe this will continue …….. and the risks involved in today’s markets due to political and economic factors worldwide.

    It would be great to hear your thoughts …… thx.

    by da way a bit about me again i have enough experience in investing and am a full time trader, have BSE membership……….. really am gonna do something about financial literacy now ……

    • From where did you see those figures ? Those are just indicative figures and not guaranteed . It changes every year .

      I had taken the conservative numbers for bonus considering the next so many years . Even if you take 40-45 as bonus , the article conclusion holds true .

      Manish

  87. moonlightdriver

    hi guys …. i again went to the lic website just to double check the premium sated in manish’s article ……

    The premium for a guy 30 years taking Jeevan Tarang for 15 years is :
    Rs 67,722.00 not : Rs 71400 this is really sad so many people are beginning to trust this site and we find that figures are not correct……

    I have not gone thru the full article but i have my doubts on scientific feasibility on assumptions used and the accuracy of calculations ….

    very sad

      • moonlightdriver

        hi manish, i know overall the conclusion is same anyways ……..

        bonus info i got from bonus info listed on lic website. the bonus info on tarang since last years is same i have mentioned above …… as far as i can remember ……..

        . <<< search for 'tarang'

        as far as premium is concerned i used there online calculator for a person age 30………… i have looked at the table you have mentioned it is more generic and does not mention the rebates if one pays yearly premium and is a non smoker …………. which are taken into account when official premium is offered finally the customers ………. I always ask my agent these things :)

        http://www.licindia.in/premium_calculator.htm

        i hope i make myself clear ………..

        • Moonlightdriver

          Thanks for that link . I looked at it , the table shows that the bonus for that particular year was 44 for 15 yr paying tenure , But at the time of writing the article I remember I came cross data which showed that the old bonuses have been in range of 30-35 , now LIC is giving better bonuses , We can not comment on future bonus figures for a plan such at 15 yrs . What do you think ?

          Manish

    • Yes , I checked the premiums , Its comign to the same amount which you mentioned . Can it be the case that it does not include service tax ? If not , then the figure in calculator would be final . Where do you see the data for rebates on non-smoker and yearly payment ?

      I didnt find this calculator at that time of writing the article. I will be changing the figures in the article . However the change will only be the numbers and not the conclusion . Thanks for doing the check and pointing it out .

      Manish

      • moonlightdriver

        any agent should be able to tell you the data for rebates :

        Rebates for Yearly mode
        For high SA etc ……

        I understand that the conclusion is same and do not challenge, i think i said this earlier also, it do not worry buddy when some thing is right it is right :)

        gud luk :)

  88. Ravindra

    Dear Mr. Manish
    Thanks for your nice articles. After 1 year i am reading your blog article because i have to take a term plan. Earlier I used to read your blog regularly but after I was blessed by baby girl I have shortage of time ( I enjoy a lot playing with her).
    Till now my investment is OK to me I have PPF +PF+MF (diversified and ELSS) and two junk plan jeevan surabhi and icici life stage pension only Rs. 23000 in these two plan (small amount so i am no reviewing these two).

    I am going to take I protect for 50 lacks annual premium 12900 for my age 34 years ( I am tobacco user although i reduces to 2-3 times a day).

    I wan to open a new PPF account on my daughters name, and 2000 SIP in DSP black rock 100 ( I have hdfc top 200 , HDFC taxsaver , franklin taxshield SIP going on).

    What do you think about my plan just comment whenever you get time..because your comment matter for me..

    Just advise for beginners dont think much about investment just remember slow and steady wins the race… Simply take term plan for insurance and PPF + PF + MF +gold will fulfill your investment requirement.

    Thanks
    Ravindra

  89. Hitesh

    My LIC agent and i had debate over this Jeevan Tarang Policy. He has suggested me to treat this as an tool for Retirement. He said that the interest rates have almost declined by 4% since last decade or so. At present it is 8-9%. so based on this the interest rate after 20 years may be @ 3%-3.5%. so at that time this guaranteed 5% from Jeevan tarang will be higher as against annuity to kept for FD. My point was that even when i invest the amount of premium for jeevan tarang in some good equity funds, i will be able to accumulate a good huge amount which i can keep as annutiy. Also the interest rate may be less than the guaranteed Jeevan tarang rate but my corpus will be large enough to get more than 5% in terms of numbers. What do you say ?

    • Hitesh

      I agree with you . Also tell your agent that as he is beneficiary in this because he will get commission , he will not be able to see what he does not want to see .

      Next point is that at the time of your retirement there will be enough policy which will be deffered in nature , which mean pay a lumpsum and get pension kind ,. so you personally dont have to worry on that .

      Third thing is that we should not predict interest rates in this wya for future , I dont disagree to him that interest rates will not come down in future, It will as india moved toward becoming a developed nation , but we dont know if it will be 3-4% ?

      • Raju Deb

        Dear Sir,
        My premium Rs. 12,562/- quarterly.
        Sum Assured Rs. 10,00,000/-
        Premium paying term: 20 years.
        How much maturity bonus amount i will get at the end of 20 years.
        My age 34 years. and jeevan tarang lic policy other benefit.
        please reply me.
        Thanks!

  90. Masroor

    For a term insurance..is it possible that the private companies may get bankrupt after few years and the beneficiary is unable to get the money then in that case….i am worried about the claim settlement ratio, how can one rely on private comps luring wid such low premiums…..
    please explain.

  91. Raju Deb

    Dear Sir,
    i am buy Jeevan Tarang lic policy premium 12500/- quarterly.
    Sum Assured 1000000/-
    How much maturity bonus amount i will get at the end of 20 years.
    My age 34 years. and jeevan tarang lic policy other benefit.
    please reply me.
    Thanks!

  92. Dipali Kulshrestha

    Hi Manish,

    I am impressed with your analysis and suggestions. So i also need your expert advise to invest Rs. 50000 Per annum (for 20 years) ie 10 lac

    Plan 1

    HDFC SL YoungStar Super Premium

    Its a ULIP, and amount can be invested in Short Term, income,Balanced, BLue chip or Opprtunity Funds.

    Key features-
    100 % tax free (interest is also tax free u/s 10(10 D)
    FMC – 1.35%

    Death benefit-

    Immediate SA will be given to family (5 Lac)
    Premium waiver till maturity
    Fund value at the time of maturity (approx 35 Lac)

    Plan 2

    Invest 4000 /- pm in HDFC Top 200 (growth fund)

    No life cover
    FMC 2.25 %

    My Basic purpose for investment is for my 4 months old child future.

    For which i am planning to take term insurance (Aviva iLife) of 50 lac. And any one option from above 2 plans.

    Please Advice, also let me know if i should go for any other option.

    Thanks a lot.
    Dipali

    • Dipali

      I have already replied you . Option 2 looks better . More simpler , more effective and more easy to manage . U can invest in more than 1 MF, take 2-3 of them

      Manish

  93. Srinivas P

    I have taken Jeevan Tarang (20 Yr, 10lac) policy when my kid was born. It is almost 4 years from then. After reading this article, I want to surrender and get out of it, Is there a “locking” period for this policy? I am paying Rs.48,220 every year and I see the accrued amount as 0 (zero) so far. What does it mean? Does it mean I don’t get back my money I paid for 4 years If I opt out now? Please advise. I would like invest it in someother better LIC policies, but not this Jeevan Tarang.

      • Srinivas P

        It is actually 4 terms I already paid for. What would you suggest Manish? Loose 60% of what I paid so far and invest in some better plan or continue so that it would be “even” some years later? Is 30-40% always going to be the case no matter how many years I wait? Is it going to increase as and when I pay every year? I mean, If I pay for let’s say few more years (say 4-5) would this % increase so that some day, I get better surrender value (ofcourse before the tenure is over)?Please advise.

        • Srinivas

          thats the issue with these endoement plan . The exit is always going to be bad , if you wait for more years .. still your surrender value will never be 100% , you will get full only at end , the worst thing of waiting is you will loose the opportunity cost . Think what will happen if you surrender it now and start investing your future payments some where else ?

          Manish

  94. Gandhi

    Manish,
    The bonus from Jeevan Tarang is tax free, where as the returns from SIP are taxed at 20%( Long term capital gains), your calculation has to consider the effect of the tax
    Regards,
    Gandhi

  95. Gandhi

    Manish,
    As per my understanding long term capital gains are taxed at 20%. I assume SIP is also long term capital gain. Correct me if iam wrong
    Regards,
    Gandhi

    • Gandhi

      thats not true for EQUITY ! . For shares and equity MF , the taxation is different . for short term capital gains (less than 1 yr) , 15% tax

      And for more than 1 yr, not tax !

      Manish

  96. Gandhi

    Even though iam not great fan of LIC, LIC policy might give less returns, but other safe investments like FD will give returns of appx 9% over period of 20 years, post tax they will be equivalent to 6%. Other investment options like SIP will give returns ranging from 20 to 40%, but we cannot bank on SIP for retirement fund. SIP looks good on paper, but its not practical to track your SIP portfoli for 20 long years consistently and at the time you need money for retirement fund your SIP might be doing bad. SIP are good to meet the commitments within next 5 yrs, but not for retirement.
    For example if you take 50 laks Jeevan Anand for 20 yrs, you need to pay 2.75 laks per annum and you will get close to 1.40 crores after 20 years( SA+Bonus+Additional Bonus+ 80% of sum assured, if you surrender your policy after 20 yrs), even if you invest same money in FD with growth rate of 9%, you will get 1.45 crore, which is again taxable. Other important thing we need to keep in mind the yearly premium we pay is not adjusted for inflation i.e actual value of 2.75 laks today might be less 10 yrs down the line.

    For short term commitments take risk invest in equities, MF, SIP etc, but for long term play safe. What you need at the age of 60 yrs is income which is assured. So we need to have both kinds of investments. In that sense LIC is not bad investment

    • sunil s bhagat

      I do not agree with Mr.Gandhi that equities , MF are for the short term.
      Infact in a growing/ developing nation like India, equities offer the solution to beat inflation (8% average) . We can look to a CAGR of 15/20% in the long run (exceeding 5 yrs) . ofcourse equities in the short term can be very volatile. Depending on risk averseness , a person’s portfolio should have equiites (including MFs), and debt(Fixed incomes like PPF, Bank deposits etc) and other classes like gold, commodities to form not more than 15% of the portfolio.
      For retirement what needs to be done atleast 3 yrs before the retirment is an asset reallocation whereby from an aggressive/moderate portfolio (having 85/60% in equities) the retirement proceeds have to be made into a conservative portfolio (shift from equities to fixed deposits).
      LIC / Private life should primarily be for the sake of insurance. However it may be planned to keep a very small portion in plans like endowment (Jeevan Tarang ,Jeevan Anand etc) provided the investor is a very conservative one as these plans can be construed as debt funds which will not be able to beat inflation. Therfore a 4.5% AVERAGE RETURN pa eats away your savings as inflation is 8%.

      • Gandhi

        Sunil,
        As per my calculations, Jeevan Anand policy of 50 laks is giving a returns of 9%( Which is tax free) for 20 years. Below is my calculation
        Sum Assured : 50 laks
        Premium you pay every year( Age :34) : 275000
        Maturity value : 50 laks
        Appx Bonus : 45 laks( With current bonus rates, you might get more than this as LIC bonus rates for Jeevan Anand are going up even in recession times)
        Additional Bonus : 10 laks
        Money after surrendaring the policy : 40 laks( In Jeevan Anand you can surrendar policy after 20 yrs and get 80% of sum assured, if you don’t surrendar, you will have risk coverage for rest of your life)

        Total returns : 14500000 ( 1 Crore 45 laks)
        Compute the returns using FVIFA method ( Future Value of Annuity)
        FVIFA ( r, 20) = Total returns/ yearly Premium
        = 14500000/275000
        = 52.72
        Look FVIFA tables under 20 years for the value close to 52.72, you will get 9% and this 9% is tax free returns.
        SO ITS NOT 4-5% RETURNS

          • Gandhi

            Manish,
            By Surrendering the policy after 20 yrs, you can get 80% of sum assured. Jeevan Anand whole life policy, so you can surrender your policy even after your premium paying term ends.

            so 50 lacs+45 lacs+10 lacs+ 40 lacs= 1.45 crore

            Regards,
            Gandhi

            • Gandhi

              Manish,
              This is introduced recently. The surrender value on maturity might change based on the age. For age group below 35 it will be 80%, for age ground 40 to 45 it will be 65%. You can refer the LIC circulars on Jeevan Anand regarding this information
              Regards,
              Gandhi

              • Gandhi

                Once you get the sum assured at hte end of the term , there is nothing like Surrendering ! .. You will just get the cover , if you die you get the money , else not .

                Where did you see that after the term ends , you can still surrender it and get money ?

                Manish

                • Gandhi

                  Manish,
                  LIC agent showed me the circular of LIC. We can get up to 65% of sum assured after the term ends. I can send you scanned copy of the circular if you want. Initially i thought its 80%, i referred circular once again, its 65%. so for 50 laks policy you can get up to 32 laks after term ends. It seems in Jeevan Anand there is possibility of getting 20 laks as additional bonus for 50 laks policy, its not assured though. so your total returns will be any where from 1.38 laks to 1.45 laks. Thats why said, returns might be appx 9%.
                  Gandhi

                    • Gandhi

                      Manish,
                      Since there is no option to upload the document here, iam typing whats there in Circular.
                      basically It says
                      “Policyholder can surrender the policy after premium paying term is over where by policy will come to an end”,
                      They have given below example,
                      If sum assured is 100000 and Premium paying terms is 20, surrender value after Premium Paying Term ( PPT) is calculated as below
                      1. Calculate the paid up value as PUSA = no of years premium paid/no of years premium paid * Sum Assured
                      PUSA = 20/20 * 100000 = 100000,
                      Kindly note that PUV is not considered, since have been paid on expiry of premium paying term, Hence PUSA will be basic sum assured if all premiums of PPT have been paid

                      2. Now compute special surrender value(SSV) as
                      SSV = PUSA* Factor 3
                      = 100000*0.6462 = 64620
                      Factor 3 is computed by refering the age of the person at the time of surrender. For example for 78 years, factor 3 is 0.6462, If the age is less than 78 at the time of surrender, then you might more value.

                      Regards,
                      Gandhi

                    • Rajan

                      Hi,

                      I have started a Jeevan Tarang Policy on 01/03/2010
                      with premium of Rs. 31406 ( Quarterly) and I will end up paying Rs.2,51,248 at the end of 3 years.

                      After reading the eye opener article and the review comments , I have decided to surrender the policy at the end of 3 Years ( 01/03/2013) .

                      So pls. tell me how much amount I will get back. Will I get the amount which I have paid to LIC?

                      Thanks

                      Rajan

                    • Ravi

                      If you stop paying the premiums after 3 policy years, the policy acquires a Paid Up Value for a Reduced Sum Assured.

                      If you want to surrender the policy – there is a Guaranteed Surrender Value
                      During Accumulation Period, Guaranteed Surrender Value = (30% of all premiums paid – 1st year’s premium) after 3 policy years for Regular Premiums and (90% of Single Premium) after 1 policy year.

                      After Accumulation Period, Guaranteed Surrender Value = 85% of basic Sum Assured.

                      Special Surrender Value is also available under this plan.

    • Gandhi

      “Tracking is not possible for SIP for 20 yrs” . This is a commitment issue .. nothing else .. If you really want to make thing better , you will do it , and find reasons for why it can be done .. Why cant a person take 1 hour each 3 months to look at this ? He can , but he does not .. so its totally a committment a person issue .

      “SIP is not right choice for retirement as it might be doing bad at the time of retirment ” .. if one chooses to invest one time and look at it only after 20 yrs, you are right .. but over long term this is not how it has to be .. one has to be disciplined enough and has to track things on annual basis , before a goal arrives one can choose to liquidate things 2-3 yrs in advance to that he does not wait till end .

      Manish

      • Gandhi

        Manish,
        I agree with you, one needs commitment and iam not against SIP, In fact i do invest and track them regularly.
        What iam saying in the long run, there is every possibility that, your returns could be negative even if you don’t track for a month, Remember incidents like Lehmen, Satyam , Sub prime, US default doesn’t happen every 3 months, they just happen one fine day without any signs of warnings.The fund we are tracking might suddenly reduce the value by 50% even in one day, the chances are very low, but the moment the incident can coincident with the time you need money desperately or 2 /3 years before your retirement.Its all trade off. For short term high risk and high returns works perfectly. For long term where you need money for retirement take less risk and at the same time compromise on returns. For retirements what you need is more important is assured returns than high returns.So you need to have alternative source of income for your retirement which is safe. Thats why i say we need investments like LIC which are safe, the reason being your bonus get accumulated over period of time, so when the economy is good, the bonus gets accumulated, so even a major catastrophic even happens, your losses will be minimal, unlike SIP where your investment could be in water.

  97. Ninad

    Hi Manish,
    I bought flat recently. My home loan EMI is Rs.35000. I have decided to go for 1cr term insurance, so that in case of any uncertainty this insurance money will take care of my home loan and family. Is it a right decision?
    I was disciplined investor in mutual funds for last 3 years but now stopped investing because of HL EMI. Because after paying HL EMI I am not left with handsome amount to save and take care of family expenses. Is it advisable to continue with SIP again with lesser amount?
    Regards,
    Ninad

    • Ninad

      Taking a term plan is right decision and not just right , its advisable and not just advisable , its the NEED of the hour for your dependents .

      Also regarding SIP , you should keep doing it for whatever amount you can .. just make sure you prepay your EMI whenever you get some big money in your life and reduce your EMI burden

      Manish

  98. Vishal Jain

    Hi Manish

    I was not aware of all the facts about policies till i started following your articles in jagoinvestor. My problem is that my agent has forcefully given me 2 policies jeevan anand & jeevan tarang, for which i have paid the 1st premium. I dont wish to continue with both. SO my question is –

    I cannot surrender it before 3 yrs, but can i stop paying the premium any further & still continue or i will have to pay till 3rd year then stop paying & make it paid up. Plz suggest.

    • Vishal

      before I comment , please make sure you do not fool yourself by saying “Agent forcefully sold me” .. You know deep down , its not true … It was you who never paid any attention in what you were buying and took someone advice for granted . Accept that.

      the best thing would be to stop paying premiums and forget about it , because if you are going to pay more , and then surrender later , it would be more costly

      Manish

      • Vishal Jain

        yes its true that i had no idea so whatever was told to me i accepted, moreover it was taken on obligation. stop paying any further premium would be good or payiing it for 3 yrs and then making it paid up? plz suggest.

  99. mario

    I have a jeevan tarang policy.The details are:
    commencement date : 8th july 2008
    end date : 8th July 2025.
    yearly premium of Rs.10044/- have been paid till date.(6 premiums = Rs. 60000/-)

    Now my question is, what is the amount i’ll receive as i want to dis-continue it next month i.e. oct 2011. will i receive the full 60000/- that i have paid as premium without the interest or there will be some deductions????
    Pls guide me.

    Best regards
    mario

  100. bhalchandra v. pade

    Mr.Manish……I am reading your articles for some time. I feel your views on LIC’s traditional plans are biased. Consider the following 1) You insist that if LIC’s traditional policy is surrendered[ in early years] then amount returned is much less than premiums paid which I agree but note that this is a product for long term savings only.This type of COMPULSORY SAVINGS makes a sense because one needs to save enough for retirement fund. Liquid investments like mutual funds, bank F.D. etc are most likely will be spent on redemption. Very few people are disciplined investors who reinvest this money on redemption. 2) One should invest about 10-15% of income in traditional LIC policies. In case one has any problem for paying premium for a year or two then he can take policy loan to the extent of premium and move on. 3) If LIC traditional plan is bought at early age for a longer term then one can get about 8% TAX-FREE returns which is at par with PPF.4)People invest money in bank F.D.;postal scheme etc where interest is taxable whereas returns from insurance products are tax-free.[Even as per proposed DTC; mutual fund maturity amount will be taxable]. 5) LIC plan is a combo product giving COMPULSORY SAVINGS + TAX-FREE returns guaranteed by Govt.of India + insurance + tax rebate + easy policy loan in case of urgency.Thanks. ……..b.v.pade

    • Bhalchandra

      Whatever you said are marketing sentences .. they will look good for a customer. How do you convince a customer who wants agrresive growth in his money , needs a real return of 5-6% above inflation rate ? How do you convince someone who wants liquidity from this portfilio who can take out 100% of the money whenever he wants ?

  101. bhalchandra v. pade

    Mr.Manish……. My letter dt.26th October is not at all marketing statements but it is a practical approach. Do you mean that one should put his all investible funds into equity so to expect 15% return ? No person; howsoever rich he may be; will invest his money at one place. It is a famous say” Don’t put all eggs in one basket”. In my letter to you I have written that one should put 10-15% in LIC’s traditional plans and rest of the money can be invested in equity/gold/PPF etc as per his RISK APPETITE. If stock market crashes and his blood pressure shoots up then there is no point in his investing in stock market. After all money is for what ? Your other point is about liquidity. Every investment is not for short term needs.Again I repeat;I say 10-15% funds should be invested in long term plans like LIC’s traditional plans so to contribute to a decent retirement fund. One should not undermine importance of COMPULSORY SAVINGS within limit.Thanks………………b.v.pade

    • Bhalchandra

      Again , there is no reason why LIC policy has to be in one’s portfolio . I am not against LIC , but the logic you are giving is not accepted . Why not just having a FD with SBI , even thats govt guaranteed ,why not PPF ?

      Manish

      • chetan

        There should be LIC policy in one’s portfolio because of its claim settlement ratio as mentioned in IRDA website whereas check the same ratio for other insurer . Private insurer came up with ulips and there agents earned handsomely by mus-selling that but when IRDA put restriction on that , then now pvt insurer are coming up with term insurance because there ulips are being sold , private insurer are able to sell the term insurance also by way of putting its cost as low as possible to attract customers but their claim settlement ratio tells the story.
        SO, LIC policy should be there in one’s portfolio as it has 55 years of standing in insurance industry along with govt guarantee under section 37 that all the bonuses attached to SA will be paid to party even if LIC of India shut down its operation.

  102. Chittaranjan

    Dear Manish,

    From this site I could see your depth knowledge on LIC policies. So, I hope you could help me in taking one decision.

    My concern:
    3 years back I enrolled myself as a Jeevan Tarang policy holder. I was totally new by that time and somehow I did this policy. Now I think this policy does not suit me. I want to surrender it now. So what is the amount that I will get if I surrender it now(completing 3 years).
    I am paying Rs. 60,300/ p.a
    So in total I have paid 1,80,900 so far.
    If I will surrender it now how much money I will get in return.
    Thanks in advance.

  103. Mayur

    Dear Manish,

    I have bought Jevan Tarang policy recently .. now since you have mentioend that there are two options to stop it .. either go for paid up or else surrender ..
    If i dont want to loose on the money (~50K per year) and go for paid up option after 3 years .. does this mean that i ll get (150K) after 20 years ?
    Could you please elaborate as to what exactly would i get in hand if i stop afetr 3 years of starting the policy and going for paid up option ..
    Also,
    Would i also get the bonus /loyalty or cover ?

  104. Gandhi

    Manish,
    You need to revise returns in the article based on the surrender value of the policy after the premium paying term ends. Since Jeevan tarang ALLOWS SURRENDERING POLICY AFTER PREMIUM PAYING TERM ENDS, you need take the value into consideration to compute the returns. The returns will increase. Please refer my earlier reply on the surrender value calculation.
    Gandhi

  105. Ramakrishna

    Hi Manish,

    I have bought 15L policy sum assured from jeevan anand. paying 60686 per year.
    paid one installment. What is the best I can do.
    Please let me know any single premium policy — retirement policy
    Is it good to go with SBI lifelong pension plan or LIC pension plus.

    I am 34 years old.

  106. Milind

    Hi,

    Recently my LIC agent told me about a plan which is combination of LIC samruddhi and some other plans. It seems close to Jeevan Tarang plan as it gives back inverstor/insurer life time same amount that he paid every year.

    Plan is like this :
    For the first 12 years pay 1,00,000/- per year.
    After completing 12 years you will get 1,00,000/- per year by LIC for life time/ 100 year age limit.
    Also after starting the policy risk cover starts which is @ 17,00,000/- (double in case accidental death) and this will last till age 80.
    From 80 to 100 year of age no risk cover.

    Plan comes with minimum premium of 50,000/-. In this case you will get 50,000/- after 12 years. Remaining terms are same.

    Please share your views on this plan…

  107. Rajan

    Hi,

    I have started a Jeevan Tarang Policy on 01/03/2010
    with premium of Rs. 31406 ( Quarterly) and I will end up paying Rs.3,76,872 at the end of 3 years.

    After reading the eye opener article and the review comments , I have decided to surrender the policy at the end of 3 Years ( 01/03/2013) .

    So pls. tell me how much amount I will get back. Will I get the amount which I have paid to LIC?

    Thanks

    Rajan

    • Rajan

      You will not get back more than 1 lac . The surrrender value after 3
      yrs is just 30% of the premiums paid excluding 1 yrs premium ..
      Considering that 17 more years are left .. it would be a right thing
      to stop this policy and divert the same thing in equity mutual funds
      keeping a long term in view ..

      Its a very hard decisioin i know , but by paying more you will worsen
      the situation more and more ..

      I can see that you have made just few premiums (1 yrs) , just stop it
      . Its a big loss , but a very small loss compared to what you will
      loose in very long term

      Buy the same insurance cover (25 lacs) in just 3-4k premium and invest
      the rest money in installments per month .. this is more liquid ,
      robust and high returns proposition

      • B.Vadamarajan

        Hi Manish,

        Thank for the reply. Pls. suggest me the options which I can opt now

        1. Take loan from the premiums paid for three years and pay for the remaining 17 years and complete the policy. ( Will there be any interst for the loan taken?)

        2. Stop the premium payment after three years and get the maturity benefit after 20 Years?

        3. Closing the policy after paying for three years and getting the surrender value?

        • I would suggest dont continue this policy at all .. You must be getting very emotional with your money right now and would not like to loose the money you have paid .. but the best thing for your situation is to just STOP the policy and forget what you paid ..

          Get a term plan for your insurance cover and invest the rest of the money in equity mutual funds for long term .. This will be better in long term ..

          Manish

  108. Madhavan

    Dear Manish,
    After reading your posts, I am emotionally breaking downs as:

    1. I have taken this policy blindly believing my LIC Agent “friend”
    2. I read this article just “after: paying the premium today.

    I have taken a Jeevan Tarang policy for a sum assured of 5 Lakh for 10 Years on 23/01/2010 with a premium of Rs. 26,690 half yearly and paid 5 instalments (total Rs. 1,33,450/- including today’s payment).

    Now, please advise me what is better:
    1. Complete the 3 years (paying last instalment due on 23/07/2012) and wait for 7 years for the surrender value?
    2. Forget about the policy and curse my friend (myself as well)
    3. Pay the last premium of Rs. 26,690 on 23/07/2012 and get the surrender value now (if it is morethan Rs. 30,000/)

    Awaiting your valuable advice.
    With best regards
    Madhavan

    • Madhavan

      You are really at the worst point right now .. These policies are known to never give more than 4-6% in long run , at times even less than 3-4% (like recent Jeevan Ankur), its not just the final return , but also the flexibility of stopping premiums and geting back the money which should concern you . If you pay your next premium (6th half yearly) and then stop the policy , you will get just 30% of your 2 yrs premiums (first year premium is always excluded) , so it would be around 30% of 1 lac = 30k+ … but that money will be your income and it will be taxable ! ..

      If you just paid the premium and want to close the policy , it will really hurt you , but over the long term it would be better to just stop this policy .. SO pay one more premium and and surrender it ..

      Be a little more informed investor and do some basic maths.. doesnt take more than 30 min , saves lacs of money !

      Manish

  109. Mayur

    I have taken a Jevan Tarang policy ..and have paid the first annula premium of 50K.. If i pay the premium for the next two years .. and complete 3 years .. and then stop the payment .. what are the options –

    I get the amount invested (50K*3) after 20 years ?
    Do i get any benefits after 20 years ?
    Do i get any insurance during 2o years ?

    Regards,
    Mayur

  110. Shashi

    Hi Manish, i read ur analysis and it really looks eye opener . I am new to this investment world. I am 27 and took Jeevan Anand from my father’s friend(LIC Agent).My father has also taken this policy. No I think i have to re-evaluate my plan. For ur information :My plan is for 21 years with annual premium 50114 . Can u please analyse this plan , and suggest me better option to get more returns .Also in that case how much will be the tax saving. hope to listen u soon

    Thank you!

  111. Akshay Jain

    Hi, I really thank you for your wonderful analysis, but i think that the returns in Lic policy is around 12%. Correct me if i am wrong.
    71600*15 years=450000bonus+55000 for 25 years assuming he lives upto 70 years+1000000 sum assured on death.
    Please do reply back.

  112. no need

    please its a advise to all the consumer.. think before u invest your money..i have heard that only for advertizement lot of agents make fake ids and comment about the plans. i would say that its your money. i am a holder of this policy from last 2 years and now i need the money. i asked lic to cancel my policy and return the money. so they said that i will not be refunded by any kind of money.they said that i have to atleast pay for 3 years and after that i will get a refund of 40% only. so please people there is lot of scam going on. please think before u invest. thanks.

  113. Amar

    In the most common scenario – What if Ajay dies after the 10/15 yr payment period?

    Does the survivor get the sum assured even if reason of death is ‘natural’ i.e. ‘old age’ and not accident?
    What factor does reason of death play in all scenarios?

  114. Amey H. Nikumbh

    Hi Manish,
    I have taken jeevan tarang policy for 10 years..( SA 5 lac) paying premium for last 6 years..
    11 premium i already paid each of RS 26,690.
    What shud i do ? shud i continue with it ? or shud i stop th epolicy ? how much money i will get back ?
    Please help..

    • Amey

      You should be able to find out how much will you get back using this same article ,you can expect somewhere around 50% of your money paid till now + Bonus if any (discounted value) , better make it paid up

          • amey nikumbh

            Hi manish,
            i checked with LIC office..if i surrender my policy now thn i will get 2,28,000 …..
            Till today i hv paid around 2,88,000…
            should i take my money back ?
            also i came to know dat we can surrender policy at the same lic branch frm whr i took it ?i cannt surrender it at any other branch ..is dis right ? actully it shud b psble to surrender it at any branch same as we can pay premium at any branch..
            regards
            amey

            • Jay Karan Prajapati

              Hi Amey,
              This system is going to change, in coming time you will have sigle window service .you can send a letter to your branch to transfer the policy docket to your place branch it will be done then you can take any kind of service from present city……….but will not suggest you for surrender as you will loosing the amount as well as your insurance cover .we can not see insurance policy only for the investment purpose while it have risk cover also…..about jeevan tarang i want to highlight some points Do you know what will be the annuity rate after 15 or 20 years ….it getting down my friend even while considering PPF you should give variable interest rate which is coming down day by day .one more point i want to focus that taking annuity will be taxable under 10(10A/3) look into that aspect also .i will tell you while showing the figure you have not considered lot of point please consider then provide the comparison.where LIC jeevan Tarang is providing 5.5.% Guaranteed of SA but we cant say that PPF will give 8.5 % fixed for 17 years or after 20 years annuity will be 6 or 7%.if you will see some developed countries there is only 1-3% where in coming time india will also be developed one see that point of view what will be the annuity rate ……….

  115. Minu

    Hi Manshu,
    I have started reading your blogs lately. Congratulations , as u are a doing a noble deed by educating masses without any selfish intention. God bless u
    Now towards my problem. I have a jeevan tarang policy which I had taken 4 years back. After reading this blog , I have decided to stop this policy
    What do suggest me ?
    Make the Policy Paid up OR Take your Money Back ?
    My sum assured is 1 lac only for 15 years and premium I pay is 8000.
    Kindly advice me .

    Thanks in advance

  116. Minu

    Hi Manish
    I have started reading your blogs lately. Congratulations , as u are a doing a noble deed by educating masses without any selfish intention. God bless u
    Now towards my problem. I have a jeevan tarang policy which I had taken 4 years back. After reading this blog , I have decided to stop this policy
    What do suggest me ?
    Make the Policy Paid up OR Take your Money Back ?
    My sum assured is 1 lac only for 15 years and premium I pay is 8000.
    Kindly advice me .

    Thanks in advance

  117. pooja

    dear manish, i did go through your analysis and according to it, its waste investing in Jeevan Tarang ,
    I really appreciate your findings, can you please tell me the same about jeevan anand

  118. Amit

    Hi,

    Amazing Article ! A big no to LIC. Please advise on this.

    Age : 30 years
    Looking for Term policy of 1crore cover.
    Female.
    Non Smoker.

    What’s the best term insurance to go right now ?

  119. Abhijeet Bhosale

    Dear Mr. Manish,

    Thanks for clarity on Jeevan Tarang. Its truly eye opening for me.
    Can you please guide me ?
    I have been paying Premium of Jeevan Tarang since Sept 2010, after reading your article I felt that I should stop this policy but the loss is huge. So should I continue till 3 years and then stop it or make it paid up.?

    Also I would like to know more about Paid up policy?

    Regards
    Abhijeet

  120. debasish manna

    i hav purchased jeevan tarang policy from corporate agent with annual installment of rs.52834/- th policy term is of 10 yrs.. if insurance amt is 5 lakhs. then how much i’ll get aftr 10 yrs.? does jeevan tarng gives accidental benefit / death benefit? as on lic page i don’t found these benefits but on my corporate agents page it shows such benefits? at what rate the bonus increases… plz reply me….

  121. BalajiSrini

    Dear Manish
    Thanks for your excellent eye-opener on Endowment / Pension policies and the financial mess I am in right now.
    I am one of the bhakras for Jeevan Tarang and I am more than mid-way right now and at loss to decide the options. Pl. suggest with practical action.
    Took 10 yrs JT policy for 10 lacs SA, quarterly premium of approx. 27K. Have completed 6 yrs now and 4 more yrs (16 more premiums) to go. Surrender value I hear is only 3 lacs from a different agent and he says that includes bonus, which I doubt cant be that low considering Nikumbh case equivalent above. How to verify the real surrender value – can we insist them to give a statement on same at branch office, without involving my original agent?

    Also, the agent told that paid-up for this policy is not after 10 yrs (my policy term) and paid-up benefits and pro-rata SA amount can be taken only at 100 yrs which is maturity period – if this is true, I’m really doomed.

    The option I think is no other go but to pay for next 4 yrs (not so long period for inflation concerns from now) – and terminate policy, I hear I might get 9 lacs (excluding 10% of SA for policy termination) + approx. 3.5 lacs bonus maybe – so at least will get 12.5 lacs 4 years later. Agreed that this is peanuts compared to all the pain I have taken for which I have only myself to blame.
    Also, can I do any action – termination or paid-up or availing loan without involving my original agent who continues pestering and brainwashing to continue?
    Pl. suggest – many thanks in advance.
    Regards
    BalajiSrini

    • BalajiSrini

      As far as I understand , on completion of policy tenure (like 10-15 yrs) , you will only get BONUS , no sum assured , SA is payable on death or on complition of 100 yrs

      Manish

  122. Sumant Kumar

    Dear Manish,

    Thanks for your valuable advise on Jeevan Tarang. I am going to surrender this policy. My monthly income is 25000. Is there any suitable policy in LIC for me? How about the term policy?

  123. hi manish.thanks for your valuble information about jeevan tharang. i am asking one advice.my husband is a private employee.now he is 38 years. now we start to invest for our furture requirements. if we invest 8000 per a month. how can we invest the amount in many plans. pls don’t say any SIP.we dont know what is best. we are living a village.so pls explain how to invest our 8000.pls tell me what is best for our future.how can we invest.better than jeevan tarang policy. thank you

    • Lakshmi

      I would say you need to invest some time in that case to learn things . For now just invest that money in a recurring deposit , because i see lack of knowledge.

  124. Nandadulal Bera

    Dear Mansih ji,

    I have a policy of LIc Jeevan Tarang policy no – 499580250 with yearly premium of 21970. I want to know what will be yearly back up after 15 years of complete.

  125. Umesh Deshmukh

    Mr.Manish, I appreciate your study.But i have some questions to ask. Since inception i.e.17/03/2006 the bonus rates have not fallen below Rs.44 for every Rs.1000 S.A. for 15 yrs term for Jeevan Tarang Policy.Latest rates as declared on 01/09/2012 are Rs.46 for every Rs.1000 S.A. for 15 yrs term.And you have shown the rates as Rs.30 for every Rs.1000 S.A. Why are you misleading the peoples without having the knowledge to the fullest. I agree with P.P.F. option & I know that Jeevan Tarang Policy is not the Best investment option.But at least 5.5% is guaranteed for life after specific term.And no one is giving guarantee like LIC for next 100 yrs. And I am totally disagree with mutual fund as an investment option.Because since 2007 everybody had burnt their fingers in stock market.I am talking about the common man.And you have shown their returns as 12% p.a. Are you ready to give this 12% p.a. guarantee on stamp paper and in registered agreement? Don’t fool & mislead peoples without having “Concrete Evidence.” Everybody should understand one thing that these suggestions about stock market & ‘X’ fund or ‘Y’ fund are “Paid Suggestions.” In my opinion everybody should buy term insurance & that too after thoroughly studying claim history of every Insurance company on IRDA website.And remaining amount should be invested in capital guarantee options such as various schemes from nationalised banks,PPF and any other investment where there is a guarantee of capital and returns from Indian government.

      • Umesh Deshmukh

        Bonus Data:-06/07-Rs.44, 07/08-Rs.44, 08/09-Rs.44, 09/10-Rs.44, 10/11-Rs.46, 11/12-Rs.46 for every Rs.1000 S.A. for the term of 15 yrs. Source- Life Insurance Corporation Of India’s official Website i.e.www.licindia.in

          • Umesh Deshmukh

            Mr.Manish IRR is not an issue here.The main issue is that you have reviewed Jeevan Tarang policy on your website and shown low bonus rates as compared to those LIC declared for last six years.If you are reviewing any policy you must study it thoroughly and only then should come to any conclusion.

            • This article was written in 2009 . There was no much data at that point of time . Also you can not project numbers which are not guaranteed. Hence I had taken pessimistic numbers like 30 , which can be real in future. Even if it does not happen , you can assume 40-50 and the conclusion would be same. I think it matters what exactly happens even with the optimistic numbers . The point is , is this the best thing a investor can do with his money ? I am talking about investors who earn good money and take some good amoutn of risk , Is a traditional plan suggested to someone like that for a long term investments ?

  126. keerthan

    Hi Manish,
    Ive paid my jeevan tarang policy premium for only one year (Rs.44000 per year), and i would like to cancel the policy and go for jeevan Anand.What will be the refund amount i will get after cancelling the policy.Or do i have any chance to shift my policy from tarang to Anand ?

    Thanks

    -Keerthan

  127. keerthan

    Ive paid my jeevan tarang policy premium for only one year(Rs.44000 Annual payment) .I would like to cancel my policy and move to Jeevan Anand Policy.If i cancel my policy within three years how much refund i will get ? Or is there any way to move from Tarang to Anand Policy ?

    Thanks

    -Keerthan

  128. Abhishek

    Hi Manish,

    Please let me know if Jeevan Tarang Policy is good policy.I have started these policy last year(Paid 2 Installation already) for 20 year.

    Please advice should I surrender the policy or not.If yes please tell me good plan

    Regards,
    Abhishek Bhartia

  129. Vaishnavi

    Excellent blog.. You saved me from investing in Jeevan Tarang. I will opt for term insurance and public provident fund as explained.

  130. Kamal

    Hi Manish,

    Came across ur article while searching for highlights of Jeevan Tarang policy as I wanted to invest in the same. Thank you for sharing the true facts with us.
    I wanted to know which Term policies are good for investment as I dont have any idea. I am 42 years old and woul like to have a cover for 1 crore. Can u pls guide me with multiple options. Also would like to know how it works out. Is it also a money back policy.
    Pls can you reply me with names of good policies.
    Kamal

  131. Amit

    Hello Manish,

    Didn’t read the whole comment thread , don’t know my question is answered here, my query is what is the best plan for maximum returns.
    In other words, I want to keep investing in the plan till retirement ( I am 27 now, retirement age is 60 for me, so I will keep investing in it till 33 more years ) without pulling out money in between.

    I am looking for plan that can give me maximum returns be it lic or any thing else say fd or anything ?

    Thanks

    • Amit

      You should read my book’s 3rd chapter, you are still not clear about the returns and risk relationship . You always have to choose uncertainity if you want to maximize return , which can happen only with mutual funds (equity products) .

      • Amit

        Not sure there will be any MF where I can continuously put money for 33 years.
        I see PPF is one of the option and hence I have started putting money in it.

        I want to have one more investment option with similar returns as PPF and if maturity amount is tax free than that is what I am looking for.

  132. Farah

    Pls suggest me which is the best pension plan policy ?
    Am 25 years old right now.
    After my retirement I don’t want to be rely on others.

  133. Bipin Ghatge

    I have a Jeevan tarang Policy that was started 6 years back on 12th December 2006.I am paying Rs 12,634/- premium every 6 months.Till now I have paid 12 premiums.I want to stop this policy and shift to some other investment.What will be the Surrender value as of today..

  134. Nishant

    Hi Manish I am 25 years now. I am married. I also have a ppf account. I am looking for insurance policy, This financial year(2012-2013) I have to show 50,000rs to save tax. I am looking to put 20k in ppf and remaining 30k in some insurance policy. I also have a money back policy from SBI insurance, but I haven’t renewed it. I would like your advise on how to go about the 30k(apart from 20k in ppf). Which policy would be good to go with insurance?

  135. srinivas

    Dear manish

    you are telling term insurance is better for insurance purpose but how many companies are paying clims 100%. and also one more thing is if a person should take jeevan tarang for his kid its soo nice policy. because for 10 lakh SA olicy premium will be 48000. after 20 years very year child will get 55000/a. so which financial institution is giving lifetime guaranteed for this money back every year. and one more thing at the end of life SA+LA loyalty addition is yet not declared but more then bonus rate LIC will declare the LA. ( around 6% to 7%) if 6% also its soo good.

    Is there in any MF or any other tool like this giving guaranteed returns for lifetime please tell me i will invest today. LIC money management is a model of all over world. no one company is managing like this. claim ratio is high. Section 36 of insurance act union govt guaranteed for all LIC policies. from last 5 years what is the total returs of equity or MF.

    With insurance cover, and PWB benefit bonus, SB And Finally SA+LA see these benefits are guaranteed in LIC. but ant one of this benefit is not guaranteed in MF. and one more thing if you are advising MF please do your business but dont misguide the people because there are 42 crore policies are running in india with LIC. for doing this job you are earning something same like this LIC agent earning commission for his job. all LIC agents are not 420. some agents are doing their job very well. in india no one not taking care of middle class people and their financial life only LIC agents are doing this job.

    please suggest me any one MF is giving guaranteed returns of 8% for 20 years of term with insurance and accidental cover and disabality cover please tell me i will surrender my policy and then i will invest with you.

    Regards
    Srinivas

    • You are looking at numbers .. if a policy gives you 1 crore after 1000 years , does it mean any thing . I think you are not clear about the concept called “value of money” . See what you will get in future is any worth that time or not . What matters is IRR% of the policy . Dont just look at numbers .

      Another point of not paying 100% of claims . Which company does that ?

      Thats a wrong question to ask . The right question you should ask is “How many companies pay 100% GENUINE Claims “? THe answer is almost every company does that. The rejections happen when the customer has violated some terms or conditions or hidden some information

      I want to make sure you are on right path and suggest to read up more on the overall subject.

      • Andy Hyd

        Hi Manish,

        I have jeevan tarag policy where in I am paying 78K per yr for 20 yrs term, have 5 years before. where as I hv 1 cr aviva term insurance as well along with PPF @ 40K per yr. After reading your article I am doubting that on my decision, that am I good to put 78k per annum in Jeevan tarang policy? Pls suggest. I am feeling may be I cud put this money elsewhere and as you mentioned above get better returns or increase my existing SIPs. should I exist from this and if yes then is it worth exiting now? Pls kindly suggest. Thanks for your time and views.

  136. Andy Hyd

    Manish,

    Also missed to mention wonderful insight, which LIC agent wont give :), Thanks for research and explanation in detail. I have asked question in reply to Srinivas’s response. I started jeevan tarang 5 yrs back, missed started word. Sorry for same. Kindly give response to my earlier post. Thanks. A

  137. Vijay

    Now that you have the clear numbers on the premium, published bonus numbers and the Loyalty numbers, can you revise the review with correct numbers so that we see where we are with regards to IRR?

  138. Anand

    Hi Manish,

    I have jeevan tarag policy where in I am paying 78K per yr for 20 yrs term, have got it 5 years before. where as I hv 1 cr aviva term insurance as well along with PPF @ 40K per yr. After reading your article I am doubting that on my decision, that am I good to put 78k per annum in Jeevan tarang policy? Pls suggest. I am feeling may be I cud put this money elsewhere and as you mentioned above get better returns or increase my existing SIPs. should I exist from this and if yes then is it worth exiting now? Pls kindly suggest. Thanks for your time and views. Pls respond, Thanks for same.

  139. Ranjit

    Hello Manish,

    First up all nice article and great anyalysis.

    I need help, where I am planning for 5 Lacs Jeevan Tarang policy for 20 yrs, and my age is 28.5 yrs, is this right decision kindly suggest. :)

    As I am planning to pay in few days, kindly reply and save me if I am taking any wrong step, also this is my first investment ever. :), if any other alternative investment also you can suggest.

    Thanks,
    Ranjit

  140. Ranjit

    Hello Manish,

    Very nice article.

    I am planning for 5 lacs, 20 years, 24610 per year, Jeevan Tarang policy, is the wise decision, as this is my first investment and suggest so that I should not fail at first step itself :).

    Waiting for response, glad if you help.

    Ranjit

  141. Bhushan

    Hi Manish,
    First of all thanks a lot for such a gr8 review. i really loved it.
    Im 25 years old and i did my first investment in Jeevan tarang and Jeevan Saral policy (for which they call magic mix) last year (2012). I have sum assured of 5,50,000 and anual premium around 39,000 for Tarang (term 15 yeras) and sum assured of 6,00,000 and anual premium around 30,00 for saral. So is it good to go with this combination or shall i just continue with Saral?
    The magic mix is, i just have to pay till next 15 years and after that my returns from tarang will be premium for saral. Please advice me. Thank you….

    • Jay Karan Prajapati

      Will suggest you not to go for paid up .such kind (Manish) of people used to misguide it is not good to suggest for paid up when your insurance cover is continued insurance policies (endowment ) are for investment (Min guaranteed) + risk coverage .i know PPF is better as of now for investment purpose not for investment + risk cover as will give you brief -Do you know what will be the annuity rate after 15 or 20 years ….it getting down my friend even while considering PPF you should give variable interest rate which is coming down day by day .one more point i want to focus that taking annuity will be taxable under 10(10A/3) look into that aspect also .i will tell you while showing the figure you have not considered lot of point please consider then provide the comparison.where LIC jeevan Tarang is providing 5.5.% Guaranteed of SA but we cant say that PPF will give 8.5 % fixed for 17 years or after 20 years annuity will be 6 or 7%.if you will see some developed countries there is only 1-3% where in coming time india will also be developed one see that point of view what will be the annuity rate ……….

  142. Srinivas Putlam

    Dear Manish,

    Thanks for explaining the things in language, a non finance expert can understand.
    I don’t know whether this is the correct forum to ask below question…
    I have taken “BSLI Dream Endow Life-Term30 Pay30 GSD30″. Yearly premium is 20693/-. Sum Insured around 50Lakhs.
    Please explain me whether I have taken a good decision or not.

    Forgive my English.

    Thanks & Regards,
    Srinivas.

  143. srinivas

    hi Manish,
    thanks for your valuable information, but i am planning for a good savings plan to my kid, his age is 1 year, can you please assist, which is the best one.

  144. Prabal Das

    Dear Manish,

    Thanks a lot for your article about Jeevan Tarang and also for your valuable advice.
    I have a Jeevan Tarang Policy of 5.0L (Term 15 years, Annual Premium Rs. 34361.00, already Paid Seven (7) Premium).

    Shall I make it Paid up policy and invest the premium amount (Rs. 34361.00) in PPF or shall I continue to pay full term premium.

    Please advice.

    Regards,
    Prabal

  145. Amandeep Chauhan

    Dear Manish, Thanks for your wonderful article. I feel sorry for myself to come across this so late. I have Jeevan Tarang policy beginning year 2009 and am paying Rs 68000/- for a term of 15 years. Can you please guide me that if I surrender it now what will I get in return. I want to stop it right now

  146. MITESH PATEL

    Dear Manish, Excellent job by Jago Investor,
    If i come with your articles before 5 years, I will be millionaires without doing huge agent-guidelines investment.
    By the way i invested in JEEVAN TARANG of my wife on 05/03/2012 of 30,00,000 premium is 74602X2=149204/annum. wife age at insured 37 years. I paid 223806. now my question is 1) What is next step to make profitable deal? 2) How can i get insured my wife/(family with 13 years male twins) with better option? Waiting for reply…Mitesh Patel

  147. manju m

    that’s simply great…sumwer confusing for first time readers. bt good…
    Could you pls suggest what one should do if he has already taken jeevan tarang n paid 5 premiums..? after reading al this I found it a big mistake…should he tak his money back with sum losses.?

  148. Jay Karan Prajapati

    Do you know what will be the annuity rate after 15 or 20 years ….it getting down my friend even while considering PPF you should give variable interest rate which is coming down day by day .one more point i want to focus that taking annuity will be taxable under 10(10A/3) look into that aspect also .i will tell you while showing the figure you have not considered lot of point please consider then provide the comparison.where LIC jeevan Tarang is providing 5.5.% Guaranteed of SA but we cant say that PPF will give 8.5 % fixed for 17 years or after 20 years annuity will be 6 or 7%.if you will see some developed countries there is only 1-3% where in coming time india will also be developed one see that point of view what will be the annuity rate ……….

  149. Jay Karan Prajapati

    In this site some people have hijacked the matter and convinced the people also that what calculation they have shown its correct .even me too agree that calculation is somehow correct but what ever return they have shown it applies for present time while insurance investment returns are for long term this statement has value .people are talking about MF where you can see 2007 Sensex was 21000 (approx) and today is 20000(approx) then also people are showing 12 -20% returns which is just imaginary . you should look into GDP condition of country and political intervention while investing in any sector (Sensex) of MF .These people just want to show that MF and PPF is good for every one while it depends on individual capacity to take risk on investment (MF) .may be these products are better if you know about market and but for a normal layman who dont want to take risk on investment and he need some family security probably in single policy
    can take life insurance .Dont suggest every one to surrender or making paid up …………I dont agree advice given to them with statically data and returns.

  150. Jay Karan Prajapati

    http://www.investopedia.com/university/mutualfunds/mutualfunds5.asp

    Perhaps you’ve noticed all those mutual fund ads that quote their amazingly high one-year rates of return. Your first thought is “wow, that mutual fund did great!” Well, yes it did great last year, but then you look at the three-year performance, which is lower, and the five year, which is yet even lower. What’s the underlying story here? Let’s look at a real example from a large mutual fund’s performance:

    1 year 3 year 5 year
    53% 20% 11%

    Last year, the fund had excellent performance at 53%. But, in the past three years, the average annual return was 20%. What did it do in years 1 and 2 to bring the average return down to 20%? Some simple math shows us that the fund made an average return of 3.5% over those first two years: 20% = (53% + 3.5% + 3.5%)/3. Because that is only an average, it is very possible that the fund lost money in one of those years.

    It gets worse when we look at the five-year performance. We know that in the last year the fund returned 53% and in years 2 and 3 we are guessing it returned around 3.5%. So what happened in years 4 and 5 to bring the average return down to 11%? Again, by doing some simple calculations we find that the fund must have lost money, an average of -2.5% each year of those two years: 11% = (53% + 3.5% + 3.5% – 2.5% – 2.5%)/5. Now the fund’s performance doesn’t look so good!

    It should be mentioned that, for the sake of simplicity, this example, besides making some big assumptions, doesn’t include calculating compound interest. Still, the point wasn’t to be technically accurate but to demonstrate the importance of taking a closer look at performance numbers. A fund that loses money for a few years can bump the average up significantly with one or two strong years.

    It’s All Relative
    Of course, knowing how a fund performed is only one third of the battle. Performance is a relative issue, literally. If the fund we looked at above is judged against its appropriate benchmark index, a whole new layer of information is added to the evaluation. If the index returned 75% for the 1 year time period, that 53% from the fund doesn’t look quite so good. On the other hand, if the index delivered results of 25%, 5%, and -5% for the respective one, three, and five-year periods, then the fund’s results look rather fine indeed.

    To add another layer of information to the evaluation, one can consider a fund’s performance against its peer group as well as against its index. If other funds that invest with a similar mandate had similar performance, this data point tells us that the fund is in line with its peers. If the fund bested its peers and its benchmark, its results would be quite impressive indeed.

    Looking at any one piece of information in isolation only tells a small portion of the story. Consider the comparison of a fund against its peers. If the fund sits in the top slot over each of the comparison periods, it is likely to be a solid performer. If it sits at the bottom, it may be even worse than perceived, as peer group comparisons only capture the results from existing funds. Many fund companies are in the habit of closing their worst performers. When the “losers” are purged from their respective categories, their statistical records are no longer included in the category performance data. This makes the category averages creep higher than they would have if the losers were still in the mix. This is better known as survivorship bias. (Learn more about survivorship bias in The Truth Behind Mutual Fund Returns.)

    To develop the best possible picture of fund’s performance results, consider as many data points as you can. Long-term investors should focus on long-term results, keeping in mind that even the best performing funds have bad years from time to time. (Dig into the numbers in Mutual Fund Ratings: Are They Decieving?)

  151. Jay Karan Prajapati

    See the returns from MF-

    http://businesstoday.intoday.in/story/indis-best-mutual-funds-2012-money-today-rankings/1/184733.html

    A financial advisor was recently confronted by an angry investor who had taken his advice and put money in a 5-star large-cap equity fund at the start of 2011. The fund shed 16 per cent value (called net asset value or NAV) in 2011. The investor found it difficult to stomach that a scheme that returned 20 per cent or more a year for the past 10 years and was accordingly rated 5-star had failed him.

    It took time for the advisor to calm him down and explain that a 5-star rating does not mean the fund will not be in the red when there is bloodbath in equity markets. He advised him to remain invested for a longer period.

    The year 2011 was bad for equity investors as the country’s two large-cap equity indices – the Bombay Stock Exchange (BSE) Sensex and the National Stock Exchange (NSE) Nifty – fell 24 per cent.

    Mid-cap and small-cap stocks fared worse with BSE Mid-cap and BSE Small-cap indices falling 33 per cent and 42 per cent, respectively.

    The advisor told the investor that negative return during a period does not merit dumping of the scheme and that the fund in question is a ‘decent’ performer (a 16 per cent fall compared to 24 per cent decline in the Sensex and the Nifty).

    Critics may say this is just statistics, hardly a consolation for a person who has lost money. But if he had invested in any equity fund rated 1- or 2-star in the large-cap category, his loss would have been 25-30 per cent or even more.

    Top Mutual Funds in IndiaTop losing mutual funds in 2011

    Swati Kulkarni, executive vice-president and fund manager, UTI AMC, says, “Equity markets can be volatile and there may be periods of nil or negative return. The performance of a mutual fund scheme needs to be measured against the benchmark.”

    A good mutual fund scheme not only outperforms its benchmark when markets are rising but also minimises losses when the chips are down.

    STRESS TEST: STAR POWER
    In this year’s Money Today-Value Research Mutual Fund Rankings, we put 4- and 5-star funds through a stress test by measuring their performance in 2011. Our knowledge partner, Value Research, has rated the schemes on the basis of their three-year (ended 30 April 2012) performance.

    Benchmarks in 2011We compared the 2011 returns of 4- & 5-star funds in each category to a benchmark that best suited the group of funds-BSE Sensex for large-cap funds, BSE 500 for large-cap, mid-cap, multi-cap & tax-saving funds, BSE Mid-cap for mid-cap & small-cap funds, CNX Infrastructure for infrastructure funds and Crisil Balanced Fund Index for equity-oriented balanced funds.

    In pure equity categories, all 4- and 5-star funds beat benchmarks by a fair margin. In the hybrid equity-oriented category, barring HDFC Prudence, all 4- and 5-star funds beat the benchmark Crisil Balanced Fund Index.

    Beating the index does not mean investors have made gains. When markets fall, it could mean your losses are less than they would have been if you had invested in the benchmark index.

    LARGE-CAP RESILIENCE
    In the large-cap equity fund category, ICICI Prudential Focused Bluechip Fund (a 5-star fund) outperformed the Sensex by 9 percentage points. The fund’s NAV fell 15 per cent as against 24 per cent drop in the Sensex.

    Rs 1,000 invested in the fund at the start of 2011 would have been Rs 850 at the end of the year. If this money was invested in Sensex stocks in same weights as individual index stocks, the value of the investment would have been Rs 760 at the end of the year.

    The worst performing fund in the category would have shrunk the investment to Rs 700.

    Franklin India Bluechip Fund and SBI Magnum Equity (both 5-star funds) beat the Sensex by 6.6 percentage points and 5 percentage points, respectively.

    MID-CAP SURPRISE
    Some schemes in the mid- & small-cap category sprang a few surprises both in the way they minimised losses and the margin by which they beat their benchmark BSE Mid-cap index.

    The value of SBI Magnum Emerging Businesses, for example, fell 9 per cent compared to 33 per cent fall in the BSE Mid-cap index. Another SBI Mutual Fund scheme, Magnum Global, limited its loss to 13 per cent.

    These are better performances than that of large-cap funds, which are known to fall less than mid-cap funds in a bear market.

    Top Mutual Funds
    Click here to Enlarge
    TAX-SAVING ONLY
    Though all 5-star tax-saving funds beat the benchmark (BSE 500 index), their performance was not as ’emphatic’ as many retail investors would have liked.

    Canara Robeco Equity Tax Saver’s NAV fell 16 per cent as against 27 per cent drop in BSE 500. ICICI Prudential Tax Plan (-24 per cent) and HDFC Tax Saver (-22 per cent) barely managed to beat the benchmark.

    The winner in the pack is Franklin Tax Shield with only a 15 per cent drop in NAV.

    INFRASTRUCTURE ON WEAK FOUNDATION
    Though most 4- & 5-star funds in this category beat the benchmark index-CNX Infrastructure-as a category it was the worst performer with all top-rated funds shedding 20 per cent or more value.

    Top Mutual Funds
    Click here to Enlarge
    The only 5-star fund in this category-Taurus Infrastructure-lost 33 per cent value as against 38 per cent fall in the NSE Infrastructure index.

    Canara Robeco Infrastructure Fund, with a negative 20 per cent return, was the best fund in the category in 2011.

    DEBT CUSHION
    If the power of equity funds was not enough to stem the fall in the value of investments, a small exposure to debt schemes could have limited your losses.

    The average return by income funds was 8.5 per cent while liquid funds gave 8.3 per cent. The better rated debt funds returned more than 9 per cent.

    WHEN IN EQUITIES…
    For equity investors, the 2011 fall, or for that matter 2008-like slumps, are part of the game. Equities are a high-risk-high-gain play and the best way to lower risk is by remaining invested for long and taking staggered bets.

    Sunil Mishra, chief executive officer, Karvy Private Wealth, says equities always come with market risk.

    “Last year was challenging for equity markets across the globe, and India was no exception. The result was evident. The finest (and perhaps the most trusted) funds ended the year in negative territory.”

    But should this be a reason to exit equity funds (or crucify the financial planner who suggested you a fund in good faith)?

    “We believe that shying away from an asset which has time and again proven its long-term investment potential will not be a prudent investment decision,” says Mishra.

    But years like 2008 and 2011 taught a few lessons to investors. Anjaneya Gautam, vice-president, mutual fund, Bajaj Capital, says systematic investment plans, which encourage regular savings without worrying about market volatility, and an asset allocation approach are the best way to build wealth in the long term.

    MONEY TODAY-VALUE RESEARCH ANNUAL MUTUAL FUND RANKINGS
    Mutual funds, especially equity funds, are long-term investments, but a yearly review of your funds’ performance is highly recommended. Our annual mutual fund ranking is an effort to keep you updated about the performance of funds you have invested in.

    The rankings are based on three-year (ended 30 April 2012) performance of equity and hybrid funds, and 18-month performance of debt funds.

    For rating, equity funds have been divided into categories-large-cap, large & mid-cap, multi-cap and mid & small-cap. Infrastructure and tax-saving funds are two other important categories covered.

    Large-cap funds allocate 80 per cent funds to large-cap stocks. Large & mid-cap funds have 60-80 per cent allocation to large-caps. Multi-cap funds have 40-60 per cent allocation to large caps and mid & small-cap funds have only up to 40 per cent allocation to large cap stocks.

    Top Mutual Funds
    Click here to Enlarge
    Large-cap funds:
    Two of the four 5-star schemes in the category are from ICICI Prudential. ICICI Prudential Focused Bluechip tops the category with 23 per cent annual return in three years to 30 April 2012.

    Launched in 2008, the scheme has been a good performer in the category not just during the last three years but also in 2011, a bad year for equity.

    It is followed by ICICI Indo Asia Equity Fund, which has given a 21 per cent return per year in the last three years. Last year, it managed to limit its loss to 2.5 per cent.

    The old war horse, Franklin Templeton Bluechip, continues to impress with consistent returns. The scheme’s NAV rose 21 per cent in the three-year period. Its consistency can be gauged by its 10-year annual return of 25 per cent.

    SBI Magnum Equity, another old-timer, has given a 21 per cent annual return in the last three years.

    Top Mutual Funds
    Click here to Enlarge
    Large- and mid-cap funds:
    This category proves that small can be wonderful. Three out of five 5-star funds in this category are from small fund houses (with assets below Rs 10,000 crore). Quantum Long Term Equity, with 28.5 per cent annual return in three years, tops the group. The scheme had only Rs 105 crore under management at the end of March 2012. Quantum Mutual Fund manages Rs 190 crore.

    Another small fund, Mirae Assets India Opportunities Fund, launched in March 2008 amid equity market mayhem, has given 28 per cent annual return in the past three years despite losing 19 per cent value in 2011. The fund had assets under management of only Rs 214 crore on 31 March 2012.

    Canara Robeco Equity Diversified Fund, with 25 per cent annual return in three years, is another scheme from a relatively smaller fund house making the cut for a 5-star rating. UTI Opportunities (24.5 per cent) and HDFC Growth (24 per cent) are other 5-star funds in the category. Canara Robeco Equity Diversified managed Rs 542 crore and HDFC Growth Rs 1,260 crore at the end of March 2012.

    Schemes from small fund houses ruling the group was not as much a surprise as the missing of one name that always appeared prominently among the Top 10 in this category.

    Top Mutual Funds
    Click here to Enlarge
    Yes, even we were taken aback to see HDFC Top 200 missing from the list (it’s not even in top 10), so we cross-checked with our data partner Value Research, which said the scheme might have been outperformed by others in the period under consideration.

    Multi-cap funds:
    Despite the presence of category behemoth HDFC Equity Fund, ING Dividend Yield (with just Rs 97 crore assets) topped with 29 per cent annual return.

    In 2011, its NAV fell only 17 per cent compared to 27 per cent drop in HDFC Equity’s NAV. This proves the scheme has the wherewithal to sail through difficult times.

    HDFC Equity (27 per cent annualised return in three years), HDFC Capital Builder (25.5 per cent) and Tata Ethical Fund (25 per cent) are the other 5-star funds in the group.

    Top Mutual Funds
    Click here to Enlarge
    Mid- and small-cap funds:
    IDFC Premier Equity is conspicuous by its absence from the category this year. SBI Magnum Emerging Businesses, however, is a worthy replacement.

    The fund not only clocked 40 per cent annual return in the three-year period, it also managed to give a double-digit (12.84 per cent) return during the one-year period to 30 April 2012, when the BSE Midcap index fell 3 per cent.

    In 2011, the fund’s NAV fell 9 per cent as against 33 per cent fall in the BSE Midcap index.

    Religare Mid N Small Cap Fund, HDFC Mid-cap Opportunities and DSPBR Micro Cap are the other 5-star funds in the mid- and small-cap fund category.

    Tax-saving & infrastructure funds:
    Only three funds made the cut for a 5-star rating. Canara Robeco Equity Tax Saver, ICICI Prudential Tax Plan and HDFC Taxsaver have given 25 per cent a year for the last three years.

    Canara Robeco, however, showed more resilience (a 1.29 per cent drop last year) in a falling market.

    There is not much cheer for investors in infrastructure funds. Though a couple of funds-Taurus Infrastructure and HDFC Infrastructure-gave more than 18 per cent annual return in the past three years, they failed to show resilience in 2011.

    Top Mutual Funds
    Click here to Enlarge
    The only 5-star fund in this category (Taurus Infra) shed 33 per cent value during the year.

    Hybrid Funds:
    HDFC Mutual Fund schemes dominate both debt and equity-oriented categories. HDFC Balanced and HDFC Prudence topped the equity-oriented category with more than 25 per cent return in the three-year period.

    In the debt-oriented category, HDFC Multiple Yield Plan 25 and HDFC Multiple Yield clocked close to 13 per cent annual return over the three-year period under consideration.

    Debt Funds:
    Debt could not have had more exciting times than the past couple of years with the Reserve Bank of India raising lending rates 13 times between March 2010 and October 2011.

    Top Mutual Funds
    Click here to Enlarge
    Debt fund managers managed to generate decent returns in the past two years by taking advantage of attractive yields on short-term debt securities.

    LOOKING BACK
    In the past three years, while big names such as HDFC Mutual Fund, ICICI Prudential, Franklin Templeton and UTI Mutual Fund have consolidated their position in the industry, SBI Mutual Fund, with funds such as SBI Magnum Emerging Businesses, has rewritten the script after Magnum Tax Gain’s downgrading.

    However, Reliance Mutual Fund, the largest fund house not so long ago and dethroned by HDFC Mutual Fund, needs to pull off something outstanding to regain its glory.

    Top Mutual Funds
    Click here to Enlarge
    In this years Mutual Funds’ Rankings, none of the equity funds from the fund house features among 5-star rated funds, though in 10-year period Reliance Growth beat all other equity funds with a 32 per cent average annual return.

    The year gone by also saw the exit of one of the country’s best equity fund houses-Fidelity Mutual Fund.

    Top Mutual Funds
    Click here to Enlarge
    Uncertainty in equity markets and a difficult regulatory environment made one of the world’s largest fund manager call it quits in India.

    Fidelity won’t be the last fund house to be sold. Murmurs of a few more exits are already doing the rounds.

    Notwithstanding the negative stories, we pay our tribute to fund managers who kept looking for corporate success stories amid declining earnings, shrinking order books and increasing exasperation over government’s inability to push through economic

  152. narendra

    Dear Manish
    You being of so young age share views which shocks the old senior experienced agents.I Really appriciates u for ur such huge thinking/calculations.
    from ur article reading i saved from insurance company who was offering me Agent’s accumlated money & for that bonus i will hav to take a fresh insurance….
    Thank God..u saved me when one day before i searched internet on bonus.
    Thanks a Lot!!!
    Plz suggest me
    i m taking term plan(20 years) + MF+PPF instead of jeevan aanand policy.according to u in which MF should i invest?(my yearly invest is 60,000/-including term plan,mf,ppf).age is 31
    And also i want a pension type plan for my parents age 51-49,rejecting jeevan tarang policy…which investments u suggests for him.yearly he can pay 1,40,000/- for 15 years.

  153. yash

    I was just planning jivan tarang for my son aged 12 for 20 yr term
    while going through I read ur comment
    will it b ok for his age?
    as lic is going to increase service tax from 1 what difference it going to make?
    can u reply soon as I had to decide

    \

  154. Suneil

    Dear Manish,

    Thanks for excellent discussion and guidance.

    I am 43 yrs old businessman, I have taken Jeevan Tarang policy of 10 lacs for 20 yrs in March 13, recently i went through your forum and understood about the policy, and stopped paying after I paid 1st premium of 27 k quarterly.

    I have old LIC polices:
    Bema Kiran 3 lacs – (which will mature in 2019)
    Jeevan Anand (6 polices) 1 lac each maturity 2024 to 2029

    Your discussion impressed me and took some tips from your discussion and I opened SIP 5000/- per month with Axis bank and at same time proposed to take 50 lac term insurance myself, plus opened my son PPF a/c and plan to invest 1 lac in PPF very year, as well in my PPF account as already i have my account.

    I am looking for additional investment for my son age 3 yrs old, I request you to suggest me plan / scheme to make my son / family future safe. As I am not good at investments. Thanks in advance.

    Regards,
    Suneil

  155. Barkha Chourasia

    Dear All,

    My daughter is 1.5 years old and i went through Jeevan Tarag Policy details.

    If i invest Rs.1.25 lakh/annum after 20 years, i would be getting return of 27 lakh + she will be liable to take surrender value at any phase of time after maturation worth Rs.22.5 lakh.

    That means i can withdraw Rs.49 lakh when my daughter is 22 years old and by chance something happens to me before she turns 21, benefit of proposer waiver is included.

    I am a working professional and travel extensively (High Risk Job). I have term policy of 40 Lakh and regularly invest in PPF.

    Kindly advice whether Jeevn tarag policy is suitable for my daughter?

    Regards

    Barkha

    • I have already reviewed it in article .I am not sure where else oyu have doubt ? The question you have to ask is , does jeevan tarang beat other options like PPF + Term plan or PPF + Term plan + Mutual funds ?

      If Yes, go ahead with Jeevan Tarang !

  156. venkataraman

    Great article and great source of information from the comment section.
    I’ve taken 2 ULIP policies (one from ICICI and other from Reliance) but believe the current amount in my policies are not even close to what i paid throughout these 8 years. Atleast in LIC you may expect a Bonous+LA.
    When i approached the Agent, he simply says why dont you switch the funds at regular intervals .
    For me LIC looks safer than these fraud companies.

  157. Musthafa

    Hi ,

    I have started Jeeven Tarang policy on 26/12/2013 and I’m 32 years old. Based on your article I decided to cancel my policy.

    My policy details are:
    S.A : 10,00,000/-
    Terms: 15 Years.
    Prem: 17537/-
    Mode: QLY

    I am not getting my policy document at now and also based on some LIC agent advice I can cancel my policy with in 15 days starting from policy date.

    So in this scenario I have two questions
    1. Once I canceled my policy with in the 15 days, How much amount I can get back?
    2. Its good to have New Jeeven Anand policy? (I’m not interested in PPF and SIP, because I prefer risk coverage)

  158. mahe

    if we havejeevan tarang policy in name of my child and if he die before completeing 5 year of age , did his nominee will get SA or only premium paid will return back pls confirm

  159. Abhishek

    I want to Surrender my Jeevan tarang policy ,
    first premium paid on 02 feb 2010 ,4 years complete (yearly paid 57864 Rs.)
    please suggest write time to withdraw(Surrender) from policy , w.r.t best return. in short term . policy taken for 20 years .

    please guide the process.

  160. satish

    Hi,

    I have started Jeevan tarang policy on december 2012 with sum assured of 1000000 by paying 49000 / year. I have paid two premiums till date [ the last one was on december 2013 ]. Now I have my eye opened on these LIC policies [ :( ] and planning to surrender the policy. Please let me know the best time to stop paying premiums and surrender the policy for maximum returns of my paid premiums :) . I am not in a need of money , however if I pay for 3 premiums and stop paying for next 2 years and ask for surrender , how much will they pay me ?

    I came to know from your post about LIC policies which are “Go home.. cry policies” , if you want to surrender before 3 years . Hence would like to choose the correct option for atleast maximum return of my paid amount :(

    Regarsds,
    Satish

    • As far as I understand, for almost all the policies the more time you spend, the more you loose , so I would recommend that you surrender it now itself, if you feel that its not going to help you in future.

      manish

  161. dharmendra21

    Hi Manish,

    I took Jevan Tarang Policy in Dec 2013. After reading this blog i realized that it waste of money.
    This policy was suppose to continue till 20 yrs , 2 lacs yearly premium.
    Please suggest when shall i stop this and what is the process for stopping it.

  162. Hussain

    Dear Manish,

    I have a Jeevan Tarang Policy of 5.0L (Term 15 years, Annual Premium Rs. 34361.00, already Paid Five (5) Premium).
    If I surrender now i am getting Rs.1,26,000 amount I enquired at LIC Branch.
    Shall I make it Paid up policy and invest the premium amount (Rs. 34361.00) in PPF or shall I continue to pay full term premium.

    Please advice.
    Regards,
    Hussain

  163. vasantha

    good one. I have taken jeevan tharang plocy .Iam looking forward to stop paying premiums after 3 years. I think lic policies are profitable for LIC of India and LIC agents and unfortunately profitable in case of untimely demise.

  164. hussain

    hi manish….

    i have a Jeevan Tarang Policy of 5.0L (Term 15 years, Annual Premium Rs. 34361.00, already Paid Five (5) Premium).
    If I surrender now i am getting Rs.1,26,000 amount I enquired at LIC Branch.
    Shall I make it Paid up policy or surrender it? which is the best option…

    if i make it paidup policy, after the maturity will i get accrued bonus also for the paid premiums? i.e., 34361×5 premiums= 171805/- for 5 premiums paid bonus amount is 92000/-.
    total amount 171805+92000= 263805/- is this the amont will i get after maturity for paidup policy after 15 years?

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