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 !!
{ 121 comments… read them below or add one }
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.
Arun
Your thoughts are welcome here .
Manish
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
Ramesh
You should start investing in Balanced funds through SIP per month , have a long term view .
Manish
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.
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
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
.
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.
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
Dear Arun
I can see that you are duplicating your comments , you have already commented the same in http://www.jagoinvestor.com/2009/08/review-of-jeevan-tarang-policy-from-lic.html#comment-7267
Your comments are totally acceptable here and you are welcome here , I am sure many people will be with you .
Manish
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
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.
@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
@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..
@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
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.
@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
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
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
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?
@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
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
@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
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.
@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
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
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
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
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
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
policy wise and claims wise sbilife term plan is best
Yup
its a good policy .. agree
Manish
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
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
Please avoid this for now .. I will write a detail analysis later
Manish
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…
ok thnx buddy will wait 4 the detailed post
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
See http://www.jagoinvestor.com/2009/08/what-is-irr-and-xirr-and-how-to.html . You can then apply the IRR procedure and calculate it .
Manish
Thanks a lot Manish …I am an avid reader of your blog….Keep continuing the good work…….
-Krishnendu
great
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
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
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
i invest in jeevan tarang yrs-14400 for 15yrs(sum assured 200000).hou much get after 15 yrs.
Anil
Didnt your Agent give the illustration on this ? If no , it would be a good idea for you to calculate it for yourself using the rules given to you . Let everyone know when you come up with the figure .
manish
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.
Akhilesh
you are using wrong formula . We have to use future value formula in this case which is also called as “Annuity formula” , we use this formula when we invest every year or every month .
Look at http://www.jagoinvestor.com/2008/09/3-most-important-formulas-you-should.html
Manish
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.
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
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
Shiva
All your queries can be answered here : http://www.jagoinvestor.com/2009/12/till-what-age-should-you-take-your-life-cover.html
manish
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
Srikanth
the returns are very less as per your description , i think around 2-3% , not more than that . Stop it right away and better put money in equity funds for long term .
manish
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
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
Chakrawarty
the lady is right , Now the policy already becomes paid up when you stop the premiums after 3 yrs
manish
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 : http://www.insuremagic.com/sify/LifeCalc/FrmSurrValCalc.asp
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
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
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
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
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.
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.
Narasimha
For exact amount contact your agent , a rough estimate is 30-35% of your amount .
manish
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.
A.Narasimha
Thats how Endowment plans work . If you surrender them before maturity especially at start , you get very low amount ,see policy documents .
Manish
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
Thanks for comment
Manish
Manish yar! please advise..
I m 29 now, want term insurance (10 lac for 10 years), SBI Life Swadhan (http://www.sbilife.co.in/sbilife/content/9_797)
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
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
Vimal
Look at the archive section and read an article .. “List of Best Equity … ”
manish
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?
Nayandeep
I think its wise to close the policy if you have started it recently (around 3-4 yrs) ..
Manish
Nayandeep
Better to make the policy as paid up .
Manish
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?
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
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)
You wont get any thing .
It will attain a paid up value only after payment for 3 yrs , before that , its NIL
Manish
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………..
Ashok
Financial plan is a long document created after putting a lot of thoughts and hardwork , cant be done on comments section , you should hire a financial planner .
Manish
Ok, But what should i do about this jeevan tarang policy?
And what about the MFs that i have started?
Please reply manish, bcse i have to make decision, in next month there will be 4th premium of Jeevan tarang. so should i stick to the plan or abort it? which is beneficial for me?
Ashok
What to do with Jeevan Tarang? this decision has to come from you only , you should read this article which will tell you what you can do : http://www.jagoinvestor.com/2009/10/what-to-get-rid-of-your-junk-insurance.html
Overall its not recommended to stay with Endowment plans if you have just started .
Manish
jejeevan saral is good policy
Reason ?
Manish
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%.
Pradeep
What is your profession ?
Manish
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.
Pradeep
LIC understand the emotions of Indians, I agree this more than you do
.
Manish
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
Also where is the liquidity in this?
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
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
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
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
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
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
Jacinto Godinho
Did you check your policy correctly , If its not mentioned then go ahead and complain to ombudsman first and then file a complain,
Manish
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.
Hey Manish, Could you please help me to know if I surrender my LIC policy after 5 yrs will there be any loss ?
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
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
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
Many Many Thanks Manish . This information will help.
I think now I can take decision
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