How LIC policies works ? Bonus, Premiums, Maturity, Loan !

There are so many LIC policies with different names ? For example – LIC Jeevan Saral , Jeevan Anand , Jeevan Tarang and many more LIC policies. So almost every person in India holds some LIC policies, but majority of them do not know how these LIC policies works ?

How does LIC policy work?

How LIC Policies Work ?

Most of the investors just take things for granted and keep dragging the policies assuming it would be the best thing in their financial life. In this article I will show you how Life Insurance Corporation (LIC) policies work and talk about few aspects like LIC bonus, LIC premiums and different other aspects which will help you in understanding how these policies work.

Moneyback Plans or Non-Moneyback Plans

A lot of LIC policies pay you on a periodic basis like at the end of 4th, 8th and 12th year, and then finally at the end of the maturity period. These policies are Money back policies, the example can be LIC Jeevan Surabhi or LIC Komal Jeevan. A lot people get attracted to these moneyback plans because they get money “many” times in between and it looks attractive to them, but the premiums are generally higher for these policies.

Then there are LIC policies which do not pay you back periodically but only pays you at the end of the maturity period. They are generally termed as normal Endowment plans. Some examples are Jeevan Anand and Jeevan Tarang

LIC Bonus & Additions to your Policy

The biggest confusion I see is generally in Bonus by LIC. One thing which investors in these policies don’t know and don’t care for to find out is that there are different kinds of bonuses in LIC policies and they are calculated differently. Let’s see them one by one.

1. Simple Reversionary Bonuses

Generally when we say “Bonus”, it is this “Simple Reversionary Bonus”, which is declared per thousand of the Sum Assured on annual basis at the end of each financial year. This bonus is declared today, but is paid at the end of maturity period only or on death, whichever is earlier. So for example if you hold a policy of Rs 10,00,000 Sum assured and the bonus for this year is Rs 60 per thousand sum assured, then your bonus amount is Rs 60,000 for this year, but you will only get it at maturity (after many many years) or on death, but by then it’s worth would be much lesser than today (this 60,000 today and 60,000 after 20 yrs).

A very important point to note here is that, if you surrender the policy, you don’t get the actual accrued bonus because it’s the future value, you will only get its reduced amount in today’s term and its very less. Also note that you are eligible to get reduced Accrued Bonus only if your policy has completed 5 premium paying terms. (This thread on our forum discusses Jeevan Anand in good detail)

2) Final Additional Bonus (FAB)

There is another kind of bonus in LIC which is generally called as “FAB” or Final Additional Bonus and it’s paid to those policies which are of a longer duration and has run for more than 15 yrs (The premiums are paid for all 15 yrs). This is generally a token of appreciation for being with the policy for long duration. The FAB is generally not paid for policies which have “Guaranteed Additions” (explained below). Here is an indicative list of FAB.

Final Addition Bonus FAB LIC

3. Loyalty Additions

This is again a bonus which is declared for being loyal to the LIC and completing a longer tenure. Generally it’s declared at the end of the policy, but for some policies it might be applicable after completion of 5 or 10 yrs. For example – In Jeevan Saral, the policy holders will earn such additions after a minimum of ten policy years have been completed.  This is usually an amount declared per thousand of sum assured depending on the corporation’s performance. Loyalty additions are totally non-guaranteed.

4. Guaranteed Additions

For a lot of LIC policies there is a term mentioned like “Guaranteed Additions”. These are assured sums which are given to policyholders for a specific period at start or end of some event along with the sum assured at the end of the term. Like for example, , Jeevan Shree-1 policy provides for the Guaranteed Additions at the rate of Rs. 50/- per thousand Sum Assured for each completed year for first five years of the policy. The Guaranteed Additions are payable along with the Basic Sum Assured at the time of claim.

Surrender Value

Most of the people who buy any Traditional Policies from LIC or any pvt companies’ don’t think a bit about terms and conditions on exiting the policy much before maturity. A general assumption is that they will at least get their paid premiums back with sum interest. I have seen so many cases like that where people are literally shocked to hear that they will get peanuts or nothing from their policy if they choose not to continue the policy. Surrendering of the policy works this way –

You will not get anything back if you stop your policy without paying for 3 years. Almost every traditional policy attains minimum surrender value after the policy has run for 3 yrs.

After 3 yrs, if you surrender your LIC policy, still you will only get a small fraction of your total paid premiums that too excluding first year premiums. So suppose you have a policy which has Sum assured of 10,00,000 for 20 yrs term with Rs 50,000 premium per year. If you have decided to surrender your policy after paying 5 premiums (you paid 2,50,000 in 5 yrs i.e. Rs 50,000 each year), then you will get around 30%-40% of 4 premiums paid (first year premiums are excluded), hence the total would work out to be only Rs 60,000 – Rs 80,000 only + proportionately reduced amount of accrued bonus if any (only because you completed 5 yrs, else you will not get this also).

A very important point to Note : A lot of people do not like to close their LIC policies after paying for 1-2 premiums because they will not get anything back for the 1-2 premiums already paid. They think that they will surrender the policy after completing 3 yrs, so that they will get at least something back. This is total emotional decision and not mathematical, because if you do maths you will see that surrendering the policy after 3 yrs is the worst decision if you have already realised that you should not continue with the policy. For example, if you are paying Rs 10,000 premium per year and completed 2 yrs, you paid Rs 20,000, If you close this policy now, you will lose all money (Rs 20,000), but you can save Rs 10,000 as third premium. If you choose to complete 3 yrs and then surrender, then you have paid Rs 30,000 and you will get back 30% of 2 premiums (first year premium not included), so you get back Rs 7,000 (loss of 23,000 as you paid 30,000 and got back 7,000). Do the math if you completed 1 yr only yourself, its more worst!

Note that surrender value is nothing but your future maturity value reduced to today’s value, so if the maturity value is Rs 10,000 after 20 yrs and if you want it before LIC will pay you the Net present value as per today’s term.

Paid up Policy

A lot of times when you have completed 3 yrs of policy, you might not want to get your money back immediately, in which case you can made your policy paid up (just stop paying premium and it becomes Paid up). When you do this, you can stop paying further premiums but you will get your total premiums paid + accrued bonus any at the end of the maturity period. This might work out better sometimes compared to surrendering if you were going to invest the proceeds in some debt instrument.

What are mortality charges

A lot of agents advertise these policies under the head “Free Insurance Cover“, But all the policies charge premium or charges for providing Insurance cover and it’s called “Mortality Charges”, these are the same charges which are there in Term plans and ULIP’s, but may be in a different way, so nothing is free, some part of premium goes in covering you and rest of it is invested in Debt instruments which can give you assured returns at the end of the maturity.

Loan on LIC Policy

You can also get loans at the time of crisis on your LIC policies, but the maximum loan amount available under the policy is 90% of the Surrender Value of the policy (85% in case of paid up policies) including cash value of bonus. The rate of interest charged on loans is at 9% to be paid half-yearly. Is there any other terms and conditions which you dont understand in your LIC policies ? We can all help you understand it in comments section .

Are you looking for surrendering your LIC Policies ?

By now you must have got a good understanding of your LIC policies and how they work. You can find out the return of your policies using the IRR method taught in this article. If you feel that you want to continue your Policies then well and good. But if you feel that you want to close your policies, do it soon because delaying the decision will cost you a lot in long run. I hope its clear to you how your LIC policy works for you .

1,101 CommentsAdd Comment

  1. Hi Manish,
    Awesome Article :)
    Alvin Toffler said “The illiterates of the 21st century will not be those who cannot read and write but those who cannot LEARN, UNLEARN and RELEARN”
    People need to think beyond insurance policies – when it comes to investment.

      • S S

        Most of us can read but few care to understand. I am happy that I never supported LIC. And as you have always suggested, so far I have kept myself clear of any relative or uncles trying to sell LIC policy.

        • Bhaskar S. M

          Hello, i taken LIC policy past 15 years but i never losed my money. if you know the some special things please tell me which company insurance is better

            • Bhaskar S. M

              Hello Manish why you misguiding about LIC. Now a days every company insurance also work same. In my knowledge more than 65 percent market in LIC and other 35 percent market in private company. But you are not spoken about even 5 persent also other private company. now everybody understood you are private company agent. Just you want spoil LIC. You are only blaming but you dont have any solution. First you tell me which is the best insurance company and after you talk LIC is not good. I am requiesting you dont spoil any company.

              • Bhaskar

                Why do you think I am spoiling the name .. All i have done is spread about how endowment polcies work and also mentioned that its true for prvt insurance companies as well . btw , what is your profession ?


                • Bhaskar S. M

                  Hello Manish,

                  I am working in BPO company. 35 years back my grandfather also taken LIC policy. but they not cheated anything. but 15 years back my uncle taken Pearless company policy. they cheated.

                  • Bhaskar

                    What is cheating ? and no one said LIC cheats , its wont and it cant .. its a big company … Pearless mutual funds is such a small company in mutual funds , no one knows them..


                  • Sunil Date

                    @Mr Bhaskar If by one incident you are deciding that Govt / Public sector companies are best and pvt companies are not to be believed in, then permit me to ask in what category is your employer ?

                    • nandeeshkumark

                      @ Sunil date show me a single person,who gained profit in private sectors? you know what is the claim ratio of LIC, & private company.

                  • Suhas Patil


                    The article here is all about how these plan works.It is upto you take the wise decision to go for endowment or term insurance(LIC has it too) .TheMix of both insurance and investment or seperate out is matter of “choice”
                    but if you have all the facts infront of you like this article then decision making is easy….
                    Manish keep up the good work….

                • nandeeshkumark

                  hai bhaskar good reply,but manish i think your working for some private insurance company ok. but you tell me what is the surplus value as of know.?to be honesty i gained good money from lic.your analysis shoun’t hampred sombody hopes remember before give solutions.what about all lic customers future?.how then how they will feel?

                • Balaji

                  Hi Manish,

                  My uncle had policy in LIC & private company, paid only 4000*3 yrs only in LIC. After 3 years, he died due to illness., LIC has settled the claim after 6 months in march of Rs. 1.0lacs, still now private company didnt. Later i came to know, LIC is leader in Claim settlement

                  Good service LIC

            • Vivek Sharma

              Hi Manish,
              Your article is to good, I have learn a lot. Thank you so much. But I need your help regarding the same, could you please help me out what will be the best time to surrender LIC Policy because I want to surrender it. My policy not yet completed 3 Yrs but it will complete on Dec 2012 ( 1st policy) and Jan 2013 ( 2nd Policy).

              Please help.

              • Vivek

                the best time to surrdender the LIC policy is “as soon as possible” , there is no other analysis required. Only if you have one more premium to pay for completing the 3 yrs, that might be one option . Did you put some figures and calculated how much will you loose in both cases ?

                • Vivek Sharma

                  Hi Manish,
                  Thanks for your reply, I have calculated, I am paying 97040/- per Year . So if I surrender my policy after 3 yrs I will get approx. 57000/- only. Its disgusted!!!!!!
                  I really need money in this days, I have to surrender my policy but on behalf of 3 Lacks I am getting only few 57000/-.

                  please guide how I will get good amount and when??

                  I have read some documents about my JEEVAN SARAL LIFE INSURANCE POLICY BY LIC
                  (Table No. 165) from but I am unable to understand the fact behind this. Its says “Special surrender value (SSV): the special surrender value under the policy shall be paid as the sum of (a) and (b) gives as under:
                  Discounted value or accumulated value, as the case may be, of the following: 80% of maturity S.A. if 4 years premium have been paid, 90% of the maturity S.A. if or more years but less then 5 years premiums have been paid and 100% of the maturity S.A. if 5 or more years premium have been paid.”

                  So after 5 Yrs it will be good to surrender my policy. Is that so?

                  • Vivek

                    First thing is that .. a person should understand the policy before buying it , Not after buying it , its waste of time and energy , you must have got it by now , so dont repeat that mistake from now !

                    Next point is that Jeevan Saral is compararatevely better than other kind of LIC policies . But you will have to start a thread and discuss your isssue in detail at our forum to get a better answer :

                  • Arindam

                    Hi Manish,

                    Thanks for your help at the outset.

                    I have taken Jeevan Tarang Plan 178 policy for 15 yrs. I have paid a premium of rs 34,361 each yr for 6 yrs i.e Rs. 2,06,000 in all. 9 yrs to go still. I have 1 question.

                    As per this policy, what is percentage of sum assured(Rs 5 lacs in my case) will I received back from LIC after 15 yrs as my maturity amount apart from the bonus+loyalty etc. ?

                    Thank You.

                    • Jeevan Tarang is a whole life plan , At maturity , you will get only bonus and loyalty bonus , after that you are entitled to 5.5% of SA as pension for your life .


                    • Arindam

                      Thanks Manish,

                      My LIC agent is saying that there is a provision of surrendering the policy after 15 years whereby I will get 90% of the sum assured back. Is that correct ?


                    • Arindam

                      You can surrender the policy anytime , now all you need to see if if you surrender it now and use the money which you get in something else will be more than 90% of your SA after 15 yrs or not .. Whats the use of getting your 90% money after 15 yrs !

                    • sudheer reddy

                      Hi Manish Chauhan
                      I hope u doing well.
                      i want to pay 20 -30 thousand per year
                      all ready i am paying jeevan anand and jeevan saral last three years.
                      25 thousand for year.
                      right now which policy u suggested to me for 2o years.
                      can u tel me

                    • krishna

                      hello manish
                      i do not know anything about share market but want to invest in it. how can i start investing in it and whom to contact. i have not mush money so i want to start for daily bases.i can invest only upto 300 per day.
                      please suggest me

                    • krishna

                      i just want to enter in it so that i can convert my 300 into 330 and after getting some knowledge of it . i will decide wether it is benificial or not for me. if it is beneficial then i will invest more else i will quit.

                    • Ok , so you are in learning mode .. In that case assuming your money is like paying fees , start investing in few stocks and see how you feel about it .

                    • Nikhil

                      Hi Manish,

                      At the pre set let me congratulate you on the great job you are doing at Jago investor. I have also bought your book “Change your Relation with Money” and appreciate you work there too.

                      I need some advise on my current financial situation and let`s see if you can help me.

                      With my current income I can put a surplus of 1.5 lacs/ year aside for some insurance for myself. I already have some insurance but that`s not sufficient.

                      Now I have the following options:

                      Option 1:I am thinking of going for a 30 Lac LIC Jeevan anand plan where the premium will come to 1.5 lacs approx for 20 years and the agent had mentioned the bonus and FAB put together , at the maturity will fetch me 60 lacs , I don`t know if thats going to happen. I trust LIC for whatever they give me in writing only.

                      Option 2: I can go for a term plan with LIC itself for about 50 lacs for around 25k every year and put the rest of the money in PPF.

                      My question to you is if you can suggest me something better. As I`m looking for Life cover(50 lacs at least) and good lump sum amount in 115-20 years.


                    • Nikhil

                      Thanks for appreciation, I would love if you can write few words about the book on flipkart :) .

                      Regarding your doubt , the 1st option is a disaster , an agent who gives a FIXED number is already cheat . He should have told you that it would depend purely on the bonus .

                      Option 2 is ok , but for 15-20 yrs being in PPF is not suggested especially for you (i assume you to be in your 30’s) .

                      So just do one thing , take a term plan (LIC is ok) , Start a SIP in mutual funds and if you want invest in PPF too .


                    • Sid

                      Hi Manish,
                      I am 24 years old. I have taken a LIC Jevan Surabhi policy of 25 years. I have paid just one quarterly premium of 9981 rupees. According to the policy i will get 1 lakh every 4th year till the 18th year, and then at the 25th year i’ll receive the sum assured of 5 lakhs and accrued bonus. Can you tell me how much will that accrued bonus amount to? After reading this thread i’ve realized that i have not made a great decision. Should i pay the next premium or not? Can you tell me a better place to invest in. I have 3 SIP’s going on of 3000 each.

                    • Sid

                      Thanks. Well, i have already ordered your book from Flipkart. Will get delivered by Monday. I have 3 SIP’s going as i mentioned, so what do you suggest i do after ignoring the Jeevan Surabhi? Is there any chance that i can get that money back as it has not been even 10 days since i bought it? Also, please suggest in which mutual funds should i invest after cancelling the LIC policy.

                    • Sid

                      And i calculated the IRR. It’s 7%. How bad is it? I am paying a premium of 39924/- every year and getting 1 lakh at the 4th, 8th, 12th, 15th and 18th year and a sum assured of 5 lakhs.

                    • Sid

                      And i get the sum assured and accrued bonus at the end of 25th year. And i pay premium till 18th year. So the IRR calculation is till the 18th year, right?

                    • Sid

                      I have almost finished reading your book. It is a wonderful wonderful book. The ideas are so easily explained with simple mathematics and logic. I think it is a must read for everyone. I totally recommend this book to everyone, and have already influenced 2 new buyers in my circle.
                      And guess what? I cancelled my Jeevan Surabhi policy today, and the agent who sold it to me was present. He did everything to stop me, but thanks to your book i beat him by pure logic. I wrote a letter and the money will be refunded in a week’s time or so. Thanks a lot Manish! Your contribution is very helpful, and tangible.

                    • jessi

                      Hai manish,
                      my husband holds an LIC policy finished premium of 5 years with 60000,for 20 years…Recently we bougtt an house and we have some loans anf now we want to surrender the policy so that the money we get can b used in clearing the loans…pls reply will it be worth to close and clear the debts are to continue.


                    • Oh.. its just 10 days ! ..

                      Yes then you will be able to get back your money after cutting a small parts , its called as “Free look up period” . its generally 15 days. so better act fast and give it back , better do it directly and not tell agent about it, hence he might put some trick for you to not achieve it !

  2. Hi Manish,

    Quality article and most needed one.

    Should also include the concept of return of 6% and 10% which not only investors but even the agents are not clear.
    I recently answered a query of a reader in Business Bhaskar regarding returns from LIC Policies and instantly got a query from an LIC agent questioning “When IRDA has stipulated min return of 6% in traditional policies, how can you give advise on return below that”.Although i answered it but was feeling bad for investors whom he might have advised LIC policies.

    A good work you are doing.

  3. Nilesh Patil

    HI Manish

    Excellent article, even i was unaware of the first premium being excluded in refund amount calculation…so each day is learning something when i read Jagoinvestor articles !! thanks..

    I have also made all my endowment policies paid up both for me and my wife….and bought a term plan which i did not have earlier….thanks to Jagoinvestor articles…which i hv been reading for past year..

    i need your advice on one of LIC poilicy which was pushed to me earlier – Jeevan Rekha ( T. No – 152) which i have began on 22-3-2003 with 25 yrs as premium paying tenure , in this i pay premium of 7602 for 25 yrs and get back 20000 every five years throughout my life time…i have received once 20000 cheque from LIC and next will be due next year…

    • Ram

      Tum jeo hazaro saal! But lets assume you live till 100yrs and you started this policy when u were 25yrs old. The following is IRR calculation according to me, -ve means cash going out of your pocket…

      Age Cash Flow
      25 -7602
      26 -7602
      27 -7602
      28 -7602
      29 -7602
      30 12398
      31 -7602
      32 -7602
      33 -7602
      34 -7602
      35 12398
      36 -7602
      37 -7602
      38 -7602
      39 -7602
      40 12398
      41 -7602
      42 -7602
      43 -7602
      44 -7602
      45 12398
      46 -7602
      47 -7602
      48 -7602
      49 -7602
      50 12398
      51 0
      52 0
      53 0
      54 0
      55 20000
      56 0
      57 0
      58 0
      59 0
      60 20000
      61 0
      62 0
      63 0
      64 0
      65 20000
      66 0
      67 0
      68 0
      69 0
      70 20000
      71 0
      72 0
      73 0
      74 0
      75 20000
      76 0
      77 0
      78 0
      79 0
      80 20000
      81 0
      82 0
      83 0
      84 0
      85 20000
      86 0
      87 0
      88 0
      89 0
      90 20000
      91 0
      92 0
      93 0
      94 0
      95 20000
      96 0
      97 0
      98 0
      99 0
      100 20000

      IRR= 1.75%

        • Ram

          of course yes! but the same (bonus etc) was not given in the problem statement (original question). So this was just to show how lucrative 20k return from LIC “through-out life” is in reality?

          For most of the people, return of 20k in every five yrs through out life is a big enough trap. Bonus, loyalty etc would be just icing on the cake.

          But reality sucks.

    • Ram

      Age Cash Flow
      25 -7602
      26 -7602
      27 -7602
      28 -7602
      29 -7602
      30 12398
      31 -7602
      32 -7602
      33 -7602
      34 -7602
      35 12398
      36 -7602
      37 -7602
      38 -7602
      39 -7602
      40 12398
      41 -7602
      42 -7602
      43 -7602
      44 -7602
      45 12398
      46 -7602
      47 -7602
      48 -7602
      49 -7602
      50 12398
      51 0
      52 0
      53 0
      54 0
      55 20000
      56 0
      57 0
      58 0
      59 0
      60 20000
      61 0
      62 0
      63 0
      64 0
      65 20000
      66 0
      67 0
      68 0
      69 0
      70 20000
      71 0
      72 0
      73 0
      74 0
      75 20000
      76 0
      77 0
      78 0
      79 0
      80 20000
      81 0
      82 0
      83 0
      84 0
      85 20000
      86 0
      87 0
      88 0
      89 0
      90 20000
      91 0
      92 0
      93 0
      94 0
      95 20000
      96 0
      97 0
      98 0
      99 0
      100 20000

      IRR= 1.75%

  4. Ram

    Nice article Manish,
    Can you please explain more in which situation making paid up works better than surrendering the policy?
    Let us take an example, say yearly premium is Rs. 10,000/- , paid 5 yrs premium already. The original policy was for 20yrs. Now if the policy is surrendered, the policyholder would get around, say, 50000*(1/3) + some bonus = 20,000/- (approx)

    Now, lets two scenarios,
    i) The policy holder puts this 20K money into PPF for next 15yrs with 8% interest
    ii) The policy holder does not surrender the policy rather makes the policy paid up. He takes the amount at the end of the maturity which is 15yrs away from now.

    Which one would be a better option?

    I have taken PPF instead of FD just to nullify the current tax implications as there is a possibility that the return from all these endowment policy would become taxable after the advent of DTC.

    Another request, can you please write an article on possible implications of DTC?

    • Ram

      In this case it would make sense to make it Paid up , but I was talking about cases when most of the term has gone and it might make sense to continue it a bit more so that he can get FAB + some loyalty addiitons (sometimes its added in 5 yrs) . So that way his overall returns would not be less (if not more) than surrendering


      • Ram

        Hi Manish,

        I think my question (and scenario) was a bit different. Question was to choose from two options when 5yr premium has already been paid out of 20. So next 15 are still remaining.

        i) surrendar the policy and invest whatever u get into PPF for next 15yrs
        ii) make it paid up.

        Which one would be better and how?

        • Ram & Deepa

          This is not that easy situation . You need to do number crunching for both situation and see which one is better from returns and liquidity point

          If you surrender it now , you will get surrender value which you can invest in PPF or MF . Calculate the IRR taking some realistic assumptions .

          Same for paid up .. And see which one has better returns .. Do you know how to do IRR analysis ?

          • Srinivas

            Ram & Deepa,

            If the policy term is completed more than 60% (I mean completed 12 years of original 20 years) then better to continue.
            Or else surrender and invest the amount you got in Equity MF.

            This surrender value after (remaining years) in MF is more than end of term returns.

            I have written a detail comment on the same issue some time long in jagoinvestor comments section.

            • Nilufer

              Dear Manish,

              I have 5 money back policies from LIC towards which i pay 70,000/- per annum as premium:

              The oldest Money back policy is dated 2001 for a SA of 2 lacs from which i have received 2 money backs
              The second oldest MB policy is dated 2002 for SA of 2 lacs from which i have received 1 money back
              The third oldest MB is dtd 2003 (SA 2 lacs) from which i have received 1 money back
              The 4th MB is dtd June 2009, (SA of 2 lacs) to which i have paid 3 premiums, and money back
              The 5th MB is dtd Feb 2010, (SA 2 lacs) to which i have recently finished paying 3 premiums, and no money back as yet.

              I wanted to know that if i stop paying further premiums towards all the above money back policies, would i loose out on a lot of monies that i have already paid LIC? If yes, would it be worth it to save on the rest of the premiums by making all the above policies paid up and divert the same towards PPF for the next 12 years?

              Eagerly waiting to hear from you Manish…

              • Nilufer

                You need to study a bit on all the policies and see how they offer on paid up and surrender and then for each of them see if stopping the premiums and directing your premiums in something else will make more sense or not .

                You will have to do some home work on this .

                But with what I understand and with my experience , it would be better to stop paying premiums and either make your policies paid up or surrender it

    • Hey harsha good that you learnt and had clarity when it comes to LIC. If this article would have come 1 year back you would have saved BIG money.

      anyways i am happy you are learning

  5. Rakesh


    Excellent article. I already made my LIC endowment policy paid-up last year after reading your posts. Keep up the good work.


  6. Akshay

    Hi Manish,

    I am 36 years old & I have just started to read your blog few days before & I found it quite informative for people like me who doesnt know about the financial planning.
    Just want to know your suggestion regarding my Invest plus premier policy (Bajaj allianze) which I took last year in September for 20 years duration at 30000/- premium/year. Should I have to surrender this policy or I have to paid up after completing 3 years?. I have already paid 30000/- in this policy & next due in this september.
    I am planning to take plain term plan of 25 lakhs each from LIC & ICICI (thanks to you & your blogs which helped me to take such decision) + want to increase risk cover in existing accidental policy (As I have to travel extensively in my job). + Still I can invest 15,000/- p.m. (How to plan, need your suggestions.)

    Thanks for help & good work. Keep it up

    • Akshay

      The policy you are talking about is I guess a ULIP . it works differently , but if you are not very clear about the policy and its usage , better get rid of it .

      Incase you cover by taking another term plan , and also increase your accidental cover , for the investment you can invest in Mutual funds


      • Bhaskar S. M

        Hello Manish i have 1 question for you. you are commenting only LIC not any other Insurance Company. Are you any agent of private insurance company. that’s why your trying to spoil LIC. Do you know now a days somany private insurance company cheating to public. but you are not raising the voice for such a cheating company. LIC’s main aim is giving financial security for certain critical time. (eg: death). First thing you dont know why we need insurance.

        • Bhaskar

          I do not mind telling you that I am just a blogger and we also do planning for people . I am very curious to know why you are so irritated on this article as people have got to know about how LIC works ? Is this article saying anything negative about LIC ? This article just gives the knowledge on different terms and terminologies in LIC policies , at the end, its written a person reading this can now figure out if a policy is suitable for him or not . I searched google and found out that you are an LIC agent selling its policies , I just wonder why you are not happy seeing this information publicly available to everyone , where as the other readers are feeling good about it .

          Why I wrote about LIC only ? Yes I write about LIC only or maximum LIC because you need to understand that when 90 out of 100 indians buy LIC , there should be more articles and knowledge on LIC to be given .

          Also , in the start itself I had written that this article applies to LIC and other private insurers policies . Kindly reply :)


  7. Akram Chotu

    Thank you for sharing your Knowledge and Time.

    I learned this the Hard-Way way back in 2006 when I closed my BIRLA SUNLIFE ULIP Life Insurance Policy. To put it simply, I paid Rs. 100 and when I closed the policy after 4 years then I got Rs. 60. From that time onwards I stopped looking at ULIP’s and Insurance Policies and financial things that I did not understand or financial things I am uncomfortable with.

    Sometimes it is best to shut everything and take rest.

  8. Akram Chotu

    BTW, as per your knowledge, what is the Real Rate of Return per annum or CAGR return on these Insurance Policies? Is it 7% CAGR per annum? Or?

    Please clarify.

  9. No wonder all such traditional policies are a mess to understand. Very few retail investors will do the math themselves and as rightly written, the emotional quotient is so huge, that they would rather continue.
    I’d agree that surrendering/making paid-up is a better advantage to have though that is something which many will not anyways do.
    Scintillating article guys…


    “Paid up Policy

    A lot of times when you have completed 3 yrs of policy, you might not want to get your money back immediately, in which case you can made your policy paid up (just stop paying premium and it becomes Paid up). When you do this, you can stop paying further premiums but you will get your total premiums paid + accrued bonus any at the end of the maturity period. This might work out better sometimes compared to surrendering if you were going to invest the proceeds in some debt instrument.”

    very good funda (solution)….:)

      • Byju

        In the above situation the choice of “paid up” is good since the investor has already decided to invest in debt instrument. So LIC has already put the money in debt instrument and so he can wait till it matures. But is it so simple “stop paying premium and it becomes paid up”. I am paying endowment premiums to the tune of Rs. 79,620/- per year. Should I intimate LIC that I am going to stop paying premium ?
        I am considering buying a term cover from LIC for Rs. 1500000/-. So if I stop paying the premium in the above policies , then may be LIC will take into consideration the same and may decide against issuing the term policy. Already I have 36 lacs term cover through iCare. But my actual requirement was 50 lacs , the balance was being achieved through the above endowment policies.

        • Byju

          Yes , you should stop paying LIC premiums and make your policies paid up .. Also there should not be any effect of this on your term plan , better get a term plan and then make your policies paid up


  11. Sunil Date

    Excellent article, (None of the LIC agents would like it). But to play devils advocate, endowment plans with the longest tenure ( whole life) have their place in a financial plan. If one has to have a debt component in his portfolio, what ever be his age, why not have it in the form of a Long term endowment, which is the cheapest in its category. It would provide insurance cover and debt investment along with associated tax benefits, which are not available to Deposits, Debt Mutual funds etc.

      • sunil Date

        Term plan is cheap but one does not get to participate in the surplus. You must be aware that the Ins co keeps margins for mortality, expenditure, and investment returns. If the experience is favorable the surplus is shared with the policy holders in terms of bonus.

        Whole life plans participate in the surplus (Bonus), can be a estate planning tool, and are the cheapest per SA in the endowment category. In asset allocation they provide the debt exposure. Other features include premium payment term flexibilities, bonus availing flexibilities, Loan, partial withdrawal and surrender. The bonus feature allows it to increase the SA in pace with inflation.

        So all the 3 basic type of plans ( Term, whole life & ULIP) have their own use.

        • Sunil

          Agreed with your points .. but are those points basis of evaluation for its “goodness” or “badness” . What are the actual returns which are recived by the policy holders .Also for the customers is that the best arrangement possible ?

          My question is “Can we say that for a policy holder , buy whole life term plan is the top most option , cant there be other way round they can achieve same thing ?”


          • sunil Date

            @Manish 1 If other plans have their negatives so does Term plan. It is generally available only for a term of 30 years whereas a person may be earning upto age 65 & beyond. Generally the WOP rider is not available in term plans especially in Online plans.

            2 You have yourself mentioned several times that the returns from Endowment is in the 5to7% tax free. If one has to have debt in the portfolio for asset allocation, after PPF, is this not a good option ?

            3 All plans also have some positives and it will be necessary to consider the adequate cover over income earning age, increase in cover over time, affordability, flexibility to withdraw & take loans in case of emergencies (financial stress) etc. None of the plans meet all the requirement hence the need for a insurance portfolio.

  12. J

    Hi Manish,

    Thanks for sharing your knowledge….regarding making a policy a paid up. You wrote if we stop paying the premiums, the policy will automatically become Paid up. Then, when will a policy get Lapsed? Are you suggesting that Lapsed = Paid up? Please help me understand the difference. Thanks!

    • J

      Lapse word is also used for term plan , ULIP’s … and for LIC policies yes, LAPSE would means “no more insurance cover” or you are getting out of the regular contract .


  13. Vivek

    Seriously…..We need Sweeping Changes (and not just Cosmetic) in Insurance Landscape. Of all the Insurance products, the only one I like is Term Insurance.

    All other products are not worth a glance (forget about actually buying one).

    I seriously wonder, what does the LIC do with all the money that it collects from Investors, specially Endowment plans. (I bet 10-30% of the premium received is knocked-off towards Agents commission).

    The effective annualized returns from a typical Endow plan is 6% p.a.

    Compare this return on inflation-adjusted calculator, the real returns are negative.

    Where does LIC Channelize/deploy this money. Is LIC so incompetent to earn such shoddy returns.

    Seriously, the IRDA should step-in and see how Insurance companies are channelizing money. IRDA should instruct them to give superior (atleast real inflation-adjusted returns).

    P.S: I would suggest everyone to go only for Term Insurance plans for Life/Risk Cover. Nothing beyond that.

    If you want 8-11% p.a. kind of returns, then go for Bank FD.

    If you want superior returns, allocate some amount (like 10-25%) in Equity, just for enhanced returns.

    Lastly, if this kind of disgusting returns continue in the furture, then it is better IRDA should stop all the products EXCEPT TERM INSURANCE.

    After all, Insurance is to Risk Cover (not a Saving Instrument).

    • Vivek

      I dont think your wish will come true in next 50 yrs . IRDA is there , but unless there is “Iccha shakti” from govt to do something , it wont improve .. LIC acts like a big reserve of cheap public money.

      The traditional plans are selling today , but it came into existence when our India had only non-risky attitude towards investments .

    • sunil Date

      @vivek – 1 No product is bad or good per say. If it meets your requirment and at a value u perceive, it is good. You have to be clear about what is it you want, ask all the questions before buying and get commitments in writing.
      2 Kindly be aware that in all the traditional plans the investment risk is with the insurance co. They are already accepting your life risk. Would you in their position, not play safe with the money ? Moreover there are IRDA guidelines on the how the money can be invested and Ins co’s have to strictly adhere to that and it is audited by IRDA.
      3 Do you work free for your company, if you are salaried or for your clients, if you are a professional or for your customers, if you are a businessman ? Why are you against the insurance agent getting paid for his service ? If you think it is too much do you think the Sharukhs, Salmans, Sachins, Mahenders deserve such huge sums of money just for endorsing a product ? Why do you buy products endorsed by them and in turn contribute to the crores they earn ?
      4 You say you like only term insurance, then why are you bothered about “disgusting” returns. Risk and return are directly proportional. You cannot have safety and high returns together.
      5 I agree that many products ( not only insurance) are sold either with lies or half truths. But then ‘buyer beware’ is the principle you have to follow. No body has has held a gun to your head and made you purchase a LIC policy.
      PS I am not an LIC agent but I am associated with another insurance co as its agent.

      • Rahul

        Sunil Date

        You agents are parasites ……. simple and clear ……. are u telling me that you never knowingly hid facts or mislead a customer to sell policies ?

        Holding a gun to someone head and make them buy a policy would be a more humane thing to do … atleast he is aware that he is getting ripped off and he can plan his future better …. what you agents do is …. take a person/families future dreams and ruin it for them … do you even consider what happens to these people’s futures ?

        The “Nobody has held a gun to your head and made you purchase a LIC policy.” is a very sick statement to make ……. after you repeatedly call customers, harass them, lie to them and finally when they loose their hard earned money … u pull the “buyer beware” line…

    • Giri

      We all know every one should have cover for his / her life. But when we suggest term policy and say your loved ones will get SA if something happens to your life and the remaining money you can invest in ELSS and other instruments where they get superior returns they say I need to get something back on my policy after maturity (not on death). I’m a complete financial planner (offers MF, life & general insurance, FDs, equities). When I was trying to sell term policy to one of my friend his colleague forced him to demand a money back policy. And the other issues are 1) most of the advisors offer a single product 2) lack of knowledge on both sides (advisors & investors).

  14. Raja

    Hi Manish,

    Nice work. But watch out, pranab da might be sending some govt agencies to your house one of these days. Govt needs buyers for it’s bonds and LIC is the man :)


  15. Raj

    Dear Manishbhai,
    In 2008, i have purchased jeevan Saral policy Premium Rs.1321/-pm.
    Also buy Insurance plan from Post Office -Postal Life Insurance(central govt.Employees only)for Rs 2600/-pm. Last year when I have read your blog
    I have surrendered above policies having loss of Rs.72000/- but now I am very happy because You save my money.
    Now I have taken Term Plan from LIC of Rs.10Lakh and also want to buy One more from Kotak E preferred for Rs 25 lakhs.
    My portfolio snapshot-
    1. Term Plan of 10 Lakh(+25 Lakh adding )
    2. MF SIP 10000/-per month
    3. PPF -30000/-per year
    4. Emergency fund -50000/-
    5. Gold ETF -01 unit per month
    6. FD in SBI
    I am able to plan this due to your guidance.
    Thanks again.

      • T S Ashok


        I have purchased lic term plan for 50L cover of 10 years. The premium is very high(11300 INR). I wish to purchase the same from icici i protect or some other on line insurance. But my spouse is telling that please don’t do that. If some thing happens, i can ask the agent for claim. Whereas if you purchase in online, then it will be very tough to claim.. i don’t know how to convince..or is she right???

        • TS Ashok

          Agent can be helpful in running around at the time of claim ,but it will only happen , if the agent is really close or extremelly professional , I dont thinik that can happen , at the time of need , its known that agents are hardly around , forget at the time of need, they are not around even after some months of selling the policy .

          More than external help, its better that she is clear about the claim process herself and its your responsibility to show her how things work


  16. Raj

    Dear Manishbhai
    Thanks for your quick reply.
    I have- LIC term Plan–10lakhs
    Now going to buy- Kotak e Pre- 25 Lakhs
    After that I shall buy from another Insurance company (SBI Shield)


      • Hi Manish,

        I too have have gone for 2 policies now and plan to go for another one in future.

        The thought process behind going for 3 different policies in my case is as and when my savings increases with time and i acquire safety net for my family. I would like to discontinue them one by one.
        Whereas if i go for only one policy, it will be a either/or case.


          • Byju

            Could not understand the above. I have 50 lacs cover till the age of 45. presently I am 30 yrs. I have also taken a term policy thinking in the above lines that by 45 years , I should be able to save enough to support the family . But how does taking 2-3 policies help ?

  17. Rahul

    Hi Manish,

    I am frequent reader of your comments & topics discussed in this forum. I request you to suggest to my query. I have currently three Money back policies running, after reading your articles , I am least interested to continue them and want to invest in PPF or Mutual Funds, I already have 40 Lacs Term plan from LIC, but as i have already paid some premium for some years for these policies, I request you to kindly go through below tables and suggest me , should i continue them or surrender it or make it paid up. In my table i have specified what money back amount i have already got and what i will get in future.

    Kindly suggest.

    Sum Assured 100000
    1.       LIC Jeevan Varsha with Profits without DAB
    Sum Assured =100000.00
    Premium= 15980.00
    Mode = Yearly
    Commencement = 03/2009
    Maturity = 03/2021
    Last Premium = 03/2017

    No. of Years Year Premium Money Back Amount Amount Paid to LIC
    1 2009 15980
    2 2010 15980
    3 2011 15980
    4 2012 15980 10000 63920
    5 2013 15980
    6 2014 15980
    7 2015 15980 20000 47940
    8 2016 15980
    9 2017 15980
    10 2018 15980 30000 31960
    11 2019
    12 2020
    13 2021 40000

    Balance SA 40000
    GA 84000

    on Death SA+Guaranteed Addtion
    on Death during Last Policy Year = SA+ GA + Loyalty Addtion

    **************** Second Policy *************************

    Sum Assured 101000
    1.       20 Years Money back policy with profits + acc. Benefits.
    Sum Assured = 101000.00
    Premium =6277.00
    Mode = Yearly
    Commencement=02/ 2004
    Death before date of maturity — sum assured + vested bonus
    Surviving 5 yrs from commencement — 20% of sum assured
    Surviving 10 yrs from commencement — 20% of sum assured
    Surviving 15 yrs from commencement — 20% of sum assured
    Surviving on the date of maturity — 40% of sum + vested bonus

    No. of Years Year Premium Money Back Amount Amount Paid to LIC
    1 2004 6277
    2 2005 6277
    3 2006 6277
    4 2007 6277
    5 2008 6277
    6 2009 6277 20200 37662
    7 2010 6277
    8 2011 6277
    9 2012 6277
    10 2013 6277
    11 2014 6277 20200 31385
    12 2015 6277
    13 2016 6277
    14 2017 6277
    15 2018 6277
    16 2019 6277 20200 31385
    17 2020 6277
    18 2021 6277
    19 2022 6277
    20 2023 6277
    21 2024 6277 40400 31385
    131817 101000 131817

    ********************** Third Policy ********************************
    Sum Assured 50000
    1.       25 Years New Money back Policy – with Profits.
    Sum Assured = 50000.00
    Premium = 2513.00
    Mode = Yearly
    Commencement =03/2000
    Maturity =03/2025
    Death before date of maturity — sum assured + vested bonus
    Surviving 5 yrs from commencement — 15% of sum assured
    Surviving 10 yrs from commencement — 15% of sum assured
    Surviving 15 yrs from commencement — 15% of sum assured
    Surviving 20 yrs from commencement — 15% of sum assured
    Surviving on the date of maturity — 40% of sum + vested bonus.

    No. of Years Year Premium Money Back Amount Amount Paid to LIC
    1 2000 2513
    2 2001 2513
    3 2002 2513
    4 2003 2513
    5 2004 2513
    6 2005 2513 7500 15078
    7 2006 2513
    8 2007 2513
    9 2008 2513
    10 2009 2513
    11 2010 2513 7500 12565
    12 2011 2513
    13 2012 2513
    14 2013 2513
    15 2014 2513
    16 2015 2513 7500 12565
    17 2016 2513
    18 2017 2513
    19 2018 2513
    20 2019 2513
    21 2020 2513 7500 12565
    22 2021 2513
    23 2022 2513
    24 2023 2513
    25 2024 2513
    26 2025 2513 20000 12565
    65338 50000 65338


        Hey why are giving public such a silly ideas. Can you suggest 5 of the Mutual Funds which has gone for last Five years. Any Big Business Mens can have Term Insurance not all the People can have Term Insurance Plans. In Term Insurance Plans what you had paid will never come back to your hand at maturity or survival, the money comes to your nominee only when death takes place for the Life Assured. After premium paying term is over then the Insurance is terminated and no money is given to you. So if you have enough money for savings then go for Term Insurance plans other than traditional plans. I am a Professional Life Insurance Advisor.

  18. Atul

    My wife had taken New Jeevan Shree policy in 2003(Table 151). Term is 25 years and premium paying term is 16 years. Since the policy is half way through does it make sense to surrender.

  19. Ravi C

    Hi Manish,

    I have a query on my Jeevan Sanchay policy. The policy is a 25 yr policy with a yearly premium of 27339. I went to the LIC office for surrender quote. Here are the details:

    1. Policy is effective from 1998 and last premium payment is in 2022. Policy Matures in 2023.
    2. I get 15% money back every five years. I got Rs. 75000 in 2003 and 2008
    3. The paid-up value on the policy is Rs. 62000 and GA for last 12 years at 70 per thousand is 420000. My SA is 5 lakhs.
    4. The surrender rate of the policy is 0.381 and hence the surrender value is Rs 183642 (out of PA+GA)
    5. I thought I can continue the policy till 2013, when I will get Rs. 75,000 as money back. In that case, the GA will be Rs. 5,25,000 and provided the Paid up value remains same and with the same surrender rate I will get Rs. 2,23,647. So I will get Rs. 2,98,647 (SV + MB) in 2013 if I pay for three more years which is 1,15,005 more than what I will get today. But I will be paying 82017 as three years premium for it.
    5. With 13 years to go what do you suggest? Should I continue the policy? Or instead of surrendering the policy should I request the policy to be paid-up?

    Hyderabad, India

    • Ravi

      The bonus part declared till now is very good considered the general bonus figures .. and provided you have old policy , you can make it just paid up once you get 75k in 2013.. If you are a conservative investor , you might continue it ..


  20. ashish

    Hi Manish,

    Excellent stuff at least for novices like me!

    Just need to check if I followed your articles correctly. Also, to find out the ways that people, like me, who have been trapped in this LIC web for tax saving have now.

    My age- 27yrs. I’ve a Jeevan Anand policy (since Dec’ 06) for 30yrs. Annual Premium 30633/-. Primarily, brought for tax savings and result of little financial literacy and having a LIC agent as friend 😐

    After reading your blog, options available with me (did some calculations using your IRR sheet and other calculators, I’m just hoping its correct)

    1. Make it paid-up policy= I get 30633*5 (5yrs premium already paid) + 1,80,000 (Accrued Bonus till date as per LIC portal) at end of 30yrs which means 3% return.

    2. Surrender now = invest surrendered amount in PPF (or other debt instrument @ 8% for next 25yrs , since my left policy term is 25yrs and considering tax saving objective). Current surrender value is 62500 and invested in debt at 8% would give me 4,28,030 at end of 25 yrs.
    If I keep investing remaining premiums (25 in my case) in PPF, I would get 22,37,041.
    Total = 4,28,030 + 22,37,041 implies 6% IRR considering a complete 30yrs duration that I remained invested

    3. Continuing with the policy would mean earning at CAGR of 6-7% (I don’t really understand it convincingly though, since Jeevan Anand would be give 10Lac SA + bonus after 30yrs and again 10Lacs when I die.

    Please corroborate if I am correct, else please correct my calculations. Also, please suggest the best options of the available ones considering I am already in this LIC web for 5 yrs and that my objective was tax saving.

    Many Thanks !!


    • Ashish

      You calculations seem to be correct mostly .. The main thing you need to change here is your assumptions of returns over 25 yrs .. do you really think for 25 yrs would want to be inveted in pure debt .. Equity is generally reocmmened if one time frame is more than 5 yrs.. so you should be in equity totally for that amount of time and assume a return of 12% .. that would change the whole thing ..

      Also surrendering and investing your money in something else means your money is highly liquid and not stuck in LIC .. suppose you continue in LIC , and after 5 more years you need sudden money , then ?

      And similiarlky suppose you invest the future premims in say MF or FD , then what ? So look at it from liquidity point of view also ..

      The biggest problem here is the illiquidity and low returns .. you never know the future of bonus in LIC ,and at the same time the same is true for PPF returns and equity rerturns .

      Now what is your next move ?

      • ashish

        Fair enough.
        But as I said, the idea of investing and getting trapped in these schemes is tax saving avenues. What would be your suggestions for tax saving options in the wake of DTC from next year (no ELSS)?

  21. Ganpat

    Hi Manish,

    I read in news paper that LIC is coming up with new e-Term Plan, which will be cheaper than the current Term plans. Is it true?

    Ganpat Bagal

  22. Deepika

    Hi Manish,

    This is a GOD send article for me. This is as if you read my mind and I am sure for many others too.

    I have a query. Can you please what should

    I took a LIC endowment policy in the year 2004 for Rs. 10 lacs for which I am paying Rs. 42601/- per annum.

    This policy has a term of 25 years but I have to pay premium for 20 years which means the year of last annual premium payment is 2023 by when I would have paid Rs. 8,52,020/- and the year of maturity is 2029 when I will get Rs. 30,35,000/-

    I have already paid premium for 8 years at Rs. 42601/- per annum.

    Can you please let me know if i should at this stage withdraw from this policy or continue as I have already paid a lot of premium over the past 8 years?

  23. Deepika

    Hi Manish,

    This is a GOD send article for me. This is as if you read my mind and I am sure for many others too.

    I have a query. Can you please what should I do?

    I took a LIC endowment policy in the year 2004 for Rs. 10 lacs for which I am paying Rs. 42601/- per annum.

    This policy has a term of 25 years but I have to pay premium for 20 years which means the year of last annual premium payment is 2023 by when I would have paid Rs. 8,52,020/- and the year of maturity is 2029 when I will get Rs. 30,35,000/-

    I have already paid premium for 8 years at Rs. 42601/- per annum.

    Can you please let me know if i should at this stage withdraw from this policy or continue as I have already paid a lot of premium over the past 8 years?

    • Deepika

      The biggest issue here is that you seem to think that you will get 30,35,000 at maturity .. most probably this is the figure given to you by the agent adn not written anywhere in the policy .. Is it ? Please look at your policy document .

      Agent give some numbers based on assumption which generally dont hold true . First get clarity on what all you are getting at end ,.which policy name is this ?


  24. raj

    Namaste Deepika & Vishnu,
    I am fully agreed with your comments regarding JI articles. Not only the recent but all the articles are GOD send for us. All the articles are clear, unbiased and very easy to understand.
    Thanks to Manishbhai and his Team.

  25. samrat roy

    Manish Bhai,
    do you agree with me that we Indians are generally Impulsive Investors? We generally do not put a logic or do cross checking before investing. We invest only because we need to, or because our colleagues do. And, moreover, we are always in hunt for some extra edge, but that remains limited to negotiating commissions, pass backs, gifts or some extra facilities. If that is granted, we become gleeful. But we do not consider that a good product itself do not provide the agents with good commissions, because it is more focussed towards the Customers. Only BAD BAD products give hefty commissions (true for every Financial Product, not only Insurance). So, just stop asking for that edge, instead assure the Representative that if he provides you with a suitable suggestion, you will refer him to your close circle. And, more importantly, do cross checking. Keep only one thing in mind that you are your best Financial Planner if you are able to rationalize things.

    • lokesh

      i tried my best to suggest my good friend for a combination of a term plan with a good mutual fund (HDFC top 200 etc.) but he has recently paid 3rd premium of ULIP. premium Rs 36000/- p.a. cover: 10 times.
      when i asked him why again? his father told that this will help him save some money. i couldn’t comment on this…..

  26. Rahul

    Hi Manish,

    With respect my question on September 3, 2011 at 11:46 am, you suggested me to stop first policy and make 2, 3 as paid up. Can you please explain me why should i stop first one instead of making it also paid up. I have already paid 3 year premium. Reason why i am asking so is due to the fact that i have already paid a good amount of Rs 47940 to LIC.

    Please suggest.


    • Rahul

      The first policy is suggested to be stopped as its a new policy and the premiums would not yield high returns to you in anycase .. the others have crossed 5 yrs and eligible for bonus also .. so better to make paid up


  27. Vikram

    Hi Manish,

    i have taken a pension plan from MNYL – Smart Invest Pension Plus.

    Its a ULIP plan, i’m confused about whether should i continue or opt out?

    I’m holding this for 1 Yr now…

    • Sunil Date

      @vikram What was your intention in taking a pension plan ? If it has not changed why do you want to opt out ?

      It is always a better option to build up your retirement corpus in assets which do provide for better returns commensurate with the risk that your tenure will allow you to and also allow you liquidity. But important part is will you be disciplined to continue with the investment regularly and not divert it for some other goal unless it is an extreme emergency. If you are confidant, go ahead; if not better remain in a plan where there will be a compulsory investment and you will not be allowed to divert the funds by succumbing to temptation.

  28. Asheesh

    Hi Manish,
    another excellent post, in series of some excellent post.
    Have a few queries, can you pls suggest…
    a. how does one go about surrendering the LIC policies, is it some legwork to the Lic office;Could not quite find any document on that online…
    b. if the LIC needs some form etc to be filled up for this, are you aware of some online location where these forms can be downloaded from…


    • Asheesh

      You will have to go to LIC office to make the policy surrender . there is no document needed in this ,. just fill a surrender form , that s all .. .you will get it in LIC office itself .

      If you want to make policy paid up , in that case you dont need to do anything .. just stop paying premiums , thats all


  29. aarya

    hello manish,
    i have been following your website for more than 4-5 months. i really like your content, very knowledgeable and useful too.
    We have taken lic jeevan anand policy from December 2006, on the name of me ( SA-14 lacs) and my husband (SA-8 lacs). we have also jeevan saathi (SA-5 lacs) from Dec 2006.

    my husband has money back policy of SA- 6 lacs from march 2005.
    we have komal jeevan for our both children (SA 1 lacs each) from april 2009.
    we have taken endowment assurance with profit (SA-2 lacs) from june 2011.
    now we are paying almost 2 lacs and 15 thousand annually.
    before coming in contact with your website i was illiterate about these lic policies. now at least i can say i am little bit aware of that.

    i want to stop all these premium and take term insurance for my husband only as he is only the earning member (business) of the family.
    what should i do with these policies? should i do that paid up of surrender ? why?
    please reply me, i will be very grateful to you. please.

    mrs Aarya

  30. aarya

    hi manish,
    just today sometime before i have sent you e- mail, but i thought that i have not provide you enough information.

    so i am providing again complete information in tabular form. sorry for that.
    i have following lic policies on the name of my husband( dob -15/04/1970) and he is the only earning member of our family.


    MONEY BACK MARCH 2005 MARCH 2025 6 ,00,000

    JEEVAN DEC 2006 DEC 2031 2 ,00,000

    JEEVAN DEC 2006 DEC 2032 2 ,00,000

    JEEVAN DEC 2006 DEC 2033 2 ,00,000

    JEEVAN DEC 2006 DEC 2034 2 ,00,000

    JEEVAN DEC 2006 DEC 2035 2 ,50,000

    JEEVAN DEC 2006 DEC 2036 2 ,50,000
    (12088 )

    ENDOWMENT JUNE 2011 JUNE 2025 1 ,00,000

    ENDOWMENT JUNE 2011 JUNE 2025 1 ,00,000

    KOMAL APRIL 09 APRIL 2025 1,00,000

    KOMAL APRIL 09 APRIL 2025 1,00,000
    (15,200 )

    i have following policies on my name (DOB=21/03/1980)


    JEEVAN DEC 2006 DEC 2023 2 ,00,000

    JEEVAN DEC 2006 DEC 2024 2 ,00,000

    JEEVAN DEC 2006 DEC 2026 2 ,00,000

    JEEVAN DEC 2006 DEC 2027 2 ,00,000

    JEEVAN DEC 2006 DEC 2028 2 ,00,000

    JEEVAN DEC 2006 DEC 2029 2 ,00,000

    JEEVAN DEC 2006 DEC 2030 2 ,00,000

    Please suggest me that what should i do with these policies. i want to come out from that and want to take term insurance for my husband only, as he is only the earning member.

    Should i surrender or should i paid up these policies and why ? please help me out as till date we were able to pay the premium of policies . now we want to buy house on home loan so i want to divert that installment to the home loan emis.


      • aarya

        hello manish,

        can any one suggest me that should i go for surrender or paid up ?

        i think paid up will be better.
        please tell me your opinion.


  31. lokesh

    i am just done with insurance of 25 lacs from Indiafirst online at a reasonable pricing. but i was just surprised to see few questions which i want to share:

    Question at the time of online form filling: “””Have you smoked more than 5 Cigarettes or Beedies or had 3 Pouches of Gutka or Chewable Tobacco per day or had Alcohol/liquor exceeding 90ml or 3 Pegs of Hard Liquor or 2 Glasses of Beer/ Wine per week. Do you in any form or have you ever suffered from drug or alcohol addiction or have been advised by a doctor to reduce your alcohol / tobacco consumption & do you consume any drugs or narcotics not prescribed by the Doctor?””””

    Question as printed in policy:
    1.Do you consume any form of alcohol?
    2. Have you smoked or used any form of tobacco in the past 12 months? If yes, please indicate in which form.

    I simply answered NO at the time of online policy purchase, but when it got printed, i was surprised to see NO in questions mentioned above which is not true, as i do drink and smoke sometimes.

    what do you say about this?

      • sunil Date

        @lokesh You have replied NO to specific questions but what has been printed is a general question. I suggest that you send a written communication to the Insurance Co ( with submission proof eg registered letter or ack from local office). Mention the questions as seen at the site and your answer and also mention your understanding that the printed document is in consonance with the questions mentioned at the site. This way, even if they do not reply, your answer to the original answer will override the printed question.

        • lokesh

          manish, i answered ”NO” as my answer is “NO” to the question shown on website while questions printed in policy are totally different in meaning. (please see both questions)
          i have communicated the same to insurance co. through email, the same is happened on question of medical history.
          what’s the logic behind this type of miscommunication? i am afraid of online insurance policy now.

          • sunil Date

            @lokesh – By showing your printed Email copy it cannot be proved that you had indeed sent it. I feel a sent Email can be generated w/o actually sending it. ( mabe IT gurus can correct me & be able to prove that a mail was sent. My loigc states that when a person receives a mail it can be traced back to originating computer but tracing forward unless an auto / acknowledgement is received ?? doubtfull !)

            Why this has happened ? its not a question limited to online policy. Its a question of apathy, of tendency to not to empathise, of tendency to handle issues superfluously and not going into depth. This is my general observation of the modern day administrative and management practices. Others may accuse me of ‘old man rantings’ but it is true. If the company has serious desires to improve then your observations will be taken note of and corrective action will be taken.

            • lokesh

              Sunil, actually policy is not yet accepted by Indiafirst, as i got a call from them that they have received my email and will update the policy documents accordingly and this will require manual underwriting also.
              so, i am still waiting!!!
              this is a serious issue not only with indiafirst but also with metlife.
              last month, i refused to take policy with metlife due to same point, i answered their question as “Yes” asking “if you had consumed alcohol/tobaco in last 3 years” as i consume alcohol but not tobaco while pdf copy of proposal form is showing “Tobaco-Yes Type-Pipe”
              when did i fill this information? when i asked them, they told me that this is system issue and i have to send letter in writing. i withdrawn the policy immediately on this response.

              • sunil Date

                @Lokesh You seem to have a lot of experience on on-line policies. Gr8 it adds to our knowledge.
                If Indiafirst has not yet accepted your proposal what is the printed question you are refering to ? Can you update me on the sequence of events and the media ?

                PS – The “PIPE” part is really hilarious. I could not stop laughing.

                • lokesh

                  actually i was referring to pdf copy (sorry, i said printed) of the proposal after online submission and payment. i am sending you the part of the both policies (pdf format) to your email id.

      • krishna

        i am new a lic agent have done only 3 polices.
        whenever i go to my division officer (DO) he himself put no in these types of question even i always inform about the alcohol or tobacoo habbits of clients.
        Besides him other DO too.
        So i think it will not create any problem to you.

  32. Hitesh

    Hi Manish,

    I have prepared a sheet of all my endowment and mooney back policies with their current detailed status. Out of 7 i am able to decide on 5 of them either to surrender them or make it paidup. For the remaing 2 i need your suggestion whether i can decrease the loss.
    i will just mail u that sheet for your reference. please let me know your comment.




    LIC has been the pioneer in Indian Insurance sector. For many Indians, life insurance truely implies LIC. Therefore, education about their products is of immense importance to every Indian. The private insurers are doing their bit to create awareness about life insurance.

    • sunil Date Your web page starts with the heading “Insurance Guide for Tax Savings and more” and the first line of the information starts with “Tax Savings is among the key reasons why one may buy an Insurance product.” Your article does mention about adequate insurance but the stress is on the Tax saving aspect.

      I beg to disagree and I feel we are doing a great disservice to the individuals by stressing the tax saving aspect. If tax saving is the only objective there are other products with lesser lock in and possibility of better returns.

      If you delve into the history of insurance in Inida, LIC had a monopoly and the model selected by LIC was marketing through part time agents. These agents did not have adequate training then, and did not have time & skills to go into the insurance needs of their clients and to convince them. Therefore the Tax saving aspect and subsequent return of premium became the primary reasons to buy insurance. The 80C limit became the deciding factor for arriving at the premium limit and the Sum assured was never the consideration.

      We, the financial planners / Insurance agents should stress on the need for transfer of risk by having adequate insurance (Life, Disability, hospitalisation, critical illness, property, and liability) irrespective of the tax benefits; tax benefit is a incidental benefit / bonus and should NEVER be the primary / main objective. It should be a consideration only when other factors are similar between investment alternatives.


        Hi Sunil,

        You have brought out a very important point here. The trend that we studied among middle class policy takers is that there is a great jump in demand for insurance products during the end of financial year for tax benefits from Section 80C. This is a gross misuse of insurance.


  34. D.Jain

    Dearest Manishji,
    I m going to receive rs. 875000/- from LIC . I want to invest with a time span of 8-10 years. Should i invest it in FD’s(9.50%), Shares (not gr8 knowledge), Mutual Funds or LIC term policy.
    I have Jeevan Shree policy (15yrs) . i have already paid the whole amount in two installments 600000/-. Sum assured Rs.900000/-. Table 112. what would be my maturity amount.

    • D. Jain

      You should invest in Balanced funds for long term ,. that would give you good returns with some risk .

      The maturity value you can find out from the LIC website .. you can expect around 5-7% in LIC policy


      • D.Jain

        I should invest in Balanced funds for long term ,. that would give me good returns with some risk . Sir please name them.

        Can I invest in Hdfc Top 200, Hdfc Equity,Dspml Equity,Dspml top 100.
        Should I invest the whole amount(Rs. 875000) together in Mutual funds or just SIP .

        Waiting for ur reply . Thank u sir.

  35. dear manish, I have 2 money back policies purchased in 2006. Now I wish to surrender them. The primium is very high (10000/-yearly) and sum assured is very low.. will it be ok to surrender them? 2ndly, I have started SIPs since last 2 yrs in 5 mutual funds. 1.DSP BR Top 100,HDFC Top 200,Hdfc pru. Relince banking and Relince reg. saving. Whether I shopuld continue these SIPs? Pl. advise me

  36. neet

    Hi Manish, I have been trying to calculate the IRR of the lic policies I have but when i put the values and then the formula for IRR , I get the error #div/0 !.I have already tried using the help feature but I am still not able to resolve the issue. can you help?

  37. Ravi

    LIC policies rules table mentioned at the begining of the article.. is it same across all endowment plans?? like accrued bonus is given after 5 yrs only and FAV after 15 yrs

  38. L Thomas

    Whats your take on HDFC’s sampoorna samriddhi plan.. Looking at it from an investment point of view, it looks too good to be true.

  39. Ashish

    Dear All members… I found this blog recently while surfing the net. I appreciate the work done by the administrator. But, what I personally think that he is bit confused between INSURANCE and INVESTMENT. Almost every article i have read reflects only about the return that a LIC policy will give…Not a single article tells about about the miracle a LIC policy can give…Let me elaborate a little…


    Life Insurance has no comparison with any other investment. Many people think that life insurance is an investment or a means of saving. This is not a correct view. When a person saves, the amount of funds available at any time is equal to the amount of money set aside in the past, plus interest. This is so in a FD in bank, in NSC, in MF and all other saving instruments. If the money is invested in buying shares and stocks, there is the risk of the money being lost in the fluctuations of the stock market. Even if there is no loss, the available money at any time is the amount invested plus appreciation. People even invest in real estate. It can be a good avenue for returns but, only till the time you are not in the need to sell it. Once the need arises the appreciation coverts into devaluation. In life insurance, however, the fund available is not the total of the savings already made (premiums paid), but the amount one wished to have at the end of the savings period (which is next 20 or 30 years). The final fund is secured from the very first day. One is paying for it later, out of savings. In life, only insurance is purchased for unseen.

    It creates an estate immediately the policy commences (on payment of only a small installment), for the amount the man decides to save over a period of 15, 20 or 25 years. Thus, even if the person is not fortunate enough to live 15 or 20 years, his family is paid the full amount which the breadwinner had planned to save – although he had saved only a small portion of it. This is the miracle of Life Insurance.

    Likewise, if a person is disabled due to an accident, the payment of all future premiums is waived subject to certain conditions and yet the full sum assured is paid at maturity or at death if earlier.

    Life Insurance also overcomes every one of the weaknesses which makes it difficult for a man to save steadily and regularly over along period of time.

    The steadily increasing savings, which the man has invested regularly in a life insurance policy will also be available to him for meeting an emergency, such as unemployment (him or his children’s), loss in business etc, and help him to tide over or even a major financial crisis. The life insurance policy provides for the grant of a loan, based on his savings, to meet such needs.

    No parent would mind any sacrifice to give a good start in life to their children – a sound college education for their children and in particular, a suitable happy marriage for the daughters, irrespective of whether the breadwinner lives to see the fulfillment of this dream or not. But the desires by themselves will mean nothing unless they are backed up by a logical action, i.e., a savings plan which will produce the required amount when need arises. These provisions would be necessary, whether the breadwinner is alive or not. No other plan of saving is as good as life insurance, to provide for the various HUMAN NEEDS which confront a family at various stages of life.

    One more risk that human life faces is living too long that is old age. In this modern era everyone is not so fortunate enough to get children so much dependable. Even, if they are dependable why to count on them, when we can ourselves arrange for it. So it is a provision to live in old age with honor and dignity without being dependent on their children.


     The title to the policy moneys can be easily transferred to a dependant (by nomination or assignment);
     The moneys payable under a policy which is assigned cannot be attached by a creditor;
     The life insurance premiums are eligible for relief in income tax and capital gains;
     The policy moneys are full-proof against loss by theft, fire or fraud; and
     In the event of unfortunate death, the settlement is easy. The heirs can collect the moneys quickly because of the facility of nomination and assignment.

    So buy a life insurance policy today and secure the future of your family and loved ones.

    @ Nothing personal with the members … Just a awakening…

    • samrat roy

      Dear Ashish,
      a small question to start with, as you have written, “ADVANTAGES OF LIC LIFE INSURANCE”, are they provided by LIC only? Please reply, as it is very important.
      Anyway, this Forum never ever denies the fact what wonder can a Life Insurance product do in an unforeseen event. But as you have very rightly pointed out, “Many people think that life insurance is an investment or a means of saving. This is not a correct view”, so the Investment part (though Saving & Investment are never the same) should be kept away very consciously, right? Then why not go for a TERM Insurance and put your Saving or Investment into different Tools? And trust me, this Forum tries to suggest that only. Looks like you yourself have mixed things up, (dont worry, I am an independent Blogger only, and do not get paid for supporting Anybody).
      You said, “The final fund is secured from the very first day”, does that mean Life Insurance provides with a Fixed/Secured/Guaranteed Return? NO, IT DOES NOT. Dont misguide, please.
      What most you can say that it is a Composite Tool. And as we, the Indians, are not very good at managing our Funds in a Disciplined way, it might serve the Purpose (though not fully).
      One last question, have you yourself ever put those two things (Insurance and Saving/Investment) apart while pitching to a Prospect? I guess no.
      Sorry, if my comments irk you, nothing personal.

      • ASHISH

        @ Dear Samrat Ji…I’m glad dat u took the pain to read the entire comment…First of all why I used the name of LIC was becoz I found almost 85 percent of queries related to LIC policies…Further, I’m also just a blogger and neither (like u) I get paid for supporting or writing for anybody…
        In my entire comment i nowhere wrote that Life Insurance policy iz an instrument of investment…I would suggest u to read it once more…
        What I wrote is that “In life insurance, however, the fund available is not the total of the savings already made (premiums paid), but the amount one wished to have at the end of the savings period (which is next 20 or 30 years). The final fund is secured from the very first day. One is paying for it later, out of savings. It creates an estate immediately the policy commences (on payment of only a small installment), for the amount the man decides to save over a period of 15, 20 or 25 years.
        Thus, even if the person is not fortunate enough to live 15 or 20 years, his family is paid the full amount which the breadwinner had planned to save – although he had saved only a small portion of it.”
        I NOWHERE USED THE TERMS : Fixed/Secured/Guaranteed Return

        What I am talking about is the amount a person wishes to accumulate at the end of certain period whether he is fortunate enough to survive…

    • Ashish

      What ever is written is true for LIC policies and even pvt endowment polices. . Which part did you feel that one is trying to discourage people from investing in LIC policis ,its telling them how it works , thats all … people can take their own decision after that .


  40. sweety

    my age is 23 and took lic jeevan saral of annual payment of 60,000INR for 20 years and wanted to know did i took a correct decision in investing in it and need a suggestion on which policy to invest on a person of age 12 years to secure his life. thanks in advance.

      • sweety

        Hi Manish ,
        1) I bought it in augusst 2011 .. can you please validate your statement why my decision was a wrong decision…??
        2)about that 12 year kid is i would like to take a policy just to insure his life and even as a
        investment purpose for his education plan….

        • Sweety

          The reason I said you made wrong decision , because overall its not a long term product .. it will give you around 5-6% returns overall in long term and its not a good product from liquidity points of view .. ask your agent what will happen if you want to get your money back in 2012 , 2013 , 2014 and so on ..

          Why do you want to insure the life of your child ? What is the logic behind it ? Who will get affected “Financially” if he is not around ? Its you or your husband who has to take insurance , so that you child;s financial interest is covered .

          Take a term plan and just invest in Mutual funds for long terms ..


  41. tintu

    i would like to invest in LIC market plus .i want to know compare to mutual funds LIC market plus is good.kindly tell me is there any advantages and disadvantages of LIC market plus over mutual funds.

  42. Kishore

    Valuable info.

    My uncle has a policy. I think he paid 2 premiums, after that he did not pay and the policy is lapsed. He died (accident) 3 years after the policy lapse.

    Will he get any money back ?

  43. sameeran boruah

    questionaire of comparison between jiban anand and jiban tarang policy of lic???
    please help me to solve this

  44. Sougato Pal

    HI Manish
    Last year I purchased an Lic Jevan anand policy(T no.149) for an SA 8,20,000. I paid 40,479 pa as premium. After reading your blog I am confused.I have paid only first year premium till now.What shall be the best option for me now. Shall I stopped paying the premium now and loose 40 k. I am not able to make up my mind.Please advice me.I am 25 years old now.

    BTW what is CAGR and IRR and how to calculate the same.

  45. Najiya

    I am holding a Jeevan Saral(plan 165) policy and I would like to surrender it.
    I started that in may 2007.
    Will I be having any loss if I surrender it after May 2011?
    and what would be the approx money that I will be getting if I surrender?
    The money I pay is 22969 Quarterly.

  46. Krishna

    Hey Manish,

    I have Jeevan Anand premium 5936/ per quarter. I have paid premium for 3 years of 15 yrs tenure. I have stopped paying premium last year and it is paid up policy now.
    Is it a good decision?. Or should I consider surrendering it.


  47. Muneswar

    Hi Manish,

    I understand insurance is an expense and not an investment. One should go for pure term insurance and should have mutual funds, stocks, gold, debt instruments etc (% to be invested in increasing order) for good returns.

    I have used IRR formula; below is my analysis. Please correct me if I am wrong on the below analysis
    1. If I deposit Rs.50000 every year for 25 years in a bank FD and assuming the interest rate as 8.75% pa cumulative every year, IRR is coming to around 6%.

    2. If I go for paying Rs.50000 every year for 25 years in LIC Jeevan Anand policy for SA Rs.1250000 and assuming it would pay at least 3 times on maturity, IRR is coming to around 7.5%.

    So I see a difference in IRR and it means LIC Jeevan Anand pays more than bank FDs. Another point is that returns on bank FDs are taxable, it could be even less. So would it be nice to have LIC in portfolio, may be as a debt & safe instrument? I will anyway invest my rest of the savings in other categories of the portfolio.

    Your thoughts?


    • Muneshwar

      There are two issues .

      1. The IRR in first case is wrong , the IRR would be 8.75% only .. IRR is same as what yearly return you have got . How did you get 6% ?

      2. In LIC , the assumption of 3 times maturity amount right not be true , how did you assume that ? Generally its SA + Bonus is what you get at maturity , and bounus would be around Rs 40-50 for per 1000 insurured , which is 50k per year or 12.5 lacs in 25 yrs, which would be around 2 times of SA in total .. I have not checked the IRR for second policy .

      Note that its not just the final amount that you should see . What about liquidity ? If you want to break your FD after 2 yr , 5 yr or 10 yrs , then how does your FD and LIC policy compares , please see that you will see the real difference


      • Muneswar

        Hi Manish,

        Thanks for your comments.

        I used IRR formula in excel as suggested somewhere on jagoinvestor.

        I heard recently that there is no TDS on interest earned in recurring fixed deposits. Is that true?

        Thanks & Regards,

  48. Pulkit

    Hello Everyone,

    I wanted to know if i surrender my ‘Jeevan Anand’ LIC policy for which i have given only 1 premium till now or 25k. and invest my other premium in some other funds or policies. will it be better?? I got to know if i surrender i would get nothing in return so i just want to know from you can i also change my LIC policy to some other LIC policy (except jeevan anand) in any case so that my premium can be utilised ??

      • Pulkit

        I have asked my agent to stop my application wherever it is because 1st premium of 25k has been given to them by 21Dec’11 only. And now wanted to change my policy to ‘Jeevan Amulya’.
        Lets see what happen now.

        Also thanks for making me aware about the different policies from your posts. These agents actually force people to get these Endowment plans. In my case, same thing happened. I asked him about term policies twice. First time he ignored and second time agent said these policy are not worth ‘Aap yehi karaiye’. And i was trapped by him. But now after reading from, i got to know that this policy is not a good one comparable to other.
        So all of you who are here. Be cautious from these agents. They always will try to sell you only those policy in which they can have maximum commission. So make your decision wisely in order to have maximum return/benifits.

        • Pulkit

          I am interested to know about “These agents actually force people to get these Endowment plans.” . How do these agents do that ? Ultimately whom do you consider responsible for buying bad products – agents or you yourself ? SACH KA SAMNA !


  49. pulkit

    When you don’t know inside out about the policy. Whatever agent gonna tell you, person would buy only that. But ultimately we have been made fool.. we are only responsible. I started reading this blog after taking policy.

  50. Kannan

    Thanks Manish, It was an eye opener for me. I am in a situation where i have taken a Jeevan Chaya ( Child Policy ) Where in i have paid a premium of 55000 for two years now. Third Premium is due next March 2012, I do think i have made a mistake investing on this policy. Pls advice if i need to continue with it or shall i close it even if its a loss of 1 lakh, considering i could save the future investments in MF or other investments.

    • Kannan

      Stopping now or stopping after paying 3rd premium would be almost same … Better not do it and stick with this policy . better continue with MF now .. do a simple exercise of comparision in case you continue this and if you put money money in MF , see what happens after 20 yrs


  51. Srinivas Y

    This is very informative article. I believe that there are certain LIC policies that can provide Rs. 75 bonus for 1000 SA plus provide insurance coverage. They work well compared to the fluctuations in Interest rates. Once the growth bubble of India bursts (being largely a dependent economy and GDP component from services growing), in long run the interest rates becomes comparable with west. In US, I have never heard of anything more than 1 to 1.5% interest rate on CDs or debt instruments and IRR above 4% is almost impossible.

    So I would recommend investors do some more reading, do their own math and invest their hard earned money instead of jumping to conclusions. Interesting observation is, there is a yard stick to measure and conclude on non-ulip LIC policies, but ULIP policies of majority of insurance companies are hopeless. Close to 8-12% of ULIP investment will go into various administrative charges and to get returns of atleast 8.5% the ULIP need to perform at a 20% of IRR which is difficult even in a SIP (you can do a trending of historical returns of leading SIPs from Moneycontrol using simple excel)

    Disclosure: I am not an agent for any company. BTW I like Manish’s articles and you can read about his view points on Tarang :-).

    • Srinivas

      Which policies are you talking about ? I agree that some policies might have given a 75 per 1000 kind of bonus , but for how long ? and for how many years ? If 75 per 1000 is a possibility , then 30 is also a possibility .

      Another point is that one has to look at these policies from liquidity point of view .. ask a person holding a LIC policy how much he gets back in case of some emergencies ? thats the real problem .


  52. Arvind Hatkar

    Dear Manish Chauhan
    I was reading “Understanding your LIC Policies” on from last 11hours and trying to understand about Policies particularly LIC Policies. I have six questions.
    1) After how many years one can stop paying policy premium from the DOC and the policy will become paid-up policy? Does it mean that one should pay at least three years and then if he/she stops paying premium then only policy will become paid-up policy?

    2) Once the policy become paid up let us say after 6 years, premium paid during 6 years is Rs. 95,400 and Bonus Rs.72,000, whether my bonus will increase per year up to maturity -in turn my maturity amount will increase, OR I will get Rs. 95,400+Rs.72,000=Rs. 167400 at maturity let us say after 21 years term

    3) Once the policy become paid up let us say after 6 years, whether my insurance cover will be there which is which that policy?

    4) I read somewhere that possible lone on any LIC policy is somewhat less than surrender value of that policy? Is it correct? If correct how much less than surrender value?

    5) What is the meaning of lapsed policy? If one is not paying installment (premium), you said policy will become paid-up policy. Then, when the policy will become lapsed?

    6) How is SBI Life – Swadhan Term Insurance Plan? This plan Guaranteed refund basic premium paid on Survival at the end of the term if the term is 10 years.

    • Arvind

      1. Its 3 yrs . Only after 3 yrs , the policy can be either made paid up or be surrendered . Before 3 yrs if you stop, you loose everything

      2. You will get your Paid Premiums + Bonus accumulated ONLY at maturity , it will not increase or decrease . Its FUTURE Value , not current values .. Just because its FUTURE Value , thats the reason that when you surrender the policy. its CURRENT value is calculated as per LIC conditions and then you get less value

      3. No , it will stop after 1 yrs of making the policy paid up

      4. Its 90% of the Surrender value

      5. Yes the meaning of Lapsed policy was that the insurance premium will stop on the policy and all the benefit of a LIVE policy will not be available, the policy becomes lapse and paid up at the same time if you have paid premium for minimum 3 yrs

      6. Its CRAP , the term plan which gives back premium at the end is doing nothing but taking the extra premium from you compared to a normal term plan and then putting it in some investment product at their end in a way that you can get back the same amount invested at the end , Its nothing but playing with the psychology of those people who want something out of thier investments , nothing else . Find out how much you can get if you just go for a plain term plan and invest the difference on your own somewhere ..


  53. Arvind Hatkar

    Dear Manish,
    First of all thank you very much for reverting back within no time. I had IRR analysis, and found that the returns are not more than 4% -5.5%
    Please find time to go through following details, and please-please answer five questions at last.
    Details of our policies for Me Arvind-37 Years, and my wife Archana-34 Years, All policies are with DAB Rider.
    We both are working / salaried. Our individual annual income is of Rs 5,00,000, hence total house income is of Rs.10,00,000.
    Our family size is of four. We have two child’s Sneha-6 Year and Mohit-1 Year.
    We have Housing Loan started in 2006; Current EMI is of Rs.8,000, Remaining EMI 160, Principal O/S is around Rs.5,75,000.
    Also we have Car Loan started in 2008; Current EMI is of Rs.5,266, Remaining EMI 34, Principal O/S is around Rs.1,50,000.
    Our average Monthly expenditure is Rs. 19,000, which cannot be reduced.
    We have only following Insurance/Savings till today.
    Policy 1 for self Arvind
    Plan/Name/Term—————————-75/Mony Back/ 20
    Frequency/Installment Amount———Half Yearly/Rs.3,292
    Sum Assured———————————-Rs. 1,00,000
    Acquired Bonus till Today——————Rs. 27,800
    Total Premiums paid till Today————Rs. 46,088
    Any Returns Paid by LIC till Today——–Rs. 20,000 (20%SA)
    Any Expected Returns up to maturity—Rs. 40,000 (20%SA + 20%SA )
    Expected Maturity Amount—————-Rs. 1,21,000 (40%SA+BONUS+FAB)
    Insurance with DAB————————-Rs. 2,00,000

    Policy 2 for both Arvind + Archana
    Plan/Name/Term————————-89/Jeevan Sathi / 16
    Frequency/Installment Amount——Half Yearly/Rs. 5,284
    Sum Assured——————————-Rs. 1,50,000
    Acquired Bonus till Today—————Rs. 47,100
    Total Premiums paid till Today———Rs. 73,976
    Expected Maturity Amount————-Rs. 2,67,450 (SA+BONUS+FAB)
    Insurance with DAB for BOTH———-Rs. 3,00,000

    Policy 3 for Wife Archana
    DOC—————————————— 18/10/2006
    Plan/Name/Term————————- 103/Jeevan Chhaya / 21
    Frequency/Installment Amount—— Quarterly/Rs. 3,975
    Sum Assured——————————- Rs. 3,00,000
    Acquired Bonus till Today——————Rs. 72,000
    Total Premiums paid till Today————Rs. 95,400
    Any Returns Paid by LIC till Today——–Nil
    Any Expected Returns up to maturity– Rs. 2,25,000 (Rs. 75,000 in second last,
    third last, and fourth last year of maturity)
    Expected Maturity Amount————- Rs. 4,07,400 (25%SA+BONUS+FAB)
    Insurance with DAB———————– Rs. 6,00,000

    Policy 4 for for self Arvind
    Plan/Name/Term————————-165/Jeevan Saral / 30
    Frequency/Installment Amount——Monthly/Rs. 4,083
    Sum Assured——————————-Rs. 10,00,000
    Acquired Bonus till Today—————Nil (No BONUS, Loyalty Additions
    after 10 Years)
    Total Premiums paid till Today———Rs. 1,18,407
    Expected Maturity Amount————-Rs. 16,24,160 (Projection Shown to
    be Rs.46,42,011 assuming Rs.1,800 Loyalty Additions )
    Insurance with DAB ——————- Rs. 20,00,000

    Policy 5 for Wife Archana
    DOC——————————————— 18/09/2010
    Plan/Name/Term—————————–103/Jeevan Chhaya / 21
    Frequency/Installment Amount———–Quarterly/Rs.5,525
    Sum Assured———————————–Rs. 12,00,000
    Acquired Bonus till Today——————-Rs. 57,600
    Total Premiums paid till Today————-Rs. 82,875
    Any Returns Paid by LIC till Today———Nil
    Any Expected Returns up to maturity — Rs. 9,00,000 (Rs. 3,00,000 in second last,
    third last, and fourth last year of maturity)
    Expected Maturity Amount—————- Rs. 16,29,600 (25%SA+BONUS+FAB)
    Insurance with DAB———————— Rs. 24,00,000

    Total Insurance for my self Arvind Rs. 25,00,000 and my wife Archana Rs. 33,00,000
    My Questions
    1. Whether to surrender or paid-up the policy/s
    2. How much should be individual Term Insurance
    3. Should we first repay all Housing Loan and Car Loan and then think of investment (Savings), or start investment side by side.
    4. Suggest me 100% risk free investment scheme/s according to your knowledge, so that I will increase knowledge in that type of investment.
    5. If you do not have time, suggest me any financial consultant in Nasik(Maharashtra), but he/she should not be agent of any insurance company

    Thanks Regards

  54. Arvind Hatkar

    Dear Manish,
    correction in Policy 5 for Wife Archana is Policy Premium is not Quarterly it is Monthly. Typing mistake.
    Sorry thankyou

  55. Amit

    Dear Manish,

    Informative article, thank you.

    Request your advice on this situation. Have a Jeevan Tarang policy in my son’s name in 2006 when he was 2 years old. 5 years premiums from 2006 to 2010 of Rs.72000 annually have been paid. I have not paid this year’s premium since i realised i should not have bought this policy in the first place.

    Should i surrender it or make it paid up ?

    Could you pl explain the arithmetic ? I dont necessarily need any cash liquidity right now, i only want to make the right decision.



    • Arvind Hatkar

      You can go for paid-up ,do not surrender, in surrender case it will return you 30% of Rs.72000 along with bonus component. Please read surrender case in your policy document. Accoring to my knowladge IRR for this policy is in between4.5 % to 5.5%.

    • Amit

      You have paid 5 premims = 72k * 5 = 3.6 lacs .. so if you make it paid up , then you will get 3.6 lacs + some bonus accumuilated till now at the end of maturity . however see how much it will be worth at that time ..

      The next option it to make it surrender and you will get around 30-40% of your 4 premiums (first year premium is not taken into consideration) = 4 * 40% * 72k = 1.15 lacs today .. see if you invest this money in a FD or a balanced mutual funds , it might give you higher amount after many years


  56. Chendu

    Hi Manish,

    This Site is really superb!!

    2 months back I had taken following LIC policies
    Policy Term SumAssured Premium
    Money back 25 500,000 25,787
    Jeevan Saral 23 250,000 12,010
    Jeevan Annand 21 500,000 25,319

    totally I paid 63116

    I dont want to pay premiums for next two years and move the policies to paidup state.
    Is this impact my CIBIL score??

    I am planning to take term plan, In term plans I have to mention – what are the insurance policies I am having.

    1. I have to mention the above policies
    If I mention. However I am not going to paying any premiums to above policies.
    is this impact the term plan which I am going to buy??

    2. why exactly term plans need the information of previous insurances ??

    • Chendu

      This is not going to affect your CIBIL in anyway , as this is not about loan payments

      1. If you are not planning to pay any more premiums , then you just close this policies .. you will loose all the money , but it would be a good long decision

      2. In term plan you dont need to mention about these policies if you are discontinuing them


  57. Lost with JeevanTarang

    LIC Jeevan Tarang
    Start Date: 28/05/2006
    Sum Assured: 5L
    Frequency : 6281 (Quarterly)
    PremiumTerm: 20 Yrs
    Policy Term: 78 Yrs
    Under Sec 80D, I’ve IT benefit.
    Total Premium = 144463
    Loan of 40K; Now it’s 52000 (Principal+Interest)
    Surrendering is not an option as I would get only 35801.7 (if 30 %) or 47735.6 (if 40%)

    Kindly advise whether to stop and forget the policy or make it a Paid Up Policy? If I make it as paid up (& Stop paying any interest or principal) then the maturity will would be affected with Compounding principal? Please advise.

  58. Roy

    Thanks for your exhaustive, to the point & precise write up.
    I had my queries regarding Lic’s Jevan Saral.
    And I think I have got the ans after reading your replies.

    Thanks & Regards

  59. Amit

    Hi Manish,
    I have a policy jeevan tarang. policy start date 12/2011. i am giving premium of Rs.35735 yearly for 15years term. So how much shall i get after 15 years as sum assured and every year after accumulated period.


  60. Subramanya Gopal Rao

    Dear Sir,
    Thank you for providing the various info hidden behind the terms and conditions,ignorance and habits of customers with regard to insurence policies with regard to health,life insurence,auto etc.
    o I did not find info with regard to accident coverage term insurence in health or terminsurence for specific to senior citizens with my research. I am 59 years plus but not reaced 60. I have one lakh health insurence policy with INdia Assurance with family floater in bangalore. I am not happy with copayment and sublimits and iam aware and 1 lakh is not sufficent(Self+child+adult). I want to renew this and also go for a life long renewable coverage health insurence policy either withmaxbupa or apollo mujnich for 3 lakh. Please respond .

    • Subramanya

      Then you should buy the policies from Max Bupa .. they have life long renewal .. but now as your age is in 50’s .. just quickly take action and finish off this task


  61. Hitesh

    Hi Manish,

    It’s a very good artical.

    I have purchase Jeevan Anand & till date i have paid 4 premium.

    Now i would like to stop premium. Could you please suggest me that can i pay 5 premium or not & when will i get my paid premium & bonus. Should i cover insurance or not till 21 years of policy.

      • Hitesh

        Thnaks Manish for repaly,

        Should I pay 5 primum than will be get more benifit ? & this policy will cover my insurance till 21 years or it will stop . how much amount it will be cover ?

        LIC Jeevan Anand policy open 19-2-2008 Sum Assured – 3,00,000

        Till date i have paind 4 premium -15,967*4 = 63,868


        • Hitesh

          No , you stop it now .. when you surrender a policy , you get 30-40% of the premiums paid ,thats all (exluding the first year premium) , so you can see if it makes sense to pay 5th premium and then surrender or just surrender it right now . Surrender it or paid up , in both cases your insurance will stop, btw, does it really make any difference ? How much is the insurance ?


  62. M.Muralikrishnan

    Sir please guide me, I am paying premium of 35294/= per year(SA -500000) for Lic policy, so far i payed 123529Rs in 3.5years. In addition to this i recently taken Lic Jeevan saral policy in the month of Jan 2012(First premium payed by agent) and i need to pay from feburary 2012 thru ECS. After i read the article i realized the returns will 6 ~ 7%. My doubt is.. Do lic returns 6~7% any proof or evidence? If it is sure 6 ~ 7% what i need to do whether to continue or stop? or let it go and start investing in PPF. I strongly dont beleive in mutual funds.

    Clarify can i stop the new policy jeevan saral which i need pay 2000/=pm premium(SA -500000) from feburary onwards thru ECS method. Does it possible to stop ECS in bank?

    Please advice how much need to be investment portion out of my annual income 779000/=(Monthly expenses -15000, EMI – 30000 PM)

    • Murali

      Your agent pays the first premium , so that it attracts you and you feel good about it . There is no harm for your agent as he will get 25% of your first year premium as commission so ,its 25% of 24000 , which is 6,000 , so no issue in paying up 2k out of it to drag you into this policy .

      The policy will give 5-7% returns , no doubt about it , but the returns will depend on the bonus also , but it will be in range of 5-7% , a 5-7% in long run is a recipe of disaster :) . I hope you understand that in todays scenario .

      Better stop the ECS , you can ask your bank to do that , ask customer care ..

      Also can you explain why your strongly dont beleive in mutual funds ?

  63. Arvind Hatkar

    Hi Manish
    I have surrendered my three LIC Policies (Two of them Policies completed 7 Years and third one completed 5 years as on JAN 2012), and Received Surrender value of Rs.1,25,000.00.
    Now my questions are
    1) whether This amount is txable?
    2) Should I apply/get tax 80C benifit on the EMIs/Premiums which I have paid during year APRIL2011-JAN2012 for these three policies?

  64. Surya

    Hi Manish,
    I’m totally confused after reading your article. At first, let me appreciate your work eye opener for me. I’ve one question.

    I’ve taken jeevan anand policy in 9thFeb2008, I’ve already paid 4 premiums (4*25000) , next turn on 4thFeb2012.

    I’ve two choices to make feel better.

    Choice1: Can i pay 5th term & surrender at 6th year (9thFeb2013).
    Choice2: Surrender now & invest(25000) in PPF (for tax saving – my employer not providing EPF).

    Which one, can i choose?? Plz answer this one?

    • It depends that what is your motive ?

      In the first options , you will get around 40% of your premiums paid (excluding your first year premium) , so it means 40% of 1 lac = 40k

      In second option , still you will get around 35% of your 3 premiums (first year it not included) so , it would be 25k and then you will be able to invest your 25k in PPF . now instead of me telling which one is better, why dont you tell me which one makes sense ?


      • Surya

        Thanks manish, i should go with 2nd option. Two of my friends doing the same thing, i’ll make them aware of this…Thanks once again…

  65. M.Muralikrishnan

    Thanks for your reply manish sir, After your advice i will immediatley stop paying premium for the jeevan saral policy (recently taken). In my previous mail mention i strongly not beleive in mutual funds, because i am conservative investor. so i prefered lic but after reading your article i realized now it is an mistake. Since i paid premiums for more than 3 years i could not able to lose my hard earned money in surrendering, and i agree further continuing will be a loss, But i am taking it as positive “something is better than nothing” atleast my capital invested is secured & will get little returns (5~6%)

    But i am not going to stop with this, after reading your article i planned to invest in PPF -80% & 20% in mutul fund. in such case please suggest some better secured mutual funds.

    Please suggest how much need to be investment portion out of my annual income 779000/=(Monthly expenses -15000, EMI – 30000 PM)

    Thank u very much sir

    • There is nothing like “secured Mutual funds” , Mutual Funds invest in shares , and they are not secure in “short term” . so in a way .. they are risky , but very ideal from long term point of view .

      If you are not ready to take a lot of risk , that is totally ok , but putting everything in LIC is not ideal , so what you are doing is correct , mix LIC + Mutual funds .

      If you want secured mutual funds, you want debt mutual funds in that case .


  66. Uttam Kumar Sen

    Insurance is neither a savings nor an investment, it is always better to have insurance coverage only from insurace company.

  67. Chandrakanth

    I have taken LIC endowment policies (4 nos., each 5 lacs= 20lacs) in Mar-2008 with a quarterly premium of Rs.25000. I was mis guided by the LIC manager that policy is must in order to avail housing loan.

    I request you to please guide me wheather i have to continue with this policies or i have come out. I discontinued premium payment from Sept-11 and i took a term policy instead.

    I read many of your articles on this but i request a specific reply to my case please….

    • Chandrakanth

      The policies are not compulsory for housing loan, its just a way to build the pressure .. nothing else .

      Now as you have taken the policy , and paid many premiums , stopping would means loosing a lot of money . But it would be good in long term


  68. sudhank

    Started reading these blogs only few days back……and getting new thing to learn every time i visit this site. this refund amount i really didn’t know that on surrendering they exclude first year premium and consider only 30-40% of the premium paid. It is another thing that private companies are also offering on almost similar terms and conditions. I am in job from just 4 years but in very starting i realized that these policies are nothing but liabilities and not so lucrative as it seems in first impression. Personally i prefer FD’s . Can you please guide for health policy ?

  69. Piyush

    Another good article from JI. Apart from the usual miselling in the name of tax saving, getting money back from insurance etc., another way in which LIC policies are often missold is on the basis of past returns as being shown as guaranteed future returns. Now we all know how equity market rallied in the last decade and how interest rates used to be high in the past. Expecting the same to keep on continuing in the future is like driving by looking into the rear-view mirror which can only lead to crashes.

    Further, given the high premium charges at LIC, even a term insurance taken from them seems to be a rip-off. A 30 lacs term insurance from LIC for a 27 year old costs close to 9500 while a 1-crore online term insurance from Aviva Life costs around 7400 for the same person. Of course, its difficult to explain to people that term insurance is a commodity and that probably all insurance companies may be taking reinsurance from the same company. As long as everyone is honest in the policy form and knows how and where to complain in case of claim rejection on flimsy grounds, it shouldn’t matter from which company the claim has been taken.

  70. Arvind Hatkar

    Hi Manish
    I have prepared Excel Worksheet for Jeevan Saral and PPF, I would like to upload it for others who don’t know what it returns. I will mail it to you, please check it whether it it correct or not and then please upload it.
    Also those who want to surrander Jeevan Saral but not compleated three years, I think it will be the best if they pay for three years and then surrender.

  71. Bhushan Bagul

    Hi Manish,

    One of my friend is holding LIC policy of 12.5 Lacs SA “Jeevan Saral” or “Jeevan Tarang” as I am not sure. But he pays 60K annual premium and will continue to pay for 20 years. When he took policy LIC mentioned him return of 26 Lacs upon maturity. Now my question is that will he really get this much return? How much return one do you think?

    • Hasan AbbasZaidy

      Hi Manish Sir
      Your research work on LIC policies are tremendous,you made very simple the complicated equations about the returns of LIC policies.It is very difficult to understand when the details of returns explained by LIC agents.The equations looks very attractive at the time of purchasing the policies. you have made it so simple to understand and learn because the inflation of money is a matter of keen observation and the general people never understand this factor.
      Very nice article


    • Bhushan

      No , he will not get that much ,because in LIC policies are returns are never sure .. it all depends on the bonus declared , this maturity amount of 26 lacs is based on assumptions only and might not be true ..

      He will not get more than 3-5% of returns over long term


  72. Satish

    Hi Manish
    Very good article , Now my eyes are open and i want to surrender my policy .
    In month of July 2011 i had taken Jeevan Tarang policy , Half yearly premium is 52000,
    SA is 20 lakh, and after 20 years i will get 21 lakh.

    Still date i have paid only one Premium i.e 52000.

    Now i dont want to pay more premium, what is your suggestion ,

    should I surrender this policy now or should I surrender after 3 years, kindly advice

  73. Satish

    Hello Manish

    Thanks for your reply,

    I have paid only only 1 premium of 52000 , if i forget the policy , i would loss my 52000 , right?

    now i want to invest this 52000 in mutual funds and PPF so it better option, please suggest and which mutual fund can i invest for next 15 years for better return (” above 10%).
    I have alrady Register for Jagoinvestor Paid Workshops in city Naisk , waiting for reply .

    • Arvind Hatkar

      Hi Satish
      are u from Nasik, Mahatashtra. When is this Jagoinvestor Paid Workshops in Nasik please let me know.

      • Satish

        Hi Arvind
        Yes i am from Nasik, I have registor for Jagoinvestor Paid Workshops in Nasik but still i didnt get any reply from
        Once i got any reply i will commounicate to you ,if you got any info for same please let me know.

  74. M.Muralikrishnan

    Do any term insurance gives for whole life cover. one of my freind told term insurances are coverd upto 20 to 25 years?

    • No , most of the term plans only cover for a limited tenure and thats what it should do , why does one want to get covered till his death ? What is the rational behind that ?

      It can only happen in case of endowment and moneyback plans (traditional plan) because there is huge premium and one can afford to pay back the whole life plan out of it .

  75. sanjeev

    Hi Manish,
    Thanks for the great article. I took a LIC Jeevan Anand policy on Feb 18, 2011 with a SA of 25L. I paid a premium of 1,32,156 and my second payment is due in few days. From reading this article, I understand I made a wrong choice. Should I just quit this policy and stop making further payments? thx, sanjeev

  76. Priya


    My name is priya. My dob is 03-Aug-1985. I would like to invest on some polices. I am confused which one to choose. Please explain me which one will be good among the following:

    I want to pay 60,000 premium per year. I would like to invest for 21 years. I need returns of 25,00,000 at the end of premium.

    So Please suggest me what will be the returns if I take Jeevan Anand and EPF.

    Is there any other best plans to take it?

  77. Hitesh

    Dear Manish and Jago Investor Readers,
    I got this following quote of lic policies on mail. When i did the irr calculation for it, it comes to 10% (i have taken premium as 60024 p.a and maturity value as Rs 1, 65, 78,887 as per quote). Also tax savings and insurance are added advantage. personally i had not received an irr of more than 5-6% from my lic policies till now. So i wonder if its real or just a number game to attract people.
    The wordings of calculations are as below

    “Get Rs 1, 65, 78,887/= from LIC by just paying Rs 5002/= per Month.

    Get Rs 67, 66,869/= from LIC by just paying Rs 2042/= per Month.

    Get Rs 8, 45,859/= from LIC by just paying Rs 255/= per Month.

    Features of the Plan

    Get insured for 250 times of the monthly premium from day one.

    Premium amount same at any age of entry from 12 to 60 years.

    Maximum Age of Maturity is 70 Years.

    Mode: Yearly, Half-yearly, Quarterly, Monthly-ECS

    Advances available after payment of 3 years premiums

    Partial Withdrawal Facility Available from 4th year onwards

    illustration for 25yrs Male with premium commitment of Rs 5002/= per Month for 35 years as on 01/02/2012.

    Get Insured for Rs 12,50,000 on day one and the amount keeps on increasing every year up to Rs 1, 57, 25,416.00 on Maturity.

    Maximum Risk Cover (Normal) 1, 57, 25,416.00

    Maximum Risk Cover (Accident) 1, 69, 50,416.00

    Premium Paid 21, 00,840.00

    Less Tax Saved @ 33% 7, 14,070.00

    Net Premium Paid 13, 86,770.00
    (Thirteen Lac Eighty Six Thousand Seventy Only)

    Return (01/02/2047) 1, 65, 78,887.00
    (One Crore Sixty Five Lac Seventy Eight Thousand Eight Hundred Eighty Seven)

    (Maturity + Loyalty Addition + Survival Benefit)”



  78. Vijay

    Can we take LIC policy- Jeenvan Saral without any Agent from LIC office.
    If yes/No, there is no need to give agent Commission LIC premium, if taken from LIC Office?

  79. Gnanesh V

    I have been an investor over last 24 years in Gold, stocks, mutual funds, insurance and real estate. Every investment has its benefits and disadvantages.
    I am typically bored to see so many queries on LIC policies and the author of this blog, like God, dictates you guys to stop paying the policies, take term insurance and invest in Mutual funds.
    He treats readers as herd. Ya, we were slaves under the British rule, still slaves to white coloured people, foreign goods, foreign brand junk food, etc. I agree that you and me have believed the LIC agents and trusted our money with the Institution which has over 10 Lakh crore corpus, managed for over 55 years.
    You may get returns of 5-7% from LIC. Ok. Today you guys trust this author and surrender or stop paying your policies, invest in mutual funds. Say after 7-10 years if you find that some Harshad Mehta like scam, or Lehman Brother scam or some thing comes up. Will this fellow be there to blog and suggest you to go where.
    Another Swamiji will come and tell you, hey guys mutual funds are all goofups… Now get invested Govt co. say LIC or SBI… what will you do. Surrender all your Mutual Funds for a loss and turn back to safer avenues and curse this Guy.
    Dear Investors… Please be prudent. Don’t believe in any body. Every one has his personal agenda. Why fall prey to this author’s suggestions and changing your track after paying for 5, 7 or 10 years for your policies.
    Gold was giving historic yield of 2-3 % in 80s and 90s but has given fabulous returns in the last 10 years. People have never stopped investing in Gold. So will you say people who invested in 80s were fools and those who have invested in the 2000-10 were intelligent ones.
    Real Estate has similarly given good returns. But still it is not one way. There are still pockets of real estate not growing as expected. Plus your plot or land has a risk of being grabbed by power houses.
    Have we ever asked this author, which mutual fund to invest, entry point, exit, time frame of investments, his real qualification and experience to give haphazard advises like a novice.
    In India any body can become a miracle Doctor, miracle Guruji, Vasthu consultant, Jothish, or a self-proclaimed Financial Consultant like this Author.
    Discover the truth impatiently. Every investment is good for us. Even if there is a III world war, Gold, you can sell gram by gram and live your life in a crisis situation. All other mutual fund investments will become just papers if there is another scam.
    Think about this. Stock markets have been there for over 100 years. Why just 4-5% of the investment is flowing there. According to this Author all 95% rest investors are fools.
    How many mutual funds are underperforming, how will you select which one to invest. I know a friend who invested his entire gratuity in a particular stock and today that company is non existent. So he holds this piece of paper, with sad memories.
    I never say Don’t go to Mutual Fund. I myself have invested in MFs. But never rely only on one source, else you will repent. Never make the mistake of surrendering or stopping your policy. It is definitely a good investment. I have 6 policies in LIC Jeevan Anand, Endowment and Money back for Rs.18 Lakhs and pay a premium of Rs.96000. I will continue them
    The author of this blog, seems to be confused, biased, misleading and blatantly lying on so many things.

    • Gnanesh

      Thanks for your views and comments. I agree to you that no one should take some one else words just like that and has to do their own study before arriving at the point . Also regarding scams and all .. it can happen any where .. stock markets , LIC , Banks .. agree .. one has to take the call how much risk they want to take and for what and out of that they have to take decisions.

      Keep reading.


    • Gnanesh – To each his own really.
      Instead of all such jugglery between 6 plans if one takes a Term Insurance for the same 20 lacs and pumps the remaining premium of 90,000 in PPF alone the returns will be astronomical. Even putting them in a Bank FD or PPF will yield better returns (even after tax). I wonder why one would want to complicate things so much.
      The long term return on Stock market in the US cutting across World War 1, WWII, Cuban Missile crisis, Gulf War and the 100s of other economic/political crises is ~ 5%. Remember that Long term inflation in US is 2% so long term stock market return is 3%. The long term return on Gold is a mere 1.5% over 100+ years not even beating inflation. [India growth will provide 8-10% real growth + inflation of 7-8% = 15-18% growth in stock market expected over 1-2 decades]
      Real estate is so illiquid and there is so much sentiment attached in selling property. A plot of land is always susceptible to encroachment. House is a good investment nevertheless.
      And let me correct you – Lehman Brothers going down is NOT A SCAM. They had working capital problems and the creditors were unwilling to lend any more. Lehman Brothers in its entirety has been taken over by Barclays Capital. Stock markets in India have been reasonably functional only since late seventies and I would say the creation of SEBI in 1992 really ushered in a new era. Considering that 80% of our income is agriculture oriented and 60% people are living in rural areas it is very obvious that the participation in stock markets is very low. No one called the people not invested in the stock markets as fools – it is just an attempt to educate them as well.
      If you have been investing for 24 years I am sure you know the rates returned by PPF, NSC and FDs in late eighties and early nineties. It was close to 12%. You have to ask yourself why are LIC Endowment plans returning a meager 5%-6% if you took plans that long ago?!
      In today’s world how long will 18 lacs support a family after the insured dies? For people with such income a Term cover for about 50 lacs or 1 crore and a no-brainer-investment called PPF alone will beat the low yield endowment plans manifold. The theory is simple my friend: If someone manages money we need to pay them. IF LIC invests only in Debt (Bank FDs, Company FDs etc.) for endowment plans and pays its employees salary and incurs operational costs obviously they have to return lesser than a simple debt instrument like FD. I think that much everyone will understand and appreciate.
      Stocks are not magic boxes to put money and multiply. For every 1 company that go kaput 3 of them provide sub optimal return (still same as debt), 15 of them provide returns beating debt, 8 of them beating the debt and index returns by a large margin and 3 of them provide astronomical returns that puts one in the path of wealth creation. The statistics are there for one to see. If one’s experience in the market is bad it does not mean that the market is bad. I am sure your friend acted on a ‘veritable TIP’ received from someone with no understanding of the underlying business. I don’t know whether I need to pity your friend or empathize on losing money. One bad experience with the market does not make the market itself bad.
      Again – I don’t think this website is a distributor of products which means I don’t see any conflict of interest or personal agenda.
      I agree FULLY with one thing you said though: ‘But never rely only on one source, else you will repent.’. This is ABSOLUTELY RIGHT. Asset allocation will determine the final corpus created. Thumb rule for debt allocation -– your age. As indicated Debt MUST be part of everyone’s portfolio indeed. However there are better avenues to park Debt – PPF, EPF/VPF, Tax free Bonds, Short term Debt funds and even Bank FDs etc. Bank FDs are last of the lot as they are tax inefficient for the highest income group – A Bank FD at long term return of 8% even after 30% tax will yield 5.6% – as much as an endowment plan.

      Why complicate life and risk leaving little for your loving family?

  80. Abhinav Gulechha

    Hi Manish

    Just stumbled upon this post of yours while checking some info on LIC products. Thanks its very useful, as all your posts are!

    One pain area for financial planners is that despite calculating and showing the low IRRs in the product, client does not want to stop investments in the policy. When it comes to LIC, all the talk of inflation adjusted returns etc. comes to a stop!..guess thats the brand LIC is! However, guess its important to educate client on these aspects. One good way is detailed cash flow table (comparing investment in LIC product vis a vis long term MFs)….


  81. amit

    Hi Manish,

    Dont know if this is the right thread to be asking this question, but i needed information on disability insurance in India. Are there policies for this that also cover disability that is not resultant from accidents ?



  82. Gnanesh V

    Dear JustGrownMoney,

    Lehman Brothers scam what you have stated is not true. I happened to see 2 reports in BBC.

    The first one was on South Korea. People have invested in Lehman Bros, and other mutual funds their entire Pension Corpus. The worst tragedy that happened in 2007 was people getting pension from these Mutual Funds, Lehman Bros. in the age group of 65-75, became penniless in 2007. They had to restart to go for some petty job to see that they get food. Infact I remember seeing an erstwhile Admin Manager started to work at age 68 as a TAXI DRIVER because his entire pension corpus was swept away overnight.

    The second report I saw was also in BBC some six months ago. Financial Market scam has put a dignified pensioner in Malaysia to become a SERVER at age 70.

    I think we are missing one major point. Getting money out of Mutual Fund at a specific period say 10 years from now, this much amount… is never a reality. Suppose if one had invested at age 45 in year 1998 with a view to take money out after 10 years. Stock markets crashed in 2008 and Mutual Fund values were down 70-75% down. If this person has an obligation to educate his son, he would never be able to do so. All Mutual fund Pundits will say wait 2-3 years, and realise your money later at higher NAVs.

    How will the pathetic investor feel when his objective of educating his son could have to wait for 2/3 years.

    So, my inference stays. I will continue with LIC and all my other investments in all avenues. It will be stupid for me to surrender any plan. I will not expose my self to mutual fund beyond one-tenth of my investible surplus.

    In my analysis out of 1500 odd mutual fund schemes which have been floated in the last 15 years, only 75-80 schemes have really given a yield of 12-15% compounded yearly. 0ther 250 companies have given a yield of 8-12 %. Further 600 odd schemes have given below 8% yield. Rest schemes have given negative yield.

    From my analysis, salaries paid to Mutual Fund managers are mind boggling… 10 times that of a manager in a Bank or LIC noway comparable. Why I should pay such exorbitant sum for maintaining sub-optimal investment with no guaranteed exit point

    • There is a world of difference between the word SCAM and an investment losing value. SCAM is simply swindling money. In case of Lehman Brothers – I repeat – there was NO SCAM. They sold loans as assets with expected future payments – when those payments stopped/slowed the entire CDO market came down and it is a separate discussion in itself.

      As part of sound financial planning one is supposed to move to Debt 2-3 years before the stipulated date of use of funds. If someone has moved to Debt in 2005 their corpus would have survived. For people who wanted money in 2011 the crash of 2008 put them behind but has not the markets come back as much as in 2008. Except for the great depression of 1929 no market downturn has been longer than 3-4 years.

      A LIC Agent gets about 40% of the initial investment as commission. Then about 1-2% on an ongoing basis.

      Return on Endowment plans: 7%
      Commissions and costs: 2%
      Net return: 5%
      Commission as % of return = 28%

      Return on MFs: 10% -12% at the average end – 18% long term average
      Commissions and costs: 2.25%
      Net return: 10% to 16%
      Commission as % of return = 14% to 22.5%

      Now you see who takes more cut of money -as a percentage of returns! For LIC the money is split among 1000’s of agents while it is concentrated for MF managers – thats all.

      Low exposure to equities is a guaranteed way to mishandle future planning I can be as blunt as that. As said before – to each his own!!

  83. Lakshmi

    Hi Manish

    I have taken Jeevan surabhi policy for 15 years and my premium is 132000/- per year. I have completed 1 yr and I saw your article. Yesterday I took my bond and saw my Sum assured is just 1200000Rs. Am paying 1584000Rs for 12 yrs for which am getting just 1200000Rs. I saw these people talking about 6-7% interest. Thats nothing. I want to stop paying my premium as early as possible. If I stop paying my premium after 2 more years, I would have completed 3 years of premium paying terms. Am not planning to surrender. So after 15 years what would be my returns. Am I going to get all my 3 premium paid + bonus or just 2 yrs premium + bonus? Please advice as am paying 132000Rs which is a huge amount.

  84. Gnanesh V article on BBC detailing about collapse of Lehman…..

    “Last Days of Lehman Brothers

    The Last Days of Lehman Brothers summarizes the events that occurred over the weekend preceding Monday 15 September, 2008, when Lehman declared bankruptcy.

    Investment bank Lehman Brothers is in trouble after a turbulent six months in which their real estate investments have lost billions of dollars, causing steep drops in Lehman’s stock. Lehman’s boss, Dick Fuld (Corey Johnson), who brought the firm through other crises, is himself growing desperate.

    Fuld’s plan to spinoff the company’s bad assets into a separate company does not satisfy investors, and Lehman stock drops by 75% in one week. Fuld’s only remaining solution is to have Lehman acquired. Both Bank of America and Barclay Bank are interested in purchasing the firm but are dissuaded because so much of Lehman’s assets are “toxic”, worthless.

    Lehman’s problems have put the US government in a delicate position. The collapse of a firm of Lehman’s size would have catastrophic economic repercussions well beyond the firm itself. Because there is no political support for a government bailout of the firm, the government turns to Lehman’s competitors for help. Late on the afternoon of 12 September, Friday, the leaders of the top investment banks on Wall Street, Lehman’s competitors, are summoned to the Federal Reserve Bank of New York. American Treasury Secretary Hank Paulson warns the incredulous group that Lehman is not too big to fail and that there will be no bailout using public money. Instead, Paulsen cajoles the bank heads to work out some joint plan among themselves to relieve Lehman of its toxic assets, warning them that the steep price they would pay to save Lehman would be easily outweighed by the cost of its failure. He also intimidates the bank heads by reminding them that they too will soon need help. A solution must be found before trading opens in Japan on Monday morning.

    By Friday evening, Bank of America begins stalling the deal, noting that Lehman’s valuation puts them “underwater” by billions of dollars. Fuld must now depend on Barclays, and he is clearly growing more desperate. Retaining hopes that Bank of America will change its mind, Fuld has the firm’s attorney Harvey R. Miller (Richard Durden)begin drafting a bankruptcy petition.

    As Paulsen’s group searches for alternatives, Lehman’s assets are subject to “valuation” by analysts from other firms. The analysts spend the night pouring over boxes of paperwork. Calculation is made extremely difficult because much of the assets are based on CDO instruments whose value is difficult to assess.

    Discussion continue at the Fed throughout Saturday with little result. John Thain of Merrill Lynch (Ben Daniels) pulls out of Paulsen’s bailout group, telling Paulsen that his company is in discussions with Bank of America. As they are no longer committed to Lehman, Bank of America is free to consider acquiring Merrill Lynch, which desperately needs the deal. Since the prospect of acquisition makes it less likely that Merrill will need help from the Fed., Thain has little incentive to continue participating in Paulsen’s discussions. As Thain leaves, he learns from Paulsen of the Fed’s plans to bailout AIG, whose Credit default swaps insure half of the western world’s banking system.

    By Sunday morning, Fuld receives word that Barclays has agreed to acquire Lehman Brothers, saving it. Jubilation is short-lived. Under British law, Barclays cannot guarantee Lehman’s debts until its own shareholders vote on the matter, and that will not happen until Tuesday – beyond the Monday morning deadline. Paulsen reiterates that the Fed will not “back stop” Lehman, not even for the 2 days it will take for Barclays’s shareholders to vote. With no chance of a buyout,

    Lehman has no choice but to file for bankruptcy. Lehman’s CFO signs the petition just minutes before the midnight deadline. A devastated Fuld leaves his office as Lehman’s now unemployed staff cleans out their desks.”

  85. Gnanesh V


    READ ON FURTHER… source:

    Financial fallout

    Lehman’s bankruptcy was the largest failure of an investment bank since Drexel Burnham Lambert collapsed amid fraud allegations 18 years prior. Immediately following the bankruptcy filing, an already distressed financial market began a period of extreme volatility, during which the Dow experienced its largest one day point loss, largest intra-day range (more than 1,000 points) and largest daily point gain.

    What followed was what many have called the “perfect storm” of economic distress factors and eventually a $700bn bailout package (Troubled Asset Relief Program) prepared by Henry Paulson, Secretary of the Treasury, and approved by Congress.

    The Dow eventually closed at a new six-year low of 7,552.29 on November 20, followed by a further drop to 6626 by March of the next year.”


    “The fall of Lehman also had a strong effect on small private investors such as bond holders and holders of so-called Minibonds. ”

    In Germany structured products,
    often based on an index,
    were sold mostly to
    private investors,
    elderly, retired persons,
    students and families.

    Most of those now worthless derivatives were sold by the German arm of Citigroup, the German Citibank now owned by Crédit Mutuel.

  86. I ofcourse know the Lehman story first hand even as it was unfolding in Jun/Jul 2008 as I also shorted the stock at $29 some 25 days before the bankruptcy and was literally outside Lehman on Sep 15, 2008 Monday as I worked 1 block away in NYC.

    The point is – where do you see the scam and why do you think LIC policies are better?

  87. Lehman created several of these products – true. It is like playing with fire. Let me summarize this for everyone’s benefit.

    Bank A gives a loan to Person A to buy house. Lehman then bought this loan from Bank A and securitized it – means they sold bonds based on expected future income stream from person A. Now one person’s loan will be a small amount. Say – USD 300,000. So I-Banks bought these loan assets from banks for several thousand persons, securitized them and sold them. Infact even within this asset sale they grouped it – saying Tranche 1 payments will be received by Group 1 of investors. It will be the first set of payments received. Some of them were even AAA rated. Lower tranches had more % yield and were rated lower. I-Banks estimated that even if 40% people default this can continue. If people like person A paid back the loan installments on time there would have been no financial crisis – literally. Unfortunately that was not to be.

    Though Lehman created these products if the distributors sold them to pensioners and families the fault – to some extent lies with the buyer as well. Misselling cannot happen without misbuying. Like we cannot blame only LIC and agents for selling poor performance products – buyer is at blame too for not asking the right clarifications.

    There is no scam here in Lehman. Ofcourse commissions were taken for the product as with ANY FINANCIAL PRODUCT. But as I said if everyone paid their dues there would not have been any trouble, really. Lehman was a USD 42 Billion capitalization firm and was thought of as a small fish (though extremely infuential in the market). Perhaps if they had been bailed out the financial crisis would not have attained such major proportions – their fall was like a breaking of a dam. But that is my personal opinion.

    The products sold obviosuly came with disclosures – as transparent as it can be – that investing in them included risks of substantial losses including loss of capital. Who cared? INvestors – no!

    You need to understand and agree that Mutual Funds in India are not even allowed to hedge their positions by buying/selling derivatives. They purely buy and sell securities and bonds/CDs/CPs. Granted they can buy junk bonds as well but the overall benefits far outweigh the risks and losses.

  88. Ganesh Sinha


    As many commented, I definitely think you are associated with some private insurance company. If you want to say endowment policies are not good, please be generic and don’t be particular with LIC. Your entire website talks ill about LIC. I don’t know if this is because of your personal or professional conflicts of interest.


    • Ganesh

      LIC has 95% of endowment market , so I think putting the LIC name is very appropriate and almost 19 out of 20 people have LIC product only , so it connects with readers better .

  89. Bimal

    My question is to Monish to suggest on the following:
    I invested in LIC Jeevan Saral in 2010 through monthly deduction of Rs. 9000/per month which is more than one lakh in a year. I have not completed three years yet. What to do now? Should I surrender now or complete 3rd year and go for paid up option? Same problem is with HDFC Endowment Supreme where I had paid for last 2 years one lakh per annum but dnot want to continue more. How to get rid of it with minimum losses? And what are other best investment options for less than 5 years and more than 10 years?


  90. Deepak

    Hello Manishsir,
    If I deposit rs. 100000/- each in same bank but in two different branches(i.e. one lakh in each branch) then how much money is insured is it rs. 100000/- total or both Rs. 200000/- because they are deposited at two different branches of same bank.
    In addition sir plz let me know how good is the Tamilnad Mercentil bank if I deposit my money in its two different branches . safest or not?
    Are there any sort of bonds or FD which are completely tax free just like the earlier RBI tax free 6.5% bonds.
    Thanking u. Plz reply.

    • The total insured in each BANK is upto 100,000.

      TMB is a stable bank – you can deposit money there.

      Tax free bonds may be bought in the secondary market but the yields are low – there are no fresh issues open now.

  91. Bimal

    Thank you Manish for your quick response. Please suggest a few short term and long term investment options for making wealth.

    Wish you better and better!


    • Bimal

      Long term options , I only suggest Equity products like mutual funds . for short term , you cant make wealth , it can only grow marginally ! .. FD’s are the options !


  92. Bimal

    Manish, my issue on Jeevan Saral requires some more clarification. If I continue till 4th or 5th year and then surrender as you have suggested, how it will be gainful for me? Also, there is a provision for partial surrender of the policy – what exactly it is?


  93. Bharath Kondam

    Hi Manish,

    Great Job in articulating the summary of Insurance products. I agree with you in essence that India progressing with high rate of inflation. By which you can have a strong argument, but we can’t conclude because of same reason. Look at America, Inflation of the country is flat for last 25 years, now all old people who invested in AIG are the wealthiest people. So your argument has weight-age when inflation is high. So culprit is Inflation which makes you feel all insurance products not a good option to invest. Govt. of India need to stop the high inflation regime.

  94. Rashmi

    Hi Mr. Manish,

    gud article..

    I m looking for a LIC plans which pays me back at intervals , got to know abt Jeevan Rekha. Can you suggest how it works and ll it be fruitfully in long run for 10 yrs. Also looking for some plan for my husband too which give us good saving and health cover. we both r 28 yrs.


    • Rashmi

      Thanks for asking the question. We use our forum to answer personal questions , so that more people can have a look at it and give their comments too . Please ask your question on the forum where I personally and others reply very fast . It takes 1 min to create a login and start asking question .. Incase you want me to create a login/pass – let me know

      • Rashmi


        pls help us in creating the login / password. When trying to do , it is showing Email Id already exists.


  95. Amit

    Hi Manish,
    Thanks its very useful, as all your posts are!
    I m looking for a LIC plan specially for pension plan, got to know abt Jeevan Tarang. Can you suggest how it works and it be fruitfully in long run for 15 yrs. I am of 30 yrs.


  96. Manish

    Hi manish,

    Great article. I have so many policies from Lic, i dont have any issues with lic. But i joined a policy from reliance through a friend. Its 5000 yearly, when i noted the sum assured its only 57400 only as i am paying around(85000) for 16 years only. Its moneyback in every 4 years. They only giving the sum assured as money back.

  97. Sunil


    Can you please let me know from where can I get the terms and conditions of any LIC policy? It’s not there on LIC’s website.


  98. Gajjan

    i have jeevan saral policies ( Paid 4*60,000 =2,40000)premium.What should i do ?
    What amount i will get after 5 years paying premium ?
    It will be advisible to pay 10 year premium , as it will add the loyalti addition ?


  99. saurabh

    dear manish…
    i am a lecturer age 34 years ..i was planning for a jeevan anad policy for 8 lakhs sum assured for 28 years ..but with your article and nice calcuation..i m hesitant now…? shold i take term plan instead of jeevan anand? if yes which one would u suggest for 30 lakhs sum assured and period of 25 years? plz suggest me some other mode of saving and security plan so as to grow my money…….
    saurabh shukla

    • Saurabh

      Dont take any endowment plan. Better take a term plan and just put your money in balanced funds each month for long term .. You can take a term plan from the company you trust like LIC , KOtak , ICICI , HDFC etc



      If you take a Term Insurance Plan of Rs. 30 lakhs for 25 years, So in this mean time i.e. for the time of 25 years (or Premium Paying Term for 25 years) only you will be having Insurance protection after 25 years if you died means your family will not even get One Rupee from any Insurance Company. So if you die then only your family will be survived otherwise the money what you had paid will not be come back. So as per my plan first if you are having enough savings for your family’s future then you can go to any Term Insurance Plans.

      • Prakash – I am surprised you say Term Insurance is for big business people alone and that you are a Insurance advisor? My Gosh.

        Do you know to calculate the IRR on the plans that you sell? I bet not.

        If you take a term plan for the same coverage as a LIC policy and invest the rest (premium paid for LIC policy minus premium paid for Term insurance) in PPF alone the returns will be astounding. Split this amount between a Mutual fund portfolio and PPF and chances are you come out extremely successful.

  100. saurabh

    thanx manish for ur quick response….i want to buy a term plan from lic …should i wait for few more months bcoz it says that lic is working out on its term plan to lower its premium..and second what should b the sum assured for me annual income 6 lakhs….. plz guide me………

  101. saurabh

    my second question is that .. does lic term plan amulya jeevan covers for accidental death only or does it covers for natural death ..death by illness like cancer ..heart attack etc….

  102. chandra

    I am a little confused. Is there any difference in final returns in making a policy paid up after 3 years or 5 years of premium paymen? In the chart at the top of your article you mention 5 years to get accrued bonus and later in the text you mention 3 years.

  103. Sapan

    Hey Mainshji,

    Pls help me to create username and password for the following email Id. As it is showing error when I m trying to do so…


  104. Sapan


    Can you guide me to start my Investment. As if now, I have only few FD’s and want to started with right bases. ll be very thankful to you. Becoz guidance is the first step to any Investment. Married, wid no kids yet. Earning ard 50k per month.


  105. suriyen

    Hi Manish Chauhan ji,

    I am getting 27 yrs. I want to open a premium around 20000 p.a.

    Which one is the best?

  106. Nilufer

    Thank you so much Manish, for your always so prompt reply…

    yes, you are right… i am getting an IRR of just 4%!!! really amazing, how we give so much of our hard earned monies to LIC and all we get in return in pennies… i will right away stop payments of premiums to all my policies…

    For my last two Money backs which have only completed 3 years (stated in 2009 and 2010), what do you suggest i do… surrender them..or let them be for 20 years? As you say if made paid up only after 3 years, we would not get any bonus… pls suggest… I have paid nearly 14000 x 3 = 42000/- towards each of the two policies…On surrendering i may hardly get 9000/- towards each policy..

    Thank you for all your help, Manish.. God bless you for saving me from such a blunder.. till date i was putting monies in these policies, trying to save for my retirement!!!! now have started SIPs from next month, for a period of 10 years.. hope to get better returns than 4% :-)


  107. someshwar

    hello sir i want invest money yearly rs 100000 which is best plz advise me some other mode of saving and security plan so as to grow my money…….

  108. S.Murugesan, Tirunelveli, TN

    Hi Manish Sir,

    Your articles on insurance are elaborate and great. Thanks for your contributions.. I have an issue. My friend cum LIC Agent desires me to open a Jeevan Anand Policy in the name of my son (23yrs now) for a tenure of 20yrs with SA Rs 15,00,000 and the annual premiun works out to be Rs 52,374/=. He assured that by the end of 20 yrs, the LIC would pay Rs 40,00,000/. It looks attractive and i am still doubtful after reading many of your articles above. Please clarify whether i should go ahead or stop it. In case, I accept the policy, how much my son would get at the age of 43.. please update me ..

    • No , you should not take, there is no guarantee of 40 lacs like this, ask him to provide this guaranteed sum (40 lacs) written on LIC bond . he wont be able to .

      Ask him what is the final return at the end of 20 yrs (in %) and proof of it!

      • Curious

        What is the GUARANTEED return in mutual funds or equities then? What’s wrong with you? The only thing you seem to be good at is bashing LIC…lol. God Bless. May mutual funds protect your family and make you a LOT of money.

  109. Suresh

    Hi Manish and Readers,

    After going through this article few days ago, I decided to cancel my LIC Surabhi (15 Years Plan). I paid 2 Premiums so far. I went to LIC office to request to cancel my plan and refund me, but they did not refund, and instead said to stop paying the premiums.

    I have not got my refund, but I am deciding to stop paying premiums and stop getting cheated by LIC.

  110. Bimal

    Hi Manish & other Esteemed reders,
    Suresh might have written this out of frustation. My experience was totally different. I had a Jeevan Saral policy for last 2 yrs and when I approached to my local LIC office, the officer concerned had suggested me to pay for another one year and go for paid up option to minimise the loss. Similarly, I had a few HDFC ULIP schemes and they had also shown concerned and suggested how to go for minimum losses. My opinion is choice is ours whether to go with LIC or not. But for someone’s inappropriate behaviour, let us not blame the whole organisation.


    • Suresh

      HI Bimal,

      I have not written out of frustration. I have paid just 2 premiums which is worth 5.5k; so no big deal. The LIC told me too to pay upto 3 years and get back some percentage of money at the end of 3 years.

      If i were you I would pay upto 3 years and take whatever I can from LIC since I have been paying for 2 years, but mine is just 2 premiums old. I just tried if i can get my money back if not full at-least half, but the LIC office denied since they have rules. I wrote my experience to educate others who may think of approaching LIC to take back the money which they won’t get if they try too soon like me.

      I am just supporting this article. :)

      • Suresh

        Do you know how much you will get back after you want your money back after paying for 3 yrs ? Its generally 30% of your 2 premiums . Which means that just 0.6 times of your 1 premium . thats all … So if you pay 10,000 per year , and you have made 2 payments , then you have two choices .

        1. Do not pay third premium and save that 10,000
        2. Pay 10,000 more as 3rd premium and then get 6,000 back at the end of 3rd year (30% of 2 premium)


  111. Sourabh

    Hi Manish,

    A very eye opening post. However I find it hard to understand your recommendation of surrendering the endowment plan despite the premium paid. Consider for example, I have a Jeevan saral policy for which I have paid a premium of Rs. 60, 000 over 1 year. If I were to surrender it now, I would actually loose all that money. Are you saying that I can recover that lost amount of Rs. 60, 000 by investing into equity linked MF etc.? Given the current market situation and underperforming MF’s, do you think that is a good idea?

    Best Regards

    • Sourabh

      Yes .. i mean that only .. it goes like this ..

      You can invest 60,000 per year for next 20 yrs and generate amount X by getting 5% return . Now instead of that forget that first year and now invest that 60,000 per year for 19 yrs to generate Rs X + Y by getting 5% + Z% return , all you need is 6% return . Is it hard to get it ? FD’s , PPF and equities, all will give way better return .


  112. Bimal

    Thanks Manish for your suggestion and concern! I approached to LIC only after taking your views through this blog which I found matching with them. Regarding HDFC ULIP schemes, although, they had suggested for continuation for another few years, I had opted to surrender immediately. I have started a few SIPs and opened a PPF account which, I should have done much earlier. Unfortunately, my contact with you was late. Neverthless, I am happy that whatever financila decision now I’m taking, I’m doing with much certainity and consciously. Thanks again for your support!

  113. A PAL

    I have 2 LIC Jevan Mitra Tripple Cover & 1 PLI endowment assurance Santosh policy as listed.My age 34.A Central Govt Employee
    1. LIC 133-26-26. SA 1.1 Lac Premium 5540/ pa
    2. LIC 133-27-27. SA 1.1 Lac Premium 6630/ pa (Having critical illness & premium wave off rider benefit)
    3. PLI EA/45 santosh of 1 Lac, Premium 5576 pa. PPT-17 years.
    What will be its Appx maturity value.
    Now I would like to take 1lac LIC Jevan Tarang 10 year PPT, 2 Nos 50th each LIC jevan mangal What will its premium.

  114. Veer

    I want to surrender my lic jeevan anand, after reading blog. I’ve paid 4 premiums, 5th one i have to pay this april. When i called lic customer care they are saying that, if i surrender right now, i’ll get 50k (50k loss). But my lic agent saying that, dont’t surrender rightnow, pay 5th premium & if u surender next year, u will get 80% back (1lack). I would like to know that… it true (my lic agent thought)? Please reply me asap, bcz i’ve to decide by this month? Any quick response?

  115. Romit

    I have just started my career and financial planning. I want to start with taking an insurance. I dont have any financial dependencies as of now and i am thinking of taking 15 lacs cover using LIC jeevan mitra(triple cover, SA=5 lacs).
    I also thought of taking a term plan but now i have decided to take it after getting married(after 4-5 yrs).
    The logic behind going for one LIC policy is that after getting married, i will have 2 life covers, one from LIC(very reliable) and a term cover as well(from pvt company, not as reliable as LIC).
    Please tell me if i am right in doing this?
    And are there any implications of having 2 policies from 2 different companies? Can one company reject the claim if other has rejected?

      • Romit

        Right now i dont think i need any cover what so ever as no one is dependent on me for a single penny. I am taking it for future, as most probably i will be getting married after 4-5 yrs. And just to make sure that in case my parents need some money and i am not there, there should be something on which they can rely. So right now i think 15 lacs cover is more than enough and i will be increasing it with my income and age(as i told you that i will take a term plan after marriage).
        And the reason i asked about the number of policies is that i have heard that one should divide the sum assured in 2 policies so in case 1 company rejects the claims then there is other to fall on.
        And the reason for choosing LIC is that their claim ratio is best in the industry.

  116. subhash


  117. Romit

    I have a question about LIC maturity amount calcualtion.
    The following is my estimate of the sum i can expect to receive on maturity of my policy(LIC Jeevan Mitra) based on the information given in the article. Please verify it is correct or not.

    1. Sum assured = 5 lacs

    2. Simple Reversionay Bonus = For last few years it is 50rs/1000 SA. If we take an average of 45rs/1000 SA for 21 yrs, then it will be 21*45*500 = 472500

    3. FAB = For 21 yrs, it is given in the table 250rs/1000 SA. So it will be 125000.

    4. Loyality Addition – Not taking into account as no idea of the rate

    So total amount receivable on maturity = 472500 + 125000 + 5 lacs = 1097500

    The premium for this is around 26000 + taxes(yearly) with accident benefit.

  118. bibekananda sarangi

    Hi manish what a great article.
    i am in very much confusion for my financial planning.I my annual salary is 480000.
    and take home is 35000.I have a jeevan tarang poicy witha annula premium of rs.15200 for 17 year.Now the situation is one of my relative is lic agent and he wants me to by a policy.He already convinced me for buying jeevan anand-but after reading your article i am in no mood to invest much into jeevan anand.i’ll definitely do a lic with him but with smaller amount.Is jeevan tarang ad jeevan anand is same kind if policy with life time cover.For investment purpose what i really need to do where i have to invest.Please suggest me .I’m in intial stage of my carrer .My age is 27 .S/W engineer by profession.Please keep in mind i’ll definitely buy one more policy .Suggest me how much i have to invest in LIC as i have already invest in it and other area where i can invest my money.
    Thanks in advance

    • there is no sense in investing in LIC , you can do it if you want 4-6% returns , but other wise there is no reason . Stop investing with your agent who is a relative also .. You should invest in Mutual funds through SIP’s


  119. Jose

    I have an double cover endowment plan…which i took in Kuwait.
    Sum assured: 10000$
    start date: 01/03/2009
    date of last payment:01/12/2023
    QUARTERLY Premium: 194.42$
    Paid till 03/2012.
    Options that this policy comes with…
    sum assured can be reduced after one year.
    ssurrender or paid up option after 3 years for full terms & 2 years incase of limited term.
    Pls let me know the available options to minimize the lost amount.

    Thanking you for your kind colloboration.


  120. Shreela Sen

    Dear Mr Manish
    This is a such a useful article, & the “how LIC policy works” graphic is just fab!
    What’s even more fabulous is that you’re still answering comments.
    When I decided to save Rs 12K per month, my Dad (being Dad) din’t allow me to invest completely in mutual funds. I put equal amounts in ICICI Prudential Focused Bluechip Equity Fund Retail Growth SIP, Jeevan Surabhi of 4,50,000 SI, & Post Office 5 yrs recurring deposit. DO you think these LIC policies are totally dud?
    Thanks for your help!

      • Shreela Sen

        Thanks for replying.
        But I must mention that you make “Mutual Funds” sound too simple. (On this page) you talk of MFs as if they are standardized, homogenous products. While it’s not z case. It’s as easy to lose money on MFs, as on endowment plans & ULIPs, only, sans z illusion of comfort

        • They are simple product i would again say that . here I am talking about a category of mutual funds and its equity mutual funds . Its like LIFE . Its complicated dependening on how deep you want to explore it . thats the reason there are happy and sad people . Life is same .

  121. Navin

    Hi Manish

    Great article, i was about to invest in LIC policies, however after reading your article i have changed my mind and rather go for investing in MFs.



  122. Rocky

    Dear Manish,
    I have 2 LIC policies – Jeevan Surabhi and Komal Jeevan.
    Jeevan Surabhi
    Sum assured: 5,00,000
    start date: 25/04/2005
    Yearly Premium: 43126
    The surrender value of this is 98903 and the paid up value is 2,00,000

    Komal Jeevan
    Sum assured: 3,00,000
    start date: 10-May-05
    Yearly Premium: 22566
    The surrender value of this is 121856

    Pls let me know if I should surrender/make it paid up or keep these policies.

    Thanks for your help.

  123. Iqbal

    Dear Mr Manish.

    Can i ask you 1 Questions ??

    Why People Need to Take insurance Policy ?
    If you did not find the answer. Please go to any Widow and Ask. How Her life is going on. Is Insurance policy is important to buy for a family or not ??. I am sure She will Give you a definite answer to you and that will be proper answer.

    2nd thing Remeber ” juth ki buniyad ke sath itni bari corporation banna impossible hain” trust and truth is definitely under LIC

    LIC does not mean any High Return

    How many people you know who can make a Big retirement amount through a saving bank account or Bank Fixed Deposit or Share market or any other Leading Instrument

    saving account : after getting salary within next 20 days it will O

    Fixed Deposit : 10 Yrs , Customer will wait to take the cheque before 2 months of maturity to Cover loan, child Education, child marriage Etc

    share market ; when it will UP. withdraw and make shopping and dinner Etc

    that is happening with 94 % indians.

    Only LIC policy Holder , Even Getting 3% return , will be a Big amount when you will Retire. So if any body dont want to beg at older age to his son or dependent . (99% happening )you can go for a long time LIC policy. For Long Term commitment , your saving will be definite

    Hope you can understand the concept.

    Rember : Unsuccessful Peoples Mind Always negative. So Be Positive dear.
    I given claim to a Lot of client. and I can fell when I go to the client house with a Cheque. whatever client didnt paid. and that will survivor for His Family.

    I request to you all the policyHolder. Please Dont Cancel your Policy with getting the knowledge of a Negative Minded People. Think About Your family. If you love your wife, Children , your parents . Take policy for a long Term.

    Death is Certain but Time is uncertain. If uncertainity comes to your life any time. if you dont have the insurance plan with proper Cover. even your wife will say. My husband was really illiterate. backward minded. your child will not get any guardian. a lot of ………………………..
    Iqbal hussain

      • Tushar

        Hi Manish,

        I have taken LIC’s Jeeven Anand Policy for 20 years in 2008. I am paying 27K from last 4 years and I have taken this policy when I was not aware about life insurance and investments. But now I as I better understand that clubbing Insurance with Investment is NOT good idea (as it is unnecessary expensive) hence I am thinking why I am paying 27K/Year for only 5 Lakhs of Insurance.

        Additionally I have taken 1 CR of Term insurance (LIC+Kotak) recently hence my Insurance liability is sufficiently completed.

        So now I am felling that paying 27K/Year for just 5 Lakhs of insurance is not logical and additionally even if I think of return I am sure that after paying 5.4 Lakhs (20 years*27K) in 20 years I won’t get more than 12 Lakhs Rs in Future.
        So should I stop this policy & start investing these 2700 Rs in MF SIP better? Will I be in loss if I stop this policy?

          • Tushar

            Hi Manish

            I have enquired about surrendering my Jeeven Anand policy and I came to know that as on date I have paid 91000 in last 4 years and I will get only 46000 back if I surrender this policy. So 46000 Rs of net loss is there.
            So is there any other way you know to minimize this loss?

          • Tushar Gawande

            HI Manish,
            As I told you in my last comment I had applied for LIC Term plan (to be on safer side) where I was suppose to pay 30K/Year for 30 years against 75 Lakhs of SA. But now I got call from them saying as my Weight is 84 KGs (As per LIC as per my height is should be 76 Kgs) they can’t provide me same cover in 30K and I need to pay 16K extra per year. So it will be 46K/Year which I guess is very huge amount for expenses point of view on insurance.
            Can you please suggest me what I should do in this case. My age is 30 Years.

              • Tushar

                Yes I have decided to cancel the policy but the LIC person told me even if I cancel this proposal and the go to private insurance companies they will also charge me for my extra 8 KG wt. hence frankly I am really scared now and not able to decide should I cancel it or should I pay extra premium to LIC?

    • Romit

      I dont think Manish in any way is saying here that one should not have an insurance cover. It is must for everyone.
      But the point here is that, everyone knows, return from stock market over a long period of time like 20-25 yrs will be much higher than any other thing. And as far as giving a cover to ones family is concerned, one can for a term plan with much higher cover at very less cost.
      So if one is giving 30000/yr in endowment plan(not necesarily lic but any other company also). And the same person buy a term plan for 7000/yr and invest remaining 23000 in Mutual funds, then his return and life cover both will be much higher than any endowment plan.

      • iqbal

        Dear Mr Romit

        You have a good Views. But 97% of Indian Cannot Save money through Stock Market. Because whey they need the money , they sale stock and fill the requirement. in LIC Policy Saving is with Force. there is no option to cancel. only surrender option for which they will get loss. so saving will ultimately continue for future or retirement.
        Yesterday i was talking with one of my friends for saving in LIC. his age is 43 yrs. (career started from 22 yrs)I described the plan and he want to save for his retirement but he was telling to me , right now i dont have any money , i can do after 2 months. see what he is doing from last 20 yrs of his career now even today he dont have money around 50 k to invest. this is going on with indian 97% people. he was invested in FD/Share Market/Mutual Fund many more script. but when he was some requirement faced. he withdrawn.

        Hope you can got my point. That only Life Insurance product is the best saving for Retirement or Long Term Goal


      • Romit

        All these thing said, yes it is correct that endowment plans(specially provided by LIC) has a place in Indian heart and market. And i think it is here to stay for those who dont have the risk apetite to put their money in market.

  124. Romit

    Hello everyone,
    I dont know whether it is the right platform to ask this question. But i heard something very strange from my LIC agent.
    He said, “LIC will give you return even if bank stop paying interest after 10-15 yrs.”

    Is it really possible that banks may stop paying interest? Can we have a scenario where there are no debt instruments like FD,RD etc in future? Or if there are these instruments then with very less rate of interest??
    And do you think these interest rates will decrease in future??

    • Romit

      I dont think bank will stop paying interest, why will they do so ? There is no reason and the statement your agent made I think was mostly to make LIC policies look great .. however there are chances that bank interest may go down if our economy progress a lot after years ..

  125. Shrikant


    I am 25 yrs old. If I invest Rs. 2000 per month for 10 years in Jeevan Saral policy, what amount will i get after maturity?

  126. Timsy

    Dear Manish,

    As i am planning to invest Rs 2500 pm in Jeevan Saral Policy for my son future for 20 years. Please let me know is this a good policy to invest. Also i have one query regarding the same, if i pay lump sum Ist year premium of Rs 30K together n later on converted into ECS , is that possible in this policy.. do let me know.

  127. Rakesh

    Hi Manish,

    I have bought – 25 Yrs. Money Back Policy ….. and per yr. premium is INR 10140 ,

    I wanted to know what would be the returing at the end , is it

    40 % of total sum assured , + bonus at rate of 53 i.e 53*200 * 25 =INR 265000.00
    Total would 345,000 including 40 % of sum assured at the end — is my understaing correct … if not please advice me in details also is it posible to get loan on this policy ?

  128. rose mal

    in august 2013 my money back policy of 1 lakh will be due for maturity i received 20000 at the 5th / 10 /15th year what is the amount i will be receiving in august 2013

  129. Basanagowda

    Hi Manish,
    I have a LIC Jeevan Anand Policy. I took it in Sep, 2010. I have been paying 38123INR yearly and the Sum Assured is 5,00,000INR. Maturity period is of 15 years. I feel I took a wrong decision by taking this policy. What would be your suggestion for me? Should I surrender this?

    Thank you,

  130. Narendra

    Hi Manish,

    I’ve just woken up to the world of personal finance management. Like 90% of LIC policy holders, I too bought (rather forced upon) a policy from an uncle of mine. I have the dreaded Jeevan Shree for which I have been paying up around 25K per year for the last 10 years :(

    After reading several articles about this product, I am now really confused – should I continue? Should I surrender? I will get only about 70K back. Or should I make it paid up? I really don’t know how the ‘paid-up’ process works. I gather that I’ll get my money back only after maturity sans any interest henceforth.

    I really wish I had woken up earlier :( :( :(

    • Narendra

      You dont need anyone else to tell you what you should do , a little math and 15 min will give the answer , or i would say a sad answer . Just see case 1 where yo u continue and case 2 when you do not continue , which one makes more sense from money point of view .what if you invest the surrendered money + future money in something else ? I think you should get more than 70k in case of surrender , why are you saying just 70k ? I assume you are saying this assuming 30% of paid premiums , but thats only after 3 yrs , if you have complteled 10 yrs , then i think you will get around 60% of the premiums paid excluding first year premium . So I assume it would be close to 1.6 lacs + . Did you get this 70k figure from LIC ? Enquire about it !

  131. 100rabh

    Hi Manish,
    I have taken Jeevan Tarang policy in June 2010 for 20 years. My annual premium is 76000 rs. After reading your article i feel myself cheated.
    Kindly suggest if i paid up policy after 3 years rather than surrendering it immidiately.

    • You are in bad shape right now . Surrendering it now or after 3 yrs will not make much difference, you have already lost a good amount here and wont be able to recover it .

  132. Chandra Bhushan

    Hi Manish,
    Very nice article. I have a question or suggestion on below —
    I had taken a policy from TATA AIG and paid the premium for 2 years but after that I didn’t pay the premium for three years.
    So, is there any way I can start paying the premium again with some fines and by paying three years unpaid premiums or its all gone?


  133. Mujeeb

    Hello Manish,

    Very Nice Article. And I am also happy to see your replies to comments..

    Hope you can help me with my problem.

    I had taken a policy 5 years back in 2007 (LIC “New Money Back Policy” T. No. 93)

    I only paid 6 premiums which were to be paid quarterly. i.e. only 1 and half years premium.

    Amount 6537 * 6 = 39222
    Now when I woke up and thought of renewing this policy the revival quote is 108569 (Late Fee or interest is 17051)

    I will be getting 75K as money back frm it as its 5 years completed. I would like to ask if its viable to renew this policy or just forget it and close it.’

    Also let me know if I renew and take 75000 and close it ? Will I be able to recover some amount of it ?

    Thanks in advance..

  134. Nitin Saluja

    Hi Manish,

    I have query. Please advice

    I have Bima gold LIC policy and let say it’s payback was dude on 1 Jan 2011 but I change my house so i didn’t received my payback letter. So I went to collect my amount say around may 2012 (after 15 months).
    There I notice on my money which was unclaimed for more than years LIC earned some interest.

    Please advice who would be beneficiary of the interest amount. Please help with proper policy clause.

    Nitin Saluja
    HP: +65-91067375

      • Nitin Saluja

        Hi Manish,

        Thanks for reply.

        LIC sent letter but my address was changed, so I didn’t recieved it.

        Moreover I am trying to know what policy says, even if they sent letter but i didn’t collected it for 15 months. So is liable for interest money. Is there any minimum amount or lowest interest on which I will get my money.


        • Nitin

          I dont think you stand a chance here .. LIC has sent the letter of intimation to your address which was given by you . It changed in between , but you never informed them , Now they have done their bit , if you do not take your money from them, they will consider it as “idle money” , you are not suppose to get any interest on it , why should you ?

          Its little bit like a FD which has matured, which does not earn anything if you do not renew the FD .. you can never tell banks that just because i didnt come to taking back the money give me the interest on that .. Does not make any business sense to me atleast . what do you think .. How about this situation , you took some money to your friend like 10,000 and told him that you will give 11,000 to him after 1 yr, now you tell him and call him that he should collect it from you , you also go to his home to hand over to him , he says he will come and collect it .. now he does not come for 4 yrs .. and when he comes after 4 yrs , he says that please give me 15k . Is it right ?

  135. sadiq

    i would like to know total remaining money i get from my this month matured moneyback 75-20 plan.sum assured was rs 50000(premium 842 paid quaterly for 2o years) and i had taken all 3 bonus)

  136. Rafiq

    Hi manish,

    I have taken Jeevan saral poilcy. I want to know if I continue the policy till its maturity. then will I get the all that money which they display in one table format or not. Forget about closing policy…i will continue….so they will give me the money which they assure or not.

    Pls reply

  137. Dinoop

    Hi Manish,
    Hw r u?ur artical is very informative.need to ask u 1 thing.i hv jeevan saral policy,tenure is 20 years and i m paying premium of 18000 it possible to change the premium amount?as its not worth to close the same before 3 years.kindly advise or if u can spare sum time please let me know the procedure if required so.thanks



  139. Rupen Kohli

    Hi manish, i have a very simple question for you. Plz advise. Basically i want a stamp on my decision from you since u are give such a sound advise!! (i will take the step in a few months).

    I am planning to take LIC solely from a return point of view, and on paper, the Jeevan Saral has attracted me. I am talking of a minimum of 20 years here, most preferably around 30 yrs. I am just 27, so I am viewing this from a retirement perspective. I went to my bank (HDFC) to see what they had on offer and they were pushing me to take their most hyped product, Crest. I listened to them and was drawn to their argument for a moment that LIC policies block my money, i.e. i cannot recover that amount back in a few years or get out of that policy. This point you also have made very clear which i understand. However what I am thinking is that for saving tax i anyways would plan for that roundabout Rs 1 lakh investment every year in multiple places. So i am inclining to take Saral with 60 k annual premium. In this way i am guaranteeing that i would be saving at least 60% of the maximum tax savings that i can every year of my life, and if by god’s grace i see the face of the earth after 30 years, I am getting 11 % IRR (yes, i am good with numbers and through a lot of reverse calculations i made that out from the matrix my LIC agent gave to me) after 25 years in the form of Rs 68,255,06 and 10.65% IRR after 30 yrs in the form of Rs 1,12,82,555. My intention is that i would only keep putting money into this fund and not even take any partial withdrawals so that the final amount is handsome and undisturbed. So in a nutshell, i plan to block 60 k for all my life every year and since that is roughly my one month’s salary right now, i hope taking that much out should not be too much of a worry even once i add more responsibilities on my shoulders in a few years (right now im unmarried). Plz take some time to elaborate on the pros and cons of my decisions because right now i can only imagine the handsome final return (plus any loyalty bonus which you have mentioned) so may be i am not able to view the full picture which you can. Thanx a ton for viewing my long question but it was necessary to fully comprehend what i had in mind.

    • Rupen

      I dont think you have taken the numbers correctly . The IRR of 11% is not possible , do not trust on the LIC guy numbers which was on template , Its just a estimation with some assumptions , go to LIC website and see the mumbers

  140. Ramesh

    Hi Manish, I took Jeevan anand policy for 20 yrs in 2008 Oct. every month i am paying Rs.2718. So far i finished 3 1/2 years of premium paying term. i want to surrender the policy now but i came to know that i will get only meager amount if i surrender now. i am little confused whether to surrender it or make it paid-up or simply continue the policy because if i surrender, i will be loosing lot of money. i need your suggestion please.

    • Ramesh

      You are in same boat as millions of people . Sadly you are into a wrong product (i should say unsuitable), and getting out of it later means more loss , loss right now is also a big amount , but you will have to bite the bullet .

  141. pradip

    Pl explain that does the return varries in lic jeevan saral in term 15 or 16 & 20 or 21
    unlike other traditional policies of lic like jeevan anand the bonus rate tend to increase in slabs from 11-15 then 16-20,21— it applicable in jeevan saral ?

  142. Navish Jain

    If I have an eligible policy of SA=5L, with a premium paying term of 20 years, in that case, would FAB be paid (accumulated to the policy) every year starting from year 16 (Rs 60) and then again at year 17 (Rs 100)so on; or just one time at the end of 20 years (Rs 200)?

  143. Godfrey

    Hi Manish,
    I am in a predicament and need your help sorting this out.
    I was sold ” the endowment assurance policy t no. 14 ” LIC policy in 2006.
    my yearly premium is 27,390
    sum assured : 14,00,000
    policy period : 50 yrs. ( this is ridiculous I know ) I was aged 21 then.
    I may not make it to age : 71 yrs ( in all probability)

    I have made payments regularly upto year 2012.
    i.e. 7 yrs x 27,390 = 1,91,730

    After reading your article I have realized I have been fooled into this plan.
    Please guide me so as to stop this policy .
    Paid up – (certainly not an option due to maturity period of 50 yrs)
    surrender – ( return of a meager 49,302 )

    What do you suggest is the best way out of this mess .
    Please help !!!

  144. Rahul

    Hi Manish, greetings, i want to buy a investment cum insurance plan, i am able to invest rs 50000 per year. i have some plans in my mind like Jeevan Anand from LIC, Smart kid from ICICI. i am confused for which i prefer please help me to find a better produc. my age is 26 years and i have a daughter of 2 years please suggest to find a good option so that i get benefited.

  145. Manoj

    Hi Manish, your article is very informative. I like to invest 60 to 70 thousand per annum. I am 24 and have neither a Life insurance policy nor invested anything in Mutual funds or ppf. Please guide me in taking proper LIC policy and choosing good Mutual fund investment (together 60 to 70 thousand). Thanks in advance.

    • Just go for term plan (pure insurance , not return of money later) and mutual funds . Go for a term plan from LIC or any private company and start with HDFC balanced or HDFC Prudence fund for 6 months to 1 yrs

      • Manoj

        Thank you Manish for ur reply. Please tell me which term insurance is best. And I also like to take PPF also. I am in confusion on how to divide the amount of 70 thousand among these (LIC, Mutual fund, PPF). Is taking ppf is better or investing complete amount in Mutual funds is good. Please help me in this.

          • Manoj

            My gioals are as follows:

            1.After 3 years need to do sister’s Marriage for that I need around 6 lack (approx.) .

            2. After 6 years from now need to do another sisters Marriage for that I need around 20 lack (approx .)

            3.In between if possible would like to buy a house in Bangalore.

            Please guide me how to invest systematically so that I can achieve my above goals.
            I am able to invest around 60 thousand this year and atleast 1.8 lac per year from 2013.

            Than you in advance.

  146. Babbu Pawar

    Hi Manish,
    Thanks for this thread, Its very good for new comers…..

    I have some questions…
    1) I am planning for jeevan saral plan for yr 36000 premium, but while reading this article it seems is not worth. Q Whether i enroll or not?
    2) If not what would be the investment options without any risk as lic is having & also what about the life insurance again ?
    3) Which investment option will give near about 10% yrly guaranteed ?

  147. Babbu Pawar

    Hi Manish,
    Just now had the calculations for LIC & PPF
    1) For LIC, if u go for 20yr with jeevan saral plan with annual premium of 35000 then, lic will give u near about 15L after 20 yrs (near @8% consideration/yr),
    2) For PPF, if u go for 20 yr ppf with annual fix premiun 30000 again u will be getting near about same (15L) what we are getting in LIC (near @8% consideration/yr),

    Q So insteed of going two diff way (term policy & PPF) directelly we can go for jeevan saral single policy…..?
    Not that much diff in the final numbers…

    ur comments please…????

    • How did you get this 8% figure from LIC ? Where did you learn this ? DO you understand the liquidity part ? Do you understnad what will happen if some emergency comes and you want to withdraw from LIC ?

  148. Sagar

    Dear Sir/Madam,
    If I have complete 1 year of my policy of Jeevan Saral by filling every premium, in that case can I liable to apply for loan and on what basis or conditions, and if yes then how much amount shall i get if my premimum is per month 500 rupees.



    10TH YEARS RECEIVED RS.12,500/-


  150. Hitesh Daka

    Dear Sir,
    Can I buy Jeevan anand LIC Policy online ? told me that it is possible so, thats y I m asking u ?
    and what is muturity different between Policy Takem from LIC Agents And This online ?
    I wants to invest Rs. 20009/yr….. for 21 years so Rs. : 4,00,000
    what is Muturity at the end of 21 year …. by Agents and by Online ?

  151. chris

    do we also have a free look period , i have taken a Jeevan Anand policy and i want to cancel it its just been 7 days, can i cancel it now ????????

  152. Balaji

    hi Manish,

    I’m 38 with 2 kids. Currently I have these insurance policies :

    1. Jeevan Anand (myself) : Nov 2004, 16 yr, 515000 (SA), 37531 yearly.
    2. Jeevan Anand (wife) : Jul 2010, 16 yr, 500000 (SA), 9181 quarterly.
    3. LIC- Money plus (myself): Apr 2007, 20 yr, 100000 (SA), 10000 yearly.
    4. ICICI Pru Life Time Pension II (myself) : Dec 2004, 15 yr, 0 (SA), 10000 yearly.

    I have started investing in below MF’s and PPF from 2012 with Kids education, marriage and my retirement as goals.

    1. Franklin India Bluechip.
    2. HDFC Equity
    3. ICICI Pru dynamic.
    4. UTI Opportunities.
    5. IDFC Premier Equity.

    1. Can you please look at my current insurance policies and suggest which option is the best for each policy considering that I have paid considerable premiums,
    Continue the policy OR Surrender OR Paid up ?

    2. If paid-up, would we still get the insurance cover for the reducted SA + bonus OR insurance cover is terminated by the company.

    Would greatly appreciate your suggestions. Thank you.


    • Balaji

      This is a big issue people face with their current existing policies – But you need to look at it from next 5-10-15 yrs point of view .The best thing you should do is make it paid up or surrender , anything is fine . Surrender can be done if you need some immediate money

      Your mutual funds are good , continue them and take a term plan !

  153. aleti

    Hi Manish,

    I am 31 with 1 kid, currently i have below insurace policies,
    1. Jeevan Anand (myself) : June 2005, 21 yr, 300000 (SA), 15494 yearly.
    2. Jeevan Mitra (myself) :jun 2005, 21 yr, 250000 (SA), 12838 yearly.
    3. Endowment assurance plan (myself) : apr 2006, 16 yr, 200000 (SA), 12488 yearly.
    4. Endowment assurance plan (mywife) :Mar2008, 16 yr, 400000 (SA), 25368 yearly.
    5. Amulya jeevan (myself) : Feb 2011, 30 yr, 2500000 (SA), 8400 yearly.

    i think 5th policy ( term policy ) is good one after i read your article.
    From above endowment policies, i took loan and still need to pay.
    so could you please suggest what should i do with endowment policies ? should i continue or paid up ?


      • aleti

        Thanks Manish , i have decided to surrender all of them , but few questio n here. In this article i saw that ” one can eligible to get reduced Accrued Bonus only if your policy has completed 5 premium paying terms” .

        My plan : Endowment assurance plan (mywife) :Mar2008, 16 yr, 400000 (SA), 25368 yearly” ( premium payment mode is haf yearly in March & Sep 12684 each).

        first of all 5 premium paying terms = 5 years ?

        1) For my above policy am I elgible to get reduced accured bonus as this policy is started in March2008? ( march 2012 amount paid but september is pending , if you consider 1 term = 2 half yearly payment in this case ).

        2) if not elgible, should i pay september premium and then surrender it to get reduced accured bonus ?
        3) which one is greter amount my premium ( Rs.12684 ) or reduced accured bonus , can you just calculate and let me know ?

        I would appreciate your suggestions, Thanks in advance,


        • 5 premium = 5 yrs .

          You first need to compare both the scenario , what if you surrender now and what if you surrender after paying sept premium . take a pen and paper and do the math .

  154. Satish Rajan


    One of the best articles I have seen on LIC policies, bonus and surrender.

    I would like to know if you get accrued bonuses (today’s value) on surrender of 1) Jeevan Kishore and 2) Childrens Deferred Endowment Plan…both plans with Profits.

    • You get bonus , but only after 5 yr . I mean if you surrender before 5 yrs, then you dont get bonus part . Also the bonus part which you will get will be reduced sum, because the bonus accrued value is only for future, if you take it in today terms , then its reduced as per today value

  155. Vijay

    Hi Manish,
    i have one question recently i took one policy from development officer of LIC and policy is bulk of three 1. Jeevan Anand (10,486) 2. Jeevan Saral (9608) 3. Amulya Jeevan (1486) Total Premium Rs. 21510.
    he came with one big representation about this project and finally calculation was something 12lacs. This was my 1st premium if it wont work i dont care i will surrender now. Waiting for Ur guidance/advice Positively.

    • Vijay

      We really recommend that one should not take these policies, have you already paid first premium and the look up period of 15 days are over ? In that case you stand to loose every thing if you surrender now , but thats the best choice ironically !

  156. shanmugam

    Hi Manish,
    i am seeing this article very late!
    i have one question! i took a policy from LIC Jeevan Saral and i am paying monthly 2042/-. from nov 2011. The LIC agent came with a calculation and showed me that 16 lakhs will be the sum assured i shall be getting after 20 yrs whereas in the policy document it shows that Maturity sum assuered is 5 lakhs. i am really bit confused!
    whether i hve to continue this policy (i took this policy for my daughter study, etc., after 20 yrs. she is now 4 yeras old) or
    else can i paid up this policy?.
    should i try for term insurance?
    My total salary per month is 35000/-
    idont have other insurance policies.
    Waiting for your guidance/advice Positively

    • You will get maturity sum assured + Bonus at the end of 20 yrs, I dont think you will get more than 10 lacs approx . Better get rid of it and start a SIP in mutual funds with long term view !

  157. dr darvesh

    Hi Manish,

    I m 29 yr old in govt job with 6-8 lacs salary p.a. with one kid (expecting after 5 mths). Currently, I have following insurance policies :

    1) Jeevan anand (myself): Aug. 2008, 20yrs, 100000(SA), 54576 yrly.
    2) Market plus -1 (myself): Nov. 2009, 15yrs, 200000(SA), 40000yrly.h
    3) Jeevan anand (myself): Apr. 2012, 20yrs, 2000000(SA), 105000yrly.
    4) Mediclaim policy (me and my wife): 500000(SA), 8736 yrly.

    Q. 1) Can you please look at my insurance policies and suggest which option is the best for each policy considering that I m paying considerable premium?
    Continue the policy or surrender or paid-up?
    Q. 2) I m thinking of stopping the 3rd policy (apr. 2012) and buying two online term plans of 50 lacs each from two different companies. What are the best options for this?
    Q. 3) What other options of investment can I look into like PPF/FD/equity?

    plz advice, m very confused.

  158. Nikhil

    Hi Manish,

    Thanks for the revert.
    I like what you said but just out of curiosity. Is it a bad idea to put 1.5 lacs yearly in PPF. Also I`m 29 so it think by the time it matures I`ll be 44 and will have a fat ppf check waiting for me.
    Please throw some light on why you suggest SIP or MF over PPF.

    Thanks Again!!

    • Nikhil

      PPF is safe product, thats why .. Confused yet ! .. PPF is safe and thats why the returns are not at more than inflation .. You are young and have a lot of time in hand to grow your money , assuming you are investing 2 lacs per year .. 1.5 lacs in PPF is too much in low return , if you are investing 5 lacs a year .. then 1.5 lacs is fine in PPF

      At the end its your call if you want to earn 8-9% only on your investments for 15 yrs ! .. if yes, thats ok , go ahead !

  159. Nikhil


    With your help and some extensive reserch on IRDA, Jago investor and Policy Bazaar I finally I arrived at a conclusion. I know there`ll be room for improvement and am open to suggestions.

    Out of the 1.5 lacs of surplus money yearly I have chalked out the following plan.

    1. 25k yearly for LIC Jeevan Amulya SA 1 cr, Tenure 20 years
    2. 50k in PPF
    3. 25K in HDFC top 200
    4. 25K in HDFC Prudence
    5. 25K in DSPBR top 100

    my 3 goals:
    Family security-LIC ,
    Financial Stability – PPF, HDFC Prudenc
    Current money making Future money- HDFC Prudence & top 200, DSP top 100

    Would love to hear your thoughts around the same.

    Thanks Again Manish !!

    • I think its a very simple and clean plan .. JUst add some money for liquidity purpose too and you are set to go .. I guess its not the best plan, but you should not look for it too ! … just stay in action !


    hello manish…
    i want one LIC policy and this is my first time,i don’t know much about all the policies..
    i only know that i can pay a premium of Rs. 90000 to 1 lakh per annum,so can u please suggest me for which policy i should go for and for how many yrs like 10 ,15 or 20yrs?
    please advice me,so that i can directly ask about that policy terms and conditions to customer care

  161. s. mahajan

    Hi Manish, we have taken the foll. LIC policies, which I think we should now would like to get out of. Could you please advise whether we should continue, surrender policy, or make it paid up.

    From SA Premium Maturity Prem Till
    jeevan anand 2006 1,00,000 5967 2024 2024
    jeevan anand 2006 1,00,000 5738 2025 2025
    jeevan anand 2006 1,00,000 6916 2022 2022
    jeevan anand 2006 1,00,000 5422 2026 2026
    jeevan anand 2006 1,00,000 7406 2021 2021
    jeevan anand 2006 1,00,000 6480 2023 2023
    jeevan anand 2009 5,00,000 32642 2026 2026
    jeevan anand 2009 5,00,000 34849 2025 2025
    new jeevan shree 2003 5,00,000 31885 2028 2018
    jeevan tarang 2006 5,00,000 34361 2020 2020
    jeevan suraksha 2001 3,80,000 10058 2032 2032

    • s. mahajan

      Hi Manish, Am rephrasing me earlier post. Please advise whether to surrender, continue or go in for a paid up option. The total annual premium paid is Rs180,000. Would like to put at least a large sum of that amount to better use.
      1. Six jeevan anand policies taken in 2003 for a Sum assured of Rs 1 lac each maturing in around 20yrs
      2. Two jeevan anand policies taken in 2009 with a sum assured of 5 lacs each maturing in 16 yrs
      3. Jeevan tarang taken in 2006 for a sum assured of Rs5lacs maturing in 2020
      4. Jeevan suraksha taken in 2001 for a sum assured of Rs380000 maturing in 2032
      5. New jeevan shree taken in 2003 for a sum assured of 5 lacs maturing in 2028, premium payable till 2018

      • In case any of these are money back plans , and you are suppose to get back some money in few years , then you can continue it , else the suggestion is to just surrender them !

  162. pradeep

    Hai Manish
    I am A.Pradeep presently invested in HDFC JEEVAN SAMRUDDHI PLAN . Tell me is it good or not?


  163. vageesh

    Chauhan sahab,

    I am 26 yrs of age, earning 31000 per month. I have 50,000 cash for emergency in my savings account which i wont touch unless an urgency comes out.I own no mediclaim policy.
    I am confused how to invest and where to invest. I am investing in PPF account 2000 per month.
    I can invest 3000 per month as premium in any best suited plan. Kindly suggest me the best investment plan for 5 & 10 years. Are the pvt companies such as Bharti axa, tata AIG, Reliance reliable to invest ? kahin aisa na ho k ye bhaag jayen paise le kar kuch saal baad ! plz help me sir. I shall be highly obliged if you can also tell me how to invest in mutual funds .

  164. Mrinal Basak

    Dear Manish,

    Jeevan Saral: World’s best innovative life insurance product Mon, 25 Jun 2012 01:55:32 -0600 This traditional endowment policy has become very popular because of exclusive features like – high liquidity, fixed risk cover
    LIC’s Jeevan Saral is a traditional endowment policy. Due to the apparently simple outline of the policy, it has become quite popular in the recent years. The policy also got accolade of Golden Peacock for best innovative life insurance product among all the insurance companies of the world.

    Some exclusive features like – high liquidity, fixed risk cover up to 250 times of monthly premium irrespective of age are the factors that adds to its popularity. In recent times the suitability of the policy as a saving cum insurance instrument is highly talked about. In this short write -up an effort is made to clear out some conflicting points of this plan.

    The entry age for the policy can be from 12 to 60 years, while the maturity age is 70 years maximum. The term of the policy can be from 10 years to 35 years. The minimum premium can be Rs 250 per month for age up to 49 and Rs 400 per month for age 50 & above. There is no maximum limit.

    Death Benefit: In case of death of the insured during the term the beneficiary will receive 250 times the monthly basic premium ( which is referred to as the death benefit sum assured) plus return of premiums paid (excluding the first year premium and premiums) plus loyalty additions.

    Maturity Benefit: If the policy matures, the policyholder gets maturity sum assured (MSA) plus loyalty additions.

    Partial Surrenders: Partial surrender is allowed any time after the completion of three years, provided premiums have been paid in full. If policyholder opts for it, the basic premium under the policy is reduced and the policyholder gets the surrender value corresponding to the amount by which the basic premium is reduced. For this special option this plan is also named as ATM plan. But note that like ATM, you are not allowed unlimited withdrawal from the policy.

    A minimum waiting period of one year is required between two successive surrenders and reduced basic annual premium after the partial surrenders cannot fall below the stipulated minimum level.

    Auto cover: If a policy under this plan is in force for full benefits for 3 years, the risk cover under the main plan continues for 12 months , even if subsequent premiums are not paid in due time. This cover, however, does not continue under rider benefits.

    Optional benefits: The plan also offers the two optional riders by payment of additional premium. Those are accidental death and disability benefit rider and term assurance benefit rider. The term assurance and accident benefit sums assured under the riders will not exceed the death benefit sum assured under the basic plan. Also, the maximum cover for the above riders will be Rs 25 lakh under all policies of the corporation taken together.

    Complexities made simple: In all life insurance policies premium goes on increasing with age. But in Jeevan Saral, premium has no direct connection with age at entry. A number of marketing leaflets are floating in the market, wherein maturity values
    are projected in direct relation to the premium paid by the policyholder. These projections don’t keep any link between age, premium and maturity sum assured (MSA).The reality is, this policy provides risk cover of 250 times of the monthly premium.

    So proportionate risk premium as per your age is deducted from the total amount paid by you. This is the reason, why the MSA goes on diminishing as age increases. On maturity of the policy the MSA along with loyalty additions (which is declared on per thousand MSA basis) will be payable to the policyholder.

    The drawbacks: There is always a tendency to compare the returns of insurance policies with PPF or bank RD. Please note that an insurance policy is not at all comparable to these saving instruments. When you invest in PPF, you earn interest on interest (since the interest gets attached to your account every year) and you benefit from the power of compounding. But, there is no compounding effect in an insurance policy. The loyalty additions will be calculated on the maturity sum assured (MSA) on per
    thousand basis.

    Return and advantages: This plan is quite flexible and liquidity feature are good in comparison to other life insurance policies. Being a conventional type policy return is risk free, and it varies only as per your age at entry and the term taken by you. Mind it, in direct contrast to PPF or bank RD, the loyalty additions are calculated on the Maturity Sum Assured (MSA) and not on the premium paid by you. So, when your MSA is higher than the premium paid by you, your return gets bigger although you don’t enjoy any compounding interest effect on your funds. Second advantage of this plan is that unlike PPF the term is adjustable as per your need and convenience. Thirdly, in addition to generating a kind of forced savings (because premium payable under the policy is always compulsory and not optional) it also provides a good risk cover. Last but not the least, the premium amount paid to LIC is exempted under section 80c of income Tax act and the amount policyholder receives at the end of the term after payment of all premiums is tax Free under section 10-10D of income Tax act.

    My verdict:A sufficient term life insurance cover along with regular investment habit through PPF and mutual fund is a must, if you ultimately want to cover up all your future and contingent future needs. In addition to that a good endowment insurance policy like Jeevan Saral will multiply your advantages in respect of liquidity, diversification of your portfolio and additional risk cover.

    give your comment on this article.

  165. Santosh Kumar Sharma

    Hi manish,
    I have taken LIC money back return policy of Sum Assured 4 lakhs (20 years plan). Its 6th year now. I have taken one benefit of 80k also last year.Since I am pursuing my executive MBA , so unable to pay premiums now. when i went to close the policy( 5 months before) they gave me loan of 30k . now i am confused what to do??
    I have taken educational loan of 10 lakhs @ 14% also which i will have to pay from next year onwards.
    I have one term insurance policy also for 40 lakhs.( its premium is only 8500)
    kindly suggest me what to do now??
    should I close the policy or continue??
    Waiting for ur reply.

  166. Reena Singh


    Your Article is help me One Fren (LIC Agent) of my husband suggested
    him plan “Magic Plan Retire & Enjoy”
    how this plan is should we take it or not.
    we already have very Good term plan of other company so do not require sum assured more.
    I am not intersted in this plan i am more intersted to clear my home loan at earliest.
    please suggest?
    I understand Retirement Plan are nothing diffrent from other common insurance plan.
    kindly revert with your valuable comments.

    • Yes better dont take it , its just a marketting gimmick .. just ask him to show you the comparision with a mutual fund on long term basis , ask him how much is the liquidity of policy, if you want to close after 2 yrs , can you do that ?

  167. Mohan

    Hi Manish,

    I have applied for LIC Amulya Jeevan-1 for 25 lakhs /35 years; for my age of 28, the premium is 8600 per annum. I had gone through required medical tests and every thing is fine. However, i was operated for tonsillectomy 7-8 years back which i mentioned in the application.
    I was told that, i need to pay an extra of 1625Rs/annum for the same (i.e, 20% extra) – to me, it looked like a very high price for some simple thing that is not even considered as an operation (as there are no stitches). Please advise.

    This is my first insurance policy, I wanted to be 100% sure and hence went ahead with LIC; I planned to take a second term policy from a private player with higher sum assured.


    • Understand that companies dont look at things they way you are , when you went ahead with some medical operation or some issue ,it means you are unhealtheir than others by some margin . This is how they look at it

      So better go ahead with it , if you still dont want to , go to some private insurer , but you will have to mention this LIC incident there as they ask for any rejections or you rejecting some insurer !