Jeevan Astha .. Another idiotic product

POSTED BY manish ON December 29, 2008 COMMENTS (21)

LIC has introduced another Product called “Jeevan Astha” …

Let me take one by one each line and do some analysis and raise some questions .

A)Death Benefit:

On death during the first policy year: Basic Sum Assured with Guaranteed Addition.

On death during the policy term after first policy year, excluding last policy year: 1/3rd of Basic Sum Assured with Guaranteed Addition.

On death during last policy year: 1/3rd of Basic Sum Assured with Guaranteed Addition along with loyalty addition, if any

Some points here to consider :- Your risk cover will be 6 times of your investment and just 2 times for rest of the duration + some loyalty addition if any .. So in a nutshell it as good as saying your Cover is just 2 times of your premium …

– What does it mean ? you will get double of our initial investments if you die after the first year .

This is the case when you die …

B)Maturity Benefit:
On maturity, the maturity Sum Assured along with Guaranteed Addition and Loyalty Addition, if any, shall be payable.
Maturity Sum Assured shall be 1/6th of Basic Sum Assured.

– Means , if your premium is Rs 1,00,000 , then Basic Sum assured is Rs 6,00,000 and hence , Maturity Sum Assured is Rs 1,00,000

C)Guaranteed Addition:
The policy provides for Guaranteed Addition at the following rates:

  • Rs. 100 per thousand Maturity Sum Assured per year for a policy of 10 years term.

  • Rs. 90 per thousand Maturity Sum Assured per year for a policy of 5 years term.

– Means , if your premium is 1,00,000 , then your Guaranteed Addition is Rs 10000 (10 yrs) … Means , You will get Rs 1,00,000 as Guaranteed Addition in 10 yrs .. and along with your original capital , you will get back Rs 2,00,000 back after 10 yrs .

D)Loyalty Addition:
Depending upon the Corporation’s experience the policy will be eligible for Loyalty Addition on death during the last policy year or on the Life Assured surviving the stipulated date of maturity at such rate and on such terms as may be declared by the Corporation

This may or may not be there .

Now lets take a real like example ..

Ajay takes a 6 lacs policy over a 10 year term.

Jeevan Aastha Premium = 96,960
Amount he would get if he dies in the first year : 6,00,000
Amount on Maturity : 97000 + (10*10000) = 197000 (loyalty bonus is not assured , so not adding it)

from what angle do you think this policy makes sense . You are maximum doubling your money in 10 yrs and nothing else . And the best time to die after taking the policy is first year itself .. then you can get a little benefit (but still at a big cost) .

I don’t understand why people complicate things .. LIC plans to collect Rs 25,000 Crores from this policy , and i am sure they will succeed .. Because there are many people in our country , who don’t understand effects of Inflation , compounding and get confused with all those confusing statements .

Now if you are a regular reader of this blog .. then you should be able to utilize Rs 97,000 to generate better returns than Jeevan Astha .

Let us do this …

1. Insurance for cover of 6 lacs , not just for first year but for all 10 years .. Simple : Take a term Insurance of Rs 6 lacs for 10 yrs , its around Rs 9840 (single premium , SBI life insurance for a 26 yr old ) …

2. After this you are left with around 88,000 , which you should invest in Equity Diversified mutual funds either one time or through SIP for 10 yrs … Even if we take 10% return . It would be 2,28,000 .

When it comes to Investing , just Keep it Simple , Stupid (K.I.S.S) … 🙂

UPDATE (28 AN 2009 ) : Shyam Pattabi (writes for HINDU) also shares his similar thoughts on this product at ( i am glad i made correct analysis)

Update (Jan 19 2008) : On NDTV Profit , Monika Halan has given comments that “Jeevan Astha” should be the last product you should look for and only if you have cash to put nowhere , They have given “Dont Buy” rating to this product and they also said that this product has lots of hype got created . Monika Halan is Editor of “Outlook Money” and One of the most mature and best personal Finance advisor i can think of .

Disclaimer : The above analysis is based on my study and should not be taken as investment advice or discouragement from advice, use your own analysis to take your decisions . I will not be responsible for your investment decisions .

Happy Investing

Get FREE call back from Jagoinvestor Team

First Name*
Yearly Income*
Time to Talk*
Which Package*
Your Requirement
Lead Source
Lead Status

21 replies on this article “Jeevan Astha .. Another idiotic product”

  1. Bhaskar says:

    I think the Maturity sum assured is 100,000 even if the premium paid is less than that. Secondly the loyalty reward will be given based on the LIC profits and it could be around 5% on the maturity sum assured. So the total return upon maturity will be 205000 for a maturity sum assured of 100000. I feel LIC is OK. and is better than other private equity based insurances which can go either way. The following are calculations in my case. If my understanding of teh scheme is wrong, please correct me:

    LIC Jeevan Astha – Invested in 2009, Premium paid= 99000, Sum Assured 600000, maturity sum assured = 100000, Guaranteed returns = 100000, expected Loyalty rewards (2019)= 5000, Total Returns (2019)=205000
    The tax saved in 2009 =19800, , Total Investment= 79200 (20% Tax saved in 80CC), Calculated interest (Quarterly Compounded)= 9.62% (With Insurance Cover)

    Nationalized Bank:99000 if invested in 2009, after 10 years at 8.5% the return will be = 229572 , Tax to be paid (20% bracket) =26114 . Net =203457, Calculated Interest= 7.27% Compounded quarterly and there is no insurance cover.

    NABARD Bonds 7.32% yearly compounded , if Invested in 2009 in NABARD bonds, Investment=99000, Maturity proceeds @ 7.32 % = 200651, The tax saved in 2009 =19800, Total Investment 79200 (20% Tax slab), Calculated interest (Quarterly Compounded =9.40%. NABARD Bonds are over subscribed ,Difficult to get awarded, No Insurance cover.

    SO I feel investment in LIC is OK. As far as delays in payments are concerned, I did not have bad experience with LIC.

    1. Thanks for sharing that Bhaskar

  2. chirag says:

    Sir.! Please anaylises on ‘JIVAN SHIKHAR’ single primium policy by LIC Plan no.837.Lic advertise it on ‘Jivan Aastha’which collected 10000 crore 2008
    Give proper gudience and compare both.!!

  3. Vishal says:

    I have enrolled the Jeevan Astha policy in jan 2009 for Rs.3,90,000/- (T0tal Premium paid) and in jan 2019 it is getting maturity, sum assured is Rs 24,00,000 . could you please let me know the amount i would be getting, if i surrender it in jan2016 (completed 7 years out of 10 year)?

    1. Hi Vishal

      LIC can only give you the exact number

  4. Mark says:

    LIC will never will give you a “Penny” worth nor their policies. LIFE INSURANCE ….what is it? There is nothing of that sort. In short – it is actually “DEATH INSURANCE”. So, you are ensuring yourself to DIE to get the least benefits (to whom so ever, if attempted to receive) of these policies.

    “BIG CHEATS” …. these products are and well protected by governing bodies….

    Beware! Don’t think you are 1 out of every millions who could die. Also no guarantee that will get this money; read all the fine prints; you’ll surely be blind by the time you complete reading it.

    Very concept of “ASSURED LOYALTY” are flaunted…Where the hell would you go…from pillar to post…and no one does anything.

    Insurance should be compulsorily provided to the old or senior citizen to take care of their vulnerability and not a child … who will be healthier, happier in the next 40 to 50 years. What ethos these insurance Mafia (esp. agents with huge margins) cast their nets.

    Don’t think that these guys like LIC & the rest have amassed such huge wealth and assets without conning the common people.

    Most horrendous is their customer services. You go to struggle to get back your own money.

    Better you dig a BIG HOLE and dump your wealth there so that you get it as it is in your emergencies. While the INSURANCE companies will give you back after harassment and long delays on 1/3 of your principal.


    1. Thanks for your views on this topic and LIC

  5. Nagarajan M says:

    Worst Investment & Wrong decision invested in Jeevan Aastha – not even standard returns.

  6. J.Thomas says:

    Hello Boss,

    Your predictions become exactly true as the maturity amount after 5 years is really disappointing. There is no loyalty bonus as predicted by the LIC agent while we booked the policy. Learned a lesson, hereafter never I opt for similar kind of policy with LIC.

    1. Hi J Thomas

      Thanks for your comment. I know its really disheartening to see your money go down the drain, because we earn the money with so much hard work and then these products do not deliver. But the only thing I must say to you is that the product was transparent in itself , all the documents must have screamed that “I will not deliver good return, just safe returns” . But its now upto you if you are able to decifer it.


  7. pradeep says:


    I have enrolled the Jeevan Astha policy in 2009 for 77750 rs and in jan 2014 its get maturity . could you please let me know the amount i would be getting ??


    1. Only your policy document will have the exact number . U should be more interested in IRR of the policy

    2. Uma Shankar Goel says:

      Dear Pradeep, for a 5 year policy they will give Rs.90 per 1000 of the sum assured. From your premium it appears your sum assured was Rs. 75000 so it will be 90 X 5 X 75 (+ Sum Assured) = 33750 + 75000 = 108750 /= There may be special addition at end to this amount but on base level that is guaranteed value you get on maturity.

  8. Durga says:

    Dear Manish,
    Thanks for the information, I feel should have started reading your blog 3 years back.
    Becoz I have taken this policy for Rs. 30,000 in the year 2009. Can you let me know the surrender value of this policy now?


    1. sadly , the surrender value would be extremelly low right now like 25% of your premium paid . Better stop it and put your future premiums in some mutual funds

      1. Renu says:

        Please call 1251 LIC IVR helpline and know the surrender value. It is 90 % of the single premium paid after one year and if you have purchased it three years back then it would have a special surrender value slightly higher than that.

  9. Nataraj says:

    Manish, i completely agree with your views on Jeevan Ashta product. But the only problem i see is that Jeevan Ashtha is a endowment product which means that the money is invested in debt instruments. Whereas in the above calculation you assume that we will invest in Equity instruments (remaining money after paying the Term insurance premium) and hence it is not fair to compare. Probably the better way to compare is investment in PPF or Debt Funds which will make sense as it will be a apple to apple comparison,.

    1. Nataraj

      What you are saying is correct when we do comparitive analysis , even then PPF beats it . But I am talking about the best thing u can do , 8-10 yrs is a long term and why to invest in debt products for so long term .


Comments are closed.

Subscribe to Emails

More than 1,50,000 investors across the world trust & read Jagoinvetor articles. Subscribe for emails updates and get instant access to a free ebook.

Jagoinvestor is one of the most trusted personal finance websites which writes on various topics like financial planning, mutual funds, insurance and banking.


Download Our FREE Ebook!

Available only for first 100 people today

Download Our FREE Ebook!

Available only for first 100 people today