Jagoinvestor

January 27, 2012

LIC Jeevan Ankur Review

LIC Jeevan Ankur (Plan 807) is the new traditional Children Plan from LIC. It has come at the right time when most of the people look for investing their money for tax savings and given the right time (markets doing bad), it is expected to get a lot of interest from parents looking for parking their money in something safe.

LIC Jeevan Ankur Policy

Jeevan Ankur is a traditional endowment plan where you pay regular premiums and at the end of the policy term the sum assured is paid along with loyalty additions declared at maturity. The nominee in this plan has to be your child (which makes sense), assuming that the plan is bought purely from the point of securing child’s future. (Learn how LIC Policies work)

If policyholder dies before Maturity

In case the policy holder dies before the maturity of the policy, the basic sum assured is payable immediately and a 10% of sum assured is payable each year till the end of the policy term as the income. This is a good option which makes sure some payment is made each year without fail. The premiums are not to be paid after policyholder’s death. Though there is no specific wording about this waiver of premium, it is very obvious.

If the nominee (child) dies before maturity

In this case, the policy holder can nominate another child and other benefits continue as it is. If there is no other child then, the benefits will continue and the maturity proceeds will go to legal heirs.

Optional Riders like Critical Illness and Accidental death benefit.

Apart from base plan in LIC Jeevan Ankur, you can also add two riders in this plan at extra cost. These riders are Critical Illness rider and Accidental Death rider.

Critical Illness rider: One can add critical illness rider for an amount in range of 50,000 to 5,00,000 and in case of diagnosis of some defined illness, an amount equal so critical illness sum assured will be paid. However this is available only if the policy holder age at maturity is below 60.

Accidental Death Rider: One can also get a rider called Accidental Death rider, which will pay additional sum assured in event of death . The maximum sum assured for accidental rider can be upto 50 lacs and the condition is that the maximum age at the time of maturity has to be 70 yrs.

Other Features of LIC Jeevan Ankur

  • There is option of regular premium payment and Single Premium (one time)
  • Minimum and Maximum age of the policy holder at the time of taking the policy has to be between 18-50 yrs and minimum and maximum age of child has to be 0-17 yrs
  • The maximum age of policy holder at maturity has to be 75 yrs.
  • The maximum policy term is 25 minus age of the child.
  • No loan facility will be available under this plan.

Surrender value and Paid up of Jeevan Ankur Policy

To surrender this policy or making it a paid up is very similar to other endowment policies, where it attains the surrender value only after the premium payment for minimum 3 yrs and the surrender value will start from 30% of the premium paid (excluding the first year premium). In case of paid up policy, you will get your premiums at the end of the maturity period.

Returns from LIC Jeevan Ankur Policy

Just like other endowment policies even LIC Jeevan Ankur seems to provide lot of features and bundles things in such a way that it’s too tempting, but from investment point of view, its returns are not something to cheer about. Consider this example- If 30 yr old male wants to take a 10 lacs sum assured policy for a 20 yr tenure , the premium would be Rs 41,350 per year (as per the chart on LIC website). Assuming that the payment is done on yearly basis and the sum assured is above 5 lacs, the rebate’s would be 5% (2% + 3%) so the final premium would be around Rs 40,000 per year. So if a guy pays 40,000 per year for next 20 yrs he would then get 10 lacs as sum assured and loyalty additions extra. Loyalty additions generally range from 10%-20% of Sum assured, assuming its 20%, the final maturity proceeds would be Rs 12,00,000 .

So if you pay Rs 40,000 per year for next 20 yrs and get back only Rs 12,00,000 , the final return (IRR) turns out to be only 3.7% CAGR return over long-term. Note that the actual IRR would depend on the tenure , if you take the case of 10 yr tenure , then the IRR would be different , but overall the returns from this policy is extremelly low.

Best returns only if death is premature

The policy return would really work out well if the policy holder death is premature, the early, the better. Assume that in the same example as above, if the policy holder dies after paying 2 premiums in that case, the total outgo would be Just Rs 80,000, but his family would get Rs 10 lacs and Rs 1 lac per year as income. This looks very attractive but note that this is the situation whose chances are very less and just because of this point, you can’t buy the policy.

Look at Liquidity also

The only thing which most of the people concentrate is returns from the policy, but one of the parameters to look at is liquidity of the policy too. The biggest nightmare can happen if you need your money from the policy after 2 yr or 5 yrs or 10 yrs. In that case the money you get back is horribly low and that’s where most of the people feel the pinch.

Should you buy Jeevan Ankur?

I am really trying now a days to let you decide on such questions. As I have done this short review its enough for you to decide if you want this policy or not. The returns over long-term are guaranteed only to certain level and a lot depends on loyalty additions. If it’s not good every year, then returns can be extremely bad, else it might be okay. I personally don’t see a reason to invest in this policy. A plain term plan and SIP in balanced funds looks better option to me from returns point of view and definitely from liquidity and simplicity point of view. I hope you liked this review of LIC jeevan ankur

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173 Comments
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conybhai
conybhai
8 years ago

I have bought jeevan ankur policy n I want to surrender it after paying 5years consecutive premium I want to know that will I get all the full 5years paid up premium value with interest or not?

Rajive Chopra
Rajive Chopra
10 years ago

Dear All
Can u pls guide me for the following.
I want to go for a financial plan(Edu plan/Insurance/PPF/ SIP/ ETFs etc) for education of my daughter aged 4 yrs. My age 39. Monthly premium I wish to give for this is 2500/- to start with and increase upto 3500./- after two years and after 6 yrs from now 4500/- till her studies and marriage.

I need corpus when she goes for her professional degree (MBBS/ENGG or any other) Year wise . She will be completing her 12 std in 2026 i.e after 14 yrs from now. Then after 5-6 yrs corpus for her marriage.
Please suggest me which one or combination of the best for it withen the above limits.
Thanks and regards.

Ram
Ram
10 years ago

Hi,

Truly appreciate your insights…

What are your thoughts on HDFC SL Young Star Saver Premium? I have been offered SA of 80lacs with 2lacs of annual premium for a 15 year term. I have already exhausted the PPF route and invest around 1.5 lacs in mutual funds for education. I want to ensure that I will provide adequate money for my child. I am a single parent

Thanks

kuldeep sharma
kuldeep sharma
11 years ago

Best Child me Provide Urjently Basis

Sivananda
Sivananda
11 years ago

Hi Manish,

Please suggest me what is the best Child policy . One time payment policy or Monthly payment policy.

Sivananda
Sivananda
Reply to  Jagoinvestor
11 years ago

Thank you Manish,

Which is the best Child policy. My budget is 25,000 to 30,000 per annum.

sanju
sanju
11 years ago

Hi Manish,

I have already invested in Jeevan Ankur Policy, by paying for the first quarter- Rs 9000. I read thru this article and thinking of getting out of the Policy – Only thing stopping me is that it will Zero-Down my INR 9000 straight away.

Please suggest. My next premium is due in a couple of days only.

Thanks
Sanju

sanju
sanju
Reply to  Jagoinvestor
11 years ago

Thanks Manish!

I’ll take it as ‘Der aaye durust aaye’ 🙂

Yagnesh Chauhan
Yagnesh Chauhan
11 years ago

Dear Manish

I have 5 month old daughter and I am planning to by policy for her future after 20 years. Kindly suggest me some good policy for her which covers me and my wife also.

Warm Regards,
Yagnesh

Yagnesh Chauhan
Yagnesh Chauhan
Reply to  Jagoinvestor
11 years ago

Thanks for early reply. please suggest me some good Child Insurance plan for my child.

Yagnesh Chauhan
Yagnesh Chauhan
Reply to  Jagoinvestor
11 years ago

Dear Manish
Thanks for the reply.

I know PPF & FD. kindly help me with SIP as i am not aware about SIP. please help me on this.

Warm Regards,
Yagnesh

Vijay M B D
Vijay M B D
11 years ago

Hello Manish,

I wanted to invest 20 to 25k /year for my 8month son, and it should be tax benifit also. please tell me where I need to invest.

Parimal Valamiya
Parimal Valamiya
11 years ago

Hi Manish,

I have 2 month old daughter and I am planning to by policy for her future after 10 years. If I invest Rs10lacs on her name than what will be best policy or if I buy the Jeevan komal policy or Jeevan Ankur policy which one is the best policy from this or any other.

Many Thanks in advance for your cooperation

Parimal

Deepak Arora
Deepak Arora
11 years ago

Hi Manish

I have recently been Blessed with Baby. I am Planning to Buy an Child Insurance Plan for her. I was recommeded to Buy LIC Jeevan Ankur Plan for Her. I am Looking for an an Annual Premium between 20-25 thousand & Term 20 Years

Please suggest if Jeevan Ankur will be Best or What Other Plan do you recommend for he

Nikhil
Nikhil
11 years ago

Hi Manish,
I got pay hike of Rs.5000 from this month onward. I want to put aside this salary increment in some investment plans. Please suggest.
Regards,
Nikhil

NIkhil
NIkhil
Reply to  Jagoinvestor
11 years ago

Hi Manish,
Except few most of the funds are not doing well. How would option of bank RD and FD be?

Regards,
Nikhil

Nikhil
Nikhil
11 years ago

Hi Manish,
I have home loan (35 Lacks) and because of that I had to stop my all investments in SIP and Recurring deposit. I bought term insurance of 1 cr to secure my home loan and family in case of uncertainty. After paying home loan, car loan and household expenses I dont left with much surplus cash in hand. How should I plan my child future? What could be the better avenue to invest in?
Regards,
Nikhil

bharati
bharati
12 years ago

thank u very much this plan will be best plan to children

bharati thakkar
bharati thakkar
Reply to  bharati
11 years ago

Hello,
About which plan you are saying its the best? I have son of 1yr old we have not yet done any investment for his study ect….we are looking for the best option for him……….
thanks & regards,
bharati thakkar

syam
syam
12 years ago

sir you are doing great service to society by educating in financial aspects. keep the good work sir

suraj parkash
suraj parkash
12 years ago

Dear,

What will be average return for the below mentioned figures under LIC Jeevan Ankur Policy.

Rs. 10000 anually, Term 20 years.

Shiny
Shiny
12 years ago

Single premium in Jeevan Ankur for age 35 looks good.

Mak
Mak
12 years ago

I have a clarification on the statement mentioned in LIC website for Jeevan Ankur http://www.licindia.in/children_need_0010_sales_brochure.htm :
“i) Death benefit:
On death of the Life Assured during the policy term: Basic Sum Assured shall be payable to the nominee and an income benefit equal to 10% of Basic Sum Assured shall be payable on each policy anniversary, from the policy anniversary coinciding with or next following the date of death, till the end of the policy term.
ii) Maturity Benefit: At the end of the policy term an assured maturity benefit equal to Basic Sum assured along with Loyalty Addition, if any, shall be payable irrespective of survival of the Life Assured.”

Does this mean that the nominee will get totally two Basic Sum Assured (BSA)+ loyalty addition + 10% of BSA. i.e. On death of the Life Assured during the policy term the nominee will immediately get a Basic Sum Assured + 10% of BSA every year until end of the policy term + @ the time of Maturity date (end of the policy term) Basic Sum Assured + Loyalty Addition.

Is my understanding correct?

RAM YADAV
RAM YADAV
12 years ago

Sir, you are doing a great social service by simplifying the intricacy of various financial products which are not easy to understand even for a well educated individual.
I know you can not read all comments but I hope you will read this one. I want to say that I have no words to praise you. Million million of thanks for educating us.
Please keep it up for the welfare of society at large.

jagjeet
jagjeet
12 years ago

True Manish. Ideally the real return is what you have mentioned. But every economy has its own restrictions. Major developed countries have low inflation rates, but at the same time are very prone to recession. If we see japan, the GDP rate is just 0.6% and the economy is not growing at all. In economics this is said to be a said of recession. The inflation rate is just 0.2%. But if we see the rate of interests, they are not more than 0.5% to 1%. The major fact is not recession or inflation. Basically all developed economies have lower rate of interests. and down the line we can definitely or positively expect India to be a developed nation. so talking about long term investment plans, we do need to take all this into consideration.

jagjeet
jagjeet
Reply to  Jagoinvestor
12 years ago

That is another topic of debate. we must have another place to discuss about that.

jagjeet
jagjeet
12 years ago

Every growing economy has lower interest rates. Be it US, UK, Japan, China. all developed economies are having lower interest rates available in the market. Since India is on the way from developing country to developed country, this is very much sure that in the coming future, the interest rates that are considered guaranteed in ppf, fds or any other rates will come down. In such a scenarios one must invest into diversified modes. Expectation of returns will depend on the how much risk taking capacity you have. For low risk taking capacity, insurance products is a good option, for high risk taking capacity- MFs, equity is the option.

Deepak R khemani
Deepak R khemani
Reply to  jagjeet
12 years ago

Finally a good and sensible reply form someone who understands financial markets and a good suggestion in the last two lines of your comment.

Deepak R khemani
Deepak R khemani
Reply to  Jagoinvestor
12 years ago

Asset allocation is the key, In the US over a 10 year period Bonds have outperformed equities!

Deepak R khemani
Deepak R khemani
Reply to  Jagoinvestor
12 years ago

I was in no way suggesting that Manish, My reply was in the context of the above comments where developed countries were mentioned, I am totally an equity person not averse to investing in the equity markets at all, I wanted to make a point that only proper asset allocation can get you to your goals finally!