January 18, 2014 10:39 am
I am planning to take a LIC scheme from April ’14. I am a little confused between the schemes. Please suggest.
Dear Dev, if you are going to take policy for both purpose, I w’d request you to please a lot of past discussions. You may think otherwise after reading those discussions. May i know, how much insurance cover you are looking at from your insurance policy?
Also, Please let me know how good ‘Jeevan Anand’ is.
Dear Dev, are you asking for pure insurance cover or for investment also?
It is good you have asked it before taking a policy and not after.
You might be looking for product advice. Before that you have to understand few things,
Do you want to take LIC insurance primarily to save Tax and generate some returns?
If your answer is yes, then you would benefit the most from our answers.
People like me fall prey to different LIC plans due to advice from Agents or family members.
In my case I took Jeevan anand policy which has a tenure of 16 years and sum assured of 5L. Every year i have to 35,500 (for 16 years) to keep policy active. Later By the end of tenure (16 years), LIC would return to me 5Lakhs plus Bonus roughly 5L. So totally I would get 10L after 16 years. I was told this is the best policy to take as it gives me Life Insurance (incase I die in this preminum paying term of 16 years, my dependent would get 5L.). It also returns my money after 16 years (money plus bonus). Premium paid everyyear (35k) is tax exempted Sec 80c.
My response was : Wow !! awesome and interesting and immediately i got this plan. Now I have paid premium for 4 years and decided to quit this policy.
Here is why I quit.
If I die, my family gets 5L. It doesn’t even last for a year or two considering today’s scenario. So take away is, I’m not insured enough.
Agent told me if i quit now, I wont get bonus, and wont even get 50% of what I paid till date. So I’ll be in huge loss. I still decided to quit and im closing the policy now.
So what’s the better option ?
When you take Life Insurance Policy, you are protecting your family under circumstances where you are not with them any more. What ever dreams you had (house, child education, family running expenses Etc) should still be fulfilled although major asset (your presence) is lost.
So you need to first calculate how much will be sufficient to do all the above. I roughly calculated my scenario and found out that considering inflation, my family would need 2Cr to achieve all these. I thought if I had to purchase a insurance plan for 2cr, how much should i pay annually. Even for my previous plan where they gave me 5L protection, i had to pay aroung 35k every year, so i cant think.
Then I learned about “Term plans”. Term plans are provided by LIC and many other private companies, where you pay a figure and get insured. If you die during premium paying term, your family gets the money, if you don’t you never get anymoney back.
Sounds like a crap plan, right?? Why would anyone want to pick a plan like this which doesnt pay anything back if you dont die ? Atleast my previous plan gave me 5L and all the bonus..
So, why Term plan ? Go here,
Thanks to Manish’s book, for having given me the knowledge on Life insurance Etc..
Thanks a lot for this wonderful comment of yours.
That was very helpful.
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