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POSTED BY ON December 7, 2012 4:38 pm COMMENTS (4)
Hi,
As an insurance, LIC product are scrap aprat from TERM insuarance. Because life cover amount is not that big
I want to how LIC as an investment? if it is good then which policy?
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Thanks for reply. Nice explanation provided from your side. Anybody want to answer are wel
lcomed
Ramesh thanks for your prompt reply. If possible can you name other better debt along with return or says facts and figure
PPF vs LIC endowment policy:
1. a fixed amount of declared value (8-8.6%) every year for PPF vs 30-40 per thousand (which means 3-4%) for LIC.
2. annual compounding vs gradual increase in the rate of return in LIC.
3. taxfree vs taxfree if the insurance amount is 5x or 10x or 20x depending upon the prevalent taxation rules.
4. liquid after 15 years of start of PPF vs liquid only after completion of term
5. both are govt backed. And because of insurance component, LIC policies cannot provide more than PPF.
6. very flexible in terms of amount of money which canbe put in PPF but it has an upper limit. while LIC is fixed with no apparent limits.
Then there are debt funds, which have variable returns, but in general they will beat govt securities in terms of return, since they can give you an exposure to corporate FDs/debt products. Check out the various debt funds in valueresearchonline, morningstar, etc. These are taxable, but do have inflation-indexed returns. <-- just an overview.
For investment purposes, they are even scrappier.
The maximum thing which they can do for you is to make your save forcefully. But the return is not very good, as compared to other debt products.