Jeevan Anand versus PPF

POSTED BY Gaurav Arya ON October 27, 2012 11:43 am COMMENTS (3)

Hi Manish,

I was generally reading up on Jeevan Anand policies and came across a blog written by you. It is by far the most helpful blog that I have come across.

I seek your guidance for my LIC policy as under.

Plan Name: Jeevan Anand
Sum Assured: INR 25.00 Lakhs
Premium: INR 69,770 p.a.
Tenor: 33 years

An indicative (not guaranteed) Bonus Ratio provided by an agent is as follows:
Year 1 to Year 14: Bonus of 45
Year 15 to Year 18: Bonus of 65 – 85
Year 19 – Year 25: Bonus of 100 – 135
Year 26 – Year 33: Bonus of 165 – 195

1. Could you please explain how / why the Bonus shoots up to range from 65 – 195 after 14 years and whether this estimation is conservative or optimistic / realistic??

2. Also, given that PPF returns are better the LIC at the end of 33 years, does it make sense to opt out of the LIC policy?? (i.e. PPF + Term Policy from say an HDFC instead of the Jeevan Anand policy) ->  A similar term policy from a HDFC would be for INR 4000-5000.

Look forward to hearing from you.

Thanks a lot for your time and help.

3 replies on this article “Jeevan Anand versus PPF”

  1. Dhinesh Kumar says:
    October 28, 2012 at 12:58 pm

    Hai

    Jeevan anand is a whole life policy
    Bonus depends upon company performance – you cannot be so sure about what you get as bonus.
    as per my assumption you can expect a Bonus of 4% – 6% ( 40 – 60/1000 of sum assured)
    As per my calculation
    Total amount paid = 23 lakhs grossly
    Total at maturity = 58 lakhs – 74 lakhs
    and another 25 lakhs on you death after the policy term.
    (Insurance + Tax benefit + Savings)
    or second scenario
    Investing in any equity based mutual fund for the same 33 years for 60000/years( after taking a term policy of 5000/year)
    At maturity at a rate of 10% – 1.5 crores
    (Insurance+Investments)
    I have given both the scenario – Choose what you like
    And note that if you decide to quit the plan – No premium will be refunded.

    Reply
    1. Gaurav Arya says:
      October 28, 2012 at 1:48 pm

      Hi Dinesh,

      Thanks so much for the revert! While I understand the points covered by you, request your opinion on the below:

      Could you please explain how / why the Bonus shoots up from 40 – 60 to a new range of 130 – 190 after 14 years and whether this estimation is realistic??

      That is was seeking clarity on the other types of bonuses:
      Final Addition Bonus
      Loyalty Bonus

      Are these 1-time bonuses or recurring bonuses after a certain number of years?

      Apologize for the inconvenience and thanks once again.

      Reply
  2. Gaurav Arya says:
    October 27, 2012 at 11:46 am

    Just to add, I have paid only the first premium in the LIC policy….

    Reply

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