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POSTED BY ON July 28, 2011 2:01 pm COMMENTS (4)
DEAR SIR,
First of all I thank you for creating a website like this. It is creating a revolution in financial life of people using it.
I am already paying 186000 yearly premium to LIC for 14 different policies (JEEVAN ANAND-8, JEEVAN TARANG-3, JEEVAN SARAL-3)
My 49yrs old uncle wants to go for a JEEVAN SHREE 1 policy for 5 lac and according to printouts of plan details are:-
yearly premium-Rs 49500 approx,ppt-10 yrs, maturity amount Rs 9.25 lacs approx (SA+bonus) and loyalty additions which is not written on paper will come to around 2lacs as per agent so total money I’ll be getting comes to 11.25 lacs after 15 yrs i.e. 5 yrs after last premium paid. it is written that avg. rate of return is 9.25% on this policy. Sounds attractive return is better than PPF, NSC, KVP and bank FD.
Now after reading ur review on LIC JEEVAN TARANG, I understood that Term Insurance and MF investments are better than these LIC policies, but the problem is that we dont know the abc of Mutual Funds and we are far away from share market and Equity,ULIPs,SIP,etc. are alien terms for us. Though I am acquiring some knowledge from this website, still I dont understand from where to start. we dont even have any account in PPF.
I am asking all the experts here that is JEEVAN SHREE1 good enough a policy to put money in it. we are planning to buy 2 such policy for aged 49 and 52yrs.
what are better alternatives to this? if ur answer is Term Insurance+ MF, then which term Insurance Policy will cover max yrs at moderate premium and regarding MF it can give better returns but does it come with trust and guarantee which LIC gives with 96% claim settlement ratio and returns of 9.25% (in this case)
thank you all in advance n waiting for reply as I have negotiated some time from LIC agent.
Lets see if this can change our financial planning point of view.
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@Ramesh: Thanks for all this regarding financial planning.
@Dominic: thanks, got that issue of outlook money.
Will put questions after reading it.
@deepak: Try to get last month’s (Dt 27th July) Outlook Money (13th Anniversary edition). They have nice articles to begin.
@deepak. as ramesh said, if you learn then you will understand that you have done 14 mistakes and definitely you will NOT add two more.
Start with the financial liability of your uncle. How many people depend upon his income and how much money does he think should be sufficient to generate a reasonable amount of income for his financial dependents?
If the living expenses of his+dependents are 10k per month. You calculate this way.
10k x 12 = 1.2 lakhs per year. So in case something happens to him, his dependents require a corpus of 20lakhs to generate an income of 1.2 lakhs per year (if calculated return is @6% per annum). There are multiple calculators available freely. Check them out.
Once you have finalised a corpus. Add other liabilities like loans including home loan, etc. And decrease the value of assets from that corpus. That way you get a proper life insurance amount.
Regarding the returns shown to you, can you scan them and show us. Most likely, it will be a 10% return scenario which is applicable to Ulips and not to traditional policies. Such returns are not guaranteed by LIC or by govt of India.
Regarding the problem of you having no knowledge about Mutual Funds. Well, learn and learn is the only option for that. You alone are responsible for your money, not anyone else.
Long term return generating potential of traditional policies is 5-6% and not 10-15%. They invest money in govt securities which do not give more than 8-9%, plus there are insurance charges (more the age, more the mortality charges) plus commission charges plus there is no guarantee. So, think and learn are the only recommendations at this stage for you and your uncle.
Hope this helps you.
Ramesh