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POSTED BY ON March 2, 2012 1:52 pm COMMENTS (18)
Can you please let me know are your views about LIC Jeevan Vriddhi
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Yogesh,
Link provided by JGMM is pretty informative. I would stand by the suggestions that PPF should be the first option. If you are purely looking for insurance perspective, then this is not the product for you. Again even if you are loking form investment perspective, there are better options.
Over all this is chow chow bhat ( Combination of upma and shira).
If you are in lower tax brackets. Dhanlakshmi bank is offering best interest rates for TAX FD’s.
If you must buy this, buy it before April 1, 2012. After that it loses 10(10D) benefit.
Recent budget notification is compulsory 10X cover for premium paid for 10(10D) eligibility.
Dear experts;
Consider that PPF limit of 1 lac has been exhausted.
Need to invest 1 Lac for long term assured invsmt.
So, in this plan calculation for 10 years is ,
1 lac investment is (for 27 years male) – 1948.55 + 3% of 1948.55 =~= 2006 per thousand after 10 years tax free.
In addition to this LIC bonus (which tend to be 4.3% ~ 4.8% ) per year.
Is my assumtions are correct?
Dear Prabuddha Sarkar, In case of this Jeevan Vridhi policy the Vriddhi (read bonus) ‘ll be added only one time as loyalty addition at the time of maturity of the policy. How much actual loyalty addition ‘ll you get at that time, My guess is as good as yours’.
From purely investment point of view – Tax free bonds are better than this policy.
Thanks
Ashal
Ashal,
You know a good plan does not mean it is good for every one. We have to make proper recommendation only based on the individual situation.
You are imagining a person who has insurance cover and also has taken some investment for 80C benefit. What benefit he is going to get from this plan ?
Nothing.
So, does it make this as a bad plan ? I don’t think so.
Dear Raj, I’m agree with you that recommendations should be based upon the individual needs. At the same time this plan is more for investment & less for insurance. For the investment part, the tax free bonds are better options that was my only point.
Thanks
Ashal
As any good financial advisor would do, I always recommend equity based products for long term portfolio. ( without which you can’t conquer the long term enemy – that is inflation).
But investors come from different color and different flavor. Not every one can sleep with equity based portfolio peacefully.
Among all the endowment products, that are available to this community, this is not a bad product at all. Jeevan Anands and Jeevan saral are best selling plans and they make more people in this country poorer every day.
We must appreciate LIC for bringing this kind of product. We should not criticize LIC even when they do things correctly ( for a change),
Taking 80C benefit and 10(10D) benefit into consideration, a 35 year old is looking at 11% yield. Show me a product comparable to that today.
I would say if you are time pressed, and have to buy some thing before this March end, go for it.
For those who have time, read full Analysis of returns and benefits:
http://www.r2iclubforums.com/forums/showthread.php/27318-LIC-JEEVAN-VRIDDHI-single-premium-traditional-plan
RRK – Good to see you here!
LIC Jeevan Vriddhi and PPF are both EEE but Vriddhi still trails PPF [Even though the PPF returns will change every year from now on]. I think someone should exhaust their PPF first, have a Term plan in place and then can definitely look at this policy for their Debt folio as this is tax efficient than long duration FDs.
Dear AB, Good to see some one recognize me. I see no problem with that stacking.
This is a product review page. So, I commented about this plan, without worrying about what a 80C investor should do.
I rarely find good LIC plans. I am tired complaining about LIC design team and its manufacturing division. When we find some products coming out of their factory like this, I dont want miss the opportunity to say some good words. It is like encouraging a good deed from always misbehaving kid, so the kid can do better.
True, I agree!
Dear Raj & dear Justgrowmymoney, don’t you think that tax free bonds are a better option if the 80C benefit is already over for most of the persons?
Please do not consider that 5X sum assured as in general if not term plan, most of the persons already have a bit of sum assured from other life insurance policies.
Thanks
Ashal
Dear Yogesh, Please do tell what do you want to know for this product. In a simple sense – this product is a bank FD where a so called 5 times of insurance cover ir provided to create a Tax arbitrage position & this position itself may dilute if the tax rules change.
My take, please avoid such plans which are not offering any substantial insurance or investment.
Thanks
Ashal
Bank FD will provide you more return. Better to Invest in FD.
This plan provides you retruns in between 6-7%.
You can find review of plan on:-
http://strategic-growth.in/finance/index.php/lic-jeevan-vriddhi-plan-a-review/
http://strategic-growth.in/q2a/index.php?qa=48&qa_1=lic-jeevan-vriddhi-plan-invest-or-not
Tax Arbitrage? Gimme a break!!
Tax Arbitrage is the practice of identifying Revenues in low tax environment and expenses in a high tax environment to reduce the total tax out go for a firm/individual and has nothing to do with Endowment plans.
I agree on Endowment plan being a pseudo-FD with insurance. And add this: Since someone is ‘managing’ Debt for you the returns are invariably lesser than a FD over a longer duration.
Dear justgrowmymoney, thanks for pointing out the mistake. I’m sorry. What I mean was – A tax advantage position by playing around that 5 times sum assured rule to be eligible for tax free maturity.
Hope I stand corrected.
Thanks
Ashal
I took a harder look at LIC Jeevan Vriddhi and this plan appears to be way ahead of the traditional junk plans that generally yield 4%-5% returns. Take a look at http://wp.me/p1Y418-47.
Unlike general LIC’s plans this one warrants some attention. Having a Term Insurance and maximizing PPF are must even before thinking about adding this policy to one’s portfolio.
Whether it makes the cut to enter one’s Debt portfolio is a combination of several factors including one’s current Asset allocation, liquidity situation, the premium chosen, age and tax bracket amongst other things.
Dear Ashal,
I have the following question on Jeevan Vridhhi
I have bought a LIC Jeevan Vriddhi on 28/03/2012 with a maturity duration of 10 years i.e. maturing in 2022. I have 2 questions on the same..
I have taken reference from http://www.tflguide.com/2012/03/lic-jeevan-vriddhi.html. I tried posting the same question on that blog, but it seems comment for this thread is closed. So, I am looking for help here..
1. I have read that as per budget provision in 2012-13 ““Budget 2012-2013 has tightened the eligibility criteria for life insurance policies to qualify for benefits u/s 80C and 10(10)d. Now only those insurance policies where the premium paid does not exceed 10% of the capital sum assured will qualify for such deductions”. I have bought the policy before 1st April’2012, so this is excluded from the 2012-2013 budget provision mentioned above. Does it mean the guaranteed return I would get in 2022 would be tax free?
2. I also read about DTC provision that in future if DTC is applied, then this product will no more be tax free. My question w.r.t. DTC, the rule will be applied when this policy is matured or when the policy is commenced. E.g. if say DTC is applied from 2015 onwards & it will apply on policy maturity date, then my policy loose tax benefit, otherwise if it is on policy commence date, then my policy will get tax free return. Am i right?
3. For clarification, I have understood tax rebate under 80C & I am not considering the tax rebate(I fall under 30% rebate). I am considering whether I would get tax free return. If yes, then IMHO, it is worth continuing , otherwise I will surrender the policy. So, your valuable suggestion is very important for me decision taking. Thanks a lot in advance..
Dear Mustafizur, here are my answers for your queries.
1. Yes as the policy is purchase before the cut off date by you, it’s eligible for tax free benefits at maturity.
2. DTC is still merely a talk & I can not comment on it’s future applications. We should wait for clarifications from Govt. of India. 🙂
3. As of now you should continue if it fits in your set up. Please do not worry for future outcome as on date.
thanks
Ashal