Sunday, March 22, 2009
At first glance, Jeevan Anand looks attractive. All insurance policies look great while buying and look quite meagre when you receive it.
Sample this -
A 30Y old male person `ll put in 27550 Rs. prem. per annum for a 20Y policy. Now look at the bonus announcements of past years for this policy.
2004-2005 - 43 Rs. per 1000 Rs. Sum assured
2005-2006 - 40 Rs.
2006-2007 - 41 Rs.
From the above bonus rate, u can expact an average bonus rate of around 41 Rs. for all the 20 years (not guaranteed).
So after completing 20 years -
A. Total prem. paid over 20 years = 27550*20 = 551000 Rs.
B. Total accrued simple reversionary bonus = 20*500*41 = 410000 Rs.
C. Loyalty addition = 100000 Rs. (not gtd.)
D. Total Maturity amount after 20 years = 1010000 Rs.
E. Now ur family `ll get 5L Rs. more after ur death from the maturity date of policy, it may happen any time in next 10-20-30 years. = 500000 Rs.
Plz. do note in case ur death occurs, during the normal prem. paying term, the benefit of receiving Sa again after maturity of the policy `ll not be there.
On a simple note, u r not even getting double of ur money after paying for 20 years & the remaining cover of 5L in case of death after maturity, may seems high at present but think for next 45-50-60 years & think about the effect of inflation on this 5L amount.
don`t invest in Jeevan Anand Policy, instead ask ur agent for following 3 policies.
1. 1 Anmol Jeevan - 1 Policy of 10L Sum assured for 25 years
2. 1 anmol jeevan - 1 policy of 15L Sum Assured for 20 years
3. 1 Amulya jeevan - 1 policy of 25L Sum assured for 15 years.
Plz. do note all the above mentioned policies r term plans of LIC & u `ll not get any money back from ur prem. pmt. for these policies but on the other hand, ur total prem. paid for these policies `ll not be more than 25-30K (depending upon ur age) whereas ur Jeevan Anand Policy prem. `ll be around 2.25 to 2.75L per annum (again depending upon ur age). U can invest the saved prem. as per ur choice & by the end of 20 years or 25 years (ur term selected in Jeevan Anand policy) u `ll have more money than Jeevan Anand policy.
Insurance is not Investment. Go for PURE TERM COVER. The difference in premium if invested in mutual funds will give you far higher returns. Remember your insurance agent gets 35 to 40% commission on your first premium .
Insurance is an EXPENSE, not an INVESTMENT. No amount of money put in INSURANCE will make you richer or recover the loss suffered by your dependants in your absence. As policy holder if you receive any money from Insurance - you are a loser because you have taken a policy which is costlier than a basic term cover. As nominee if you receive money - you are the biggest loser . What you receive from insurance will only give you temporary relief. The best thing for a nominee is the policy holder staying alive and earning well. So do not look for returns when you are choosing an insurance policy. As policy holder look for the least premium payable per lakh of sum assured. Best & cheapest is PURE TERM COVER.
For investment go for Mutual Funds. And note, nowadays, even most Mutual Funds do offer you Life Insurance Cover.
Do consult your financial advisor before investing.
Best of luck,
Srikanth Shankar Matrubai
Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis