Buying a LIC Policy ? "Be Ready To Lose Money" || Personal Finance

 Buying a LIC Policy? 

"Be Ready To Lose Money"

Everyone keeps criticizing LIC POLICIES, we decided to get into the depth of this.

Is that good, bad? Let's analyze.

For a 30-year-old, a life cover of Rs 20 Lakh (till the age of 70 years) will be available for a yearly premium of Rs 2k. This leaves us with Rs 88k for investment.
with LIC Jeevan Labh, 88k invested every year for 16 years, yields Rs 36 Lakh at the end of 25 years. That's is ROI (Return on investment) of 5.70%.
And even these returns aren't guaranteed, Guaranteed returns are only Rs 20 Lakh, the rest is up to the discretion of insurance companies.

We analyzed one of the best policies from the LIC " Jeevan Labh" and found something shocking.

But what is the LIC "Jeevan Labh Policy ?" 

At the age of 30, if you invest Rs 90k for 16 years, the policy matures in 25 years, at the age of 55 you get Rs 36 Lakh as a maturity amount ( inclusive of all the benefits). You also get a life cover of Rs 20 lakh throughout the policy term.

Fun Fact: we've analysed over 20 insurance + investment policies and none of them have > 6% returns.

 The other problem with this policy is that the life cover of Rs 20 Lakh is incredibly low.

In short, the policy neither yields a decent investment return nor a good life cover!

What should you do instead?

1. Buy a term life insurance cover of Rs 50 lakh- the annual premium will be Rs 7k
2. Invest the balance Rs83k per year for 16 years- at the end of 25 years, the money will have grown to Rs 70 lakh @ 10%

You may point out that you'd have to take some risk to ear 10%, but remember even LIC Doesn't guarantee the maturity amount- "Ignore what the agent says!"

You end with a higher life cover (2.5x) and higher maturity amount (2x) for the same cost at the same time.

Hope we were able to help you. still, have any queries feel free to drop your question /queries in the comment section we will get back to you as soon as possible.

MOH MAYA WORLD 

July 13, 2021