LIC’s Jeevan Varsha is a close ended Money Back Plan with Guaranteed Additions. The plan returns periodical payments as a proportion of Sum Assured at specified durations, on survival during the term of the policy and on maturity. This plan returns full Sum Assured on death irrespective of earlier pay backs. Guaranteed Additions are payable on death and Maturity. Loyalty Additions *may* also be payable during the last year of the policy on both maturity and death.
Since LIC couldn’t collect the expected amounts from Jeevan Astha policy, now they have come out with this Jeevan Varsha money back policy with a tenure to choose from 9 years and 12 years. The plan will be open for purchase from 16th February, 2009 to 31st March, 2009. Let us look at this policy features and analyse more.
Features:
* The minimum entry age for this policy is 15 years while maximum maturity Age is 75 years.
* Policy Term : 9 years & 12 years
* Premium Paying Term: 9 years
* Premium payment modes: Yearly, Half-Yearly, Quarterly, Monthly (by ECS mode only).
* Minimum Sum Assured Rs 75,000/- for monthly ECS mode while Rs 50,000/- for other modes
* Maximum Sum Assured: No limit. Also, sum assured shall be in multiples of Rs 5,000/-
Benefits:
Survival Benefits:
| Survival Benefit | Term 9 years | Term 12 years | |
| 3rd Year | 15% of SA | 10% of SA | |
| 6th Year | 25% of SA | 20% of SA | |
| 9th Year | 60% of SA + GA + LA (if any) | 30% of SA | |
| 12th Year | – | 40% of SA + GA + LA (if any) | |
Guaranteed Addition:
* Rs. 65 per 1000 of SA/year for a policy of 9 years term.
* Rs. 70 per 1000 of SA/year for a policy of 12 years term.
Loyalty Addition:
Applicable to those policies where in Life Assured has survived the stipulated date of maturity or on the Life Assured’s death during the last policy year. All this again at the descrition of LIC based on various factors which they haven’t specified clearly. For better understanding and benefits illustration visit LIC site here.
My take: Be specific on what you are looking for. If insurance is your basic need, go for pure insurance policies than compromising on both the insurance and profits via this kind of policies. Think about term insurance policies for cover while think of fixed deposits, mutual funds for investment. FD’s will give atleast 8-9% returns as compared against 6.5% of this LIC’s Jeevan Varsha. Prioritize what your needs and plan accordingly.
Update: Some of the readers requested for more detailed info with respect to calculations. So, here it is. I have compared the Jeevan Varsha with Bank fixed deposits and take a look at the image below to understand it before. I have considered the same example as that of a 35 years individual for the calculations at Rs 65 per thousand as Guaranteed Additions for a term of 9 years. However, I have not included Loyalty additions as there is no clarity on that from LIC of India. For bank FD’s I have considered interest at 8.5%. So, I leave the remaining analysis to your descrition. May be the elite knowledgeable LIC agents may be able to prove me wrong completely!
Disclaimer : This information is based on the details as available on LIC site at the time of writing this article. Please contact LIC agent / Development officer/ Regional office for official and accurate details.
Mohan says
@Sandeep
It is the Cumulative Premium year on year basis minus Money back.
Sandeep says
I am agree with u Mohan.
But i have just one question :-
what is this CP_MB in jeeven versa table and its last amount is 81480 /- (in the 9th year). What will happen to this?
Where it will goes?
siva says
Thanks Mohan.Agreeing with all your opinions.May you please let about a canara hsbc life pension plan.
Tanuja says
@ Manish
u rightly pointed out why people need to deduct tax from FDs always, how many people fall in 30% tax slab? Then u must also consider how many people can afford separate vehicles for insurance and investment. And if a company and its people cheat they can not survive for long.
As far as I know LIC is the largest financial Institution in this country with 10 lakh crore asset base and 24 crore customer base.
LIC has always honoured its commitments whatever promised, has always been paying dividends to Govt.
LIC Has always contributed to five year plans visit RBI site and check its contributions in various five year plans.
Its not like AIG which has used bail out money for paying bonuses to its its employees.
All private investment options of foreign companies needs to be checked for their corporate governance and company policies about their preference of payment in case company is in loss or goes bankrupt.
Who doesn’t want to earn good dividend on its hard earned money, but the big question is who to trust? If such big companies are bent upon cheating people and governments, its better we get little less return but return is guaranteed.
And all such good things (LIC’s own Reputation & Government guarantee) are only available with LIC.
vaishnav says
Hi!
Thanks for appreciating my inputs. I also take your point of not mixing investment with insurance, as they are separate from one another. PPF,NSC,MIS and RDs from Post-office are good options for long-term investment. Small time investors are still skeptical as they have seen the recent performance of the mutual funds. With the economic scenario deflating, some of the companies offering mutual funds, can go kaput. As for insurance, AIG, has already been jolted. Many of the foreign insurance companies having tie-ups with indian companies can also go the same way. In this background, where will the poor investor go? For the present, it would be prudent to postpone any investment proposal. Thanks once again.
Mohan says
@amit
Will look from that perspective soon and write about it in near future.
@susu
Thanks for the info.
@Amar
Well, this is not an eye opener. Here the effort is only to know the good and bad and then to choose the right product that matches an individuals interests.
@Chandan
Many of the readers have been asking for Birla Sun Life insurance. Will write about it soon too. Thanks for the request.
@vaishnav
Good point. All I am suggesting is not to mix up insurance with investment. If you need insurance, go for right product that gets you maximum benefit. If investment is you need, look at various options. Don’t loose out on both insurance and investment by compromising on one another. This answers all the issues you have raised. Thanks for the orthogonal view though. Appreciate your inputs.
vaishnav says
Hi!
Read yr comparison with interest. I dont know why modern insurers/thinkers take insurance as an expense and not an investment and instead ask to go for PURE TERM COVER ONLY and park their funds in Fixed Deposits/PPF and market based instruments like ELSS,etc. As anyone pondered before investing in mutual funds that the red herring prospectus itself comes out with a note of caution to go thru the T&C and then apply. For God’s sake,dont compare policies like Jeevan Varsha with Fixed deposits. The comparison looks excellent, what with the ROI hovering around the 8 to 8.5% mark presently. And what if the ROI comes down plunging in the years to come? Atleast in that sense Jeevan Varsha offers a better prospect. And why forget about the risk factor? If anything goes wrong with the insurer in the early part of his premium term, atleast his beneficiary will get something. Does the bank FD provide that?
My humble request to the so called puritans will be not to compare the insurance policies with investments like FDs/PPF etc. Thanks.
Chandan says
Hi Mohan, thanks for nice write up on LIC Jeevan Varsha and comparison. Any thoughts on Birla Sunlife Insurance policies? please review them as well.
Amar says
Whenever LIC announces any new policy, people go mad at it as if there is no tomorrow. Thanks for the information you have provided mohan. hope this opens the eyes of all those who blindly put money in lic insurance policies.
susu says
Now Karur visya bank gives 11.50% interest for FD’s
amit says
good comparison, can u similarly give ur views on Jeevan Anand
manish says
@kppaul
Why do you always have to calculate FD returns after deducting taxes?How many people fall under the 30% tax slab?Inflation is falling yes,with the heavy infusion of liquidity will it not rise again?There is recurring deposits availiable with banks in which you need to pay a certain amount monthly for a term you chose.The prevailing interest rates will be fixed for the entire term.SBI offers 8.5% for an RSD(RECURRING SAVING DEPOSIT)for a term of 3-10 years.
kppaul says
I am not sure if the above calculations are correct. A few points
1) The Tax on recurring FD will usually be calculated every year. This will reduce the cumulative amount at the end of each year and the overall profit will be reduced by around 6K at the end of 9 years
2) In th first table you have simply added the 40K (15K + 25K) money back to the amount recvd after 9 years to get the Total amount paid by LIC. This is misleading since if you invest
(a) 15K @8.5% pa recieved after year 3 it will fetch 6.2K post tax after the 9th year
(b) 25K @8.5% pa recieved after year 6 it will fetch 4.7K post tax after the 9th year
So Total Profit in Table B = 53K – 6K = 47K
and Total Profit in Table A = 17K + 6.2K + 4.7K = 28K
And if LIC does indeed provide 20K as loyalty bonus then both the Tables are nearly same (in terms of Profit).
However the “IFs” are (and these are big “IFs”)
1) Loyalty bonus may not be 20K
2) At the current rate at which inflation is falling expecting 8.5 % over next 9 years may be too much.
Pls correct me if I am wrong.
manish says
@tanuja
People have always been fooled by LIC and more so by its agents.LIC has given returns of 5-6% at those times when PPF,FD”s,NSC were giving returns in excess of 12%.Consider this:if LIC on an average gives 10% commission(in endowment type policies) to its agents from where shall it give you more than 5-6%.Not only that these endowment type and money back type policies are bad from an investment perspective,they are also worthless as far as insurance is concerned.One should always opt for term insurance and your investment needs can be taken care of by other products like:ppf fds etc.
satyabhama says
@David
as an insurance professional it is my responsibility to clarify some points
1) insurer means the insurance company
2) insured means the person who takes an insurance coverage
3) no doubt jeevan varsha is an insurance and investment plan
4) the investment involved in jeevan varsha is not of a fixed deposit type
5) the investment in jeevan varsha is a recurring deposit type.
6) the interest payable on postal or bank recurring deposit is lower than
jeevan varsha…. if you need i will send a seperate calculation part
7) it is unwise to compare two uncomparable products.
8) there is no comparable product jeevan varsha.
9) more to write but my time not permits………….
satyabhama says
@David
as an insurance professional it is my responsibility to clarify some points
1) insurer means the insurance company
2) insured means the person who takes an insurance coverage
3) no doubt jeevan varsha is an insurance and investment plan
4) the investment involved in jeevan varsha is not of a fixed deposit type
5) the investment in jeevan varsha is a recurring deposit type.
6) the interest payable on postal or bank recurring deposit is lower than
jeevan varsha…. if you need i will send a seperate calculation part
7) it is unwise to compare two uncomparable products.
8) there is no comparable product jeevan varsha.
9) more to write but my time not permits………….
David says
@tanuja, @vml
What are you folks talking about? Compare with similar products? Are we talking about investment or insurance? Since jeevan varsha is both, I don’t see anything wrong in comparing it with fixed deposit. Incase the insurer dies, then obviously Jeevan varsha is useful. If insurer survives, it is worst than a normal Fixed deposit.
Mohan, atleast i don’t find anything wrong in comparing these products. I don’t think people are so blind to go and put their money without knowing in and out of a product. It is good that we know both the sides, now it is upto an individual to decide whether he wants Insurance, Investment or both.
prabha says
@vml
the benefit illustration as per irda should be within the overall benefits of around 6% to 10%. this benefit should include the total benefits payable including guarantee additions. the lic has illustrated on its website against the irda guidelines. but the regulator has closed its eyes as every insurer is doing this violation. if any complaint is given it will react then
vml says
A benefit illustration included on LIC website is as per IRDA guidelines as mentioned on the site.Loyalty additions are calculated on 6 % and 10 % interest scenario,i.e., premiums collected by LIC less expenses( mortality & admn),if invested in a market fetching overall 6 % / 10 % interest will fetch the idicated LA. As mentioned in the illustration in a 6% scenario the LA will be zero. but in a 10 % interest scenario may fetch 400 per Thousand Sum Assured. I have also read in the newspapers that LIC will invest in the NCD market to ensure higher returns. Jeevan Varsha is another product from LIC the most trusted brand. Colgate has umpteen toothpaste variations, Total, active salt, mint, etc. {Car companies introduce four-five models each year with hazaar variations with incredible mileage, small print says its in ideal condition.} As far as I know LIC as a insurance company,has always paid more than it promised. Jeevan Varsha is a product as Tanuja says is one package in which many benefits are encompassed.Mohan should compare like products not insurance vs FD. Also as satyabama says Zindagi ke sath bhi, zindagi ke baad bhi – Jeevan Anand is a great plan. All insurance cos. have tried to imitate/ improvise on the slogan but have failed using the … bhi , ….bhi concept. Finally discuss in a objective manner and then check details from the compnay and then buy it. I dont think any one can force you to.
Mohan says
@Selva
It would be wrong to generalize all policies and term them bad. We are here to discuss one product and let us restrict ourselves to that.
@prabha
Nice point. I agree with you.
prabha says
@Selva
LIC never introduced useless policies.They are intended to suit the needs of diffeent customers. The policy makers called acturians in LIC will conduct a survery before designing a policy and introduce accordingly. No policy will suit the needs of all customers. For example unit linked policies are designed to those who can bear market risks and normal endowment policies are designed for those who wants a little risk. Like that the market segmentation wise distribution of policies are the real success of LIC. Don`t comment without knowing the facts on LIC which is in the nation building for the last 56 years.
Selva says
This is yet another useless policy from LIC of india. I think they are trying to retain their customer base strong but coming up with policies like this. There is neither insurance or investment profitability lies in this. LIC disappoints again.
tanuja says
@Mohan
Mohan, I am not an agent of LIC or any company. I am an investor who want to make safe investments and there are so many like me who want to invest in such products. but opinions which do not educate fully and come from people who do not have expertise are quite misleading. my suggestion is comment if you really have knowledge of all comparable products of the same segment.
tanuja says
@satyabhama
thanx satyabhama i appreciate your suggestions.
Mohan says
@satyabhama
Thanks for your thoughts and inputs. Appreciate it 🙂
@Pankaj Bhargaw
I really wonder with the kind of calculations you have come up with. Can you point to any reference where in LIC has said that the Loyalty Additions are calculated at 40% of Sum Assured?
Pankaj Bhargaw says
Dear All,
if you take an example, suppose you are 30 yrs old and taken this policy for 12 yrs your premium amount will be 15999 per year. Now in next 3 yrs your deposit will be 47997 with LIC and LIC gives you 10000, then on 6th year you deposit 67997 and LIC gives you 20000, and on 9th year LIC gives you 30000. So your total investement is 83991 for 9yrs where as LIC gives you 60000 in 9 years. On 12 yrs (without depositing anything) you will get 40000(balance SA)+84000(Guratneed Addition)+40000(Loyality Addition, which is 40% of SA)
So after 12 years you are richer by 224000 (164000+60000).
*personal info of the comment author removed*
satyabhama says
@Md Zaheer
jeevan anand by L I C is the best of all life insurance products available in india. the added advantage in that policy is that you will get free insurance equal to your basic policy amount even after maturity till the end of the life.and you can avail loan on this free insurance also which we can use at later ages as a medical expenses benefit or annuity benefit.feel free to contact any lic agent or officer for full details.
satyabhama says
@Tanuja
how comparison influence people who are educate enough and using internet blogs for their discussions. don`t under estimate the people`s knowledge and decision making power. don`t irritate yourself which is not a healthy symptom.
Mohan says
@Tanuja
Thanks for your suggestions. However, if I am not an investment adviser, it doesn’t mean that I can’t comment on the products. In our country there exists a fundamental right provided by constitution to raise my opinion. I am neither suggesting people to buy nor to avoid, but the intention here is only to make sure that they understand the product well before they get into. I have made that point very clear in the disclaimer section as well. Feel free to suggest or provide an answer for the question you have raised.
Btw., I don’t understand what bothers you so much. Are you an LIC agent by any chance?
Tanuja says
@Mohan
Comparing financial products of different segment is equal to influencing people’s opinion in decision making. if you are not knowledgeable enough stop giving comments on products which you do not understand and do not invest yourself in.
Md Zaheer says
how about Jeevan Anand? Is it any better than Jeevan Varsha? Any thoughts on that?
Mohan says
@Tanuja
Sorry, I am not an investment adviser. I would have made a good fortune if I were one!
Tanuja says
Mohan ji
Can you really suggest investment avenues with guaranteed returns & tax exempt maturity with higher returns and where money comes back intermittently with investments not made in one go?
Mohan says
@Sanjay Nair
You got it!
@Tanuja
I agree with your argument that there is no guarantee that you get 8.5% return of FD. Like I have mentioned in the article already, it is upto people to think what is good for them. If insurance is the primary concern, opt for a purely insurance based policies. Otherwise if investment is what one is looking out for, go for investment options than going for policies like this which either give good insurance nor good returns.
Tanuja says
Mr. Mohan
when rate of interest coming down can you guarante 8.5% return on FDs for next 9 years? what is the death benefit in FD. If a customer dies after 2-3 years LIC will pay SA+GA. Will FD also pay that amount? Hypothetical comparisons with actual returns is only a way of misguiding people.
Sanjay Nair says
Good comparison Mohan. I feel both of them to be the same. Just that LIC has an edge provided there are no other hidden charges and an insurance cover to spice it up. Nothing more sadly.
Mohan says
@satyabhama
Thanks for pointing that to me. Yes, I have changed it now.
satyabhama says
@ mohan ji…. i do not agree with your calculation which is not correct…
1) the annual premium for 35 years person per 100000 policy is Rs. 15720.
2) you have calculated the GA of 65/1K on the premium which is not correct.
3) the guaranty addition will be like this…. it is 65 per thousand sum per year ie.. 6500/- per year. so the total guarantee additions for total term of 9 years will be 58500/-.
4) the total maturity payable on the above illustration will be Rs 100000 + 58500 = 158500/-
5) the total premium paid will be 15720 X 9 = 141480/-
6) net profit will be 158500 – 141480 = 17020/-
7) note: in the above illustration loyalty addition is not included.
Mohan says
@Amit
My updated illustration with Jeevan varsha calculations tend to agree with your statement. Thanks for your views.
@Suvarna
Advantageous? Could you spare your thoughts to enlighten us please?
@Suhail
You are almost there!
@prabha
I completely agree. That is why I suggest go for a completely Insurance oriented policy than going for dual mode policies like Jeevan Varsha.
@tanuja
I have updated the article with inline comparison. Do I need to say more?
tanuja says
Mohan FD’s returns are taxable. Before we talk about FD pl. do reduce amount to be paid as tax from returns. risk cover + money is not being paid in one lump sum. it is being paid @ intervals, so to compare a regular payment with one time FD is comparing two non comparable products. when compare, compare what is comparable……..
tanuja says
@Kishore
people are wise enough to decide what they want to buy. india is still not so rich where people can afford insurance and investment separately. where do you stand with all those mutual funds and ulip plans of pvt. insurance companies with even basic capital eroding to the extent of less than half of invested amount. can you guarantee revival of economy which Obama & Manmohan singh are not able to revive? LIC is the largest institutional investor & financial company in india and has always retuned people’s money as guaranteed. 23.5 crore customers can not be fools….
prabha says
another point i want to add is that L.i.C. never declated loyalty addition of Rs 400 on any product. for a guarantee return policy it is highly difficulty to declare that much of amount. even in case of jeevan shree with term less than 10 years L.I.C. has declared Rs. 75 as loyalty addition. and another point is that the loyalty addition is purely based on the corporation experion and in coming economic scenario it is almost impossible. even I.R.D.A. has instructed all the life insurers through its investment policy that all the money from conventional policies should be invested in debt market. think before you invest………..
prabha says
once again L.I.C. started cheating public with another policy jeevan varsha.let us see an example here.
age 50 years term 9 years. policy for 100000. the annual premium is 16161.
the total premium payable will be Rs. 145449. the total guaranteed return on this policy will be Rs.158500. what is guarantee here? return back the premium is guarantee? it also cheated public by advertising the plan in their website by giving Rs. 400 as loyalty additions. L.I.C. has even violated the I.R.D.A guidelines on benefit illustration by restricting the total bonus by 6% and 10%.
another bad point in jeevan varsha will be ……… 1. no accident benefit rider is allowed 2. no critical illness rider is allowed. 3.no premium waiver benefit is allowed. 4. no disability benefit is allowed. and so on………..
is it a good policy? think before you do……
Suhail says
Investors need to calculate returns from a product properly before putting in their money. Don’t get sold to simple statements that say Rs 65 or 70 per thousad. It is a simple way to fool people if you don’t do your calculations properly. Be careful.
Suvarna says
Jeevan varsha is providing more advantages than other policies, as the premium paying term is less and 10% of the sum assured is given back every three years if it is 9years of policy term. If not u can go for jeevan anand which is providing money after life for dependents.
Amit says
How is it good when it is cheating you by telling you there are guaranteed returns when it will not even return your money back to you. Instead of a money back it is a money stolen plan.
The guaranteed money-back is fake as you won’t get your money-back in the 12 year policy term. You will pay more premiums than the money that will be repaid back to you. Please ask your agent to give you an illustration of Jeevan Varsha to make sure you know what you are buying.
Mohan says
@Kishore
I am glad you agree with my view.
@Md Zaheer
Not me!
@shraddhananda
I haven’t looked at Birla Sun Life Insurance Money Back Plus Plan. I shall look at it sometime soon and revert back to you.
shraddhananda says
hi Mohan,
what do you think of Birla Sun Life Insurance Money Back Plus Plan compared to LIC Jeevan Varsha. Please could you explain me both the insurance plans..
Md Zaheer says
I still recall from one of the news article that a known cricketer of indian team is said to have invested crores of rupees in Jeevan aastha. Any takers for this policy?
Kishore says
Well said Mohan. All these new policies are nothing but ways to fool people. I don’t understand how people still get fooled an invest in these kind of policies.