LIC Bima Account Policy [with Return analysis]

POSTED BY Jagoinvestor ON February 7, 2011 COMMENTS (154)

LIC Bima Account is the latest product launched by LIC of India on this festive tax season (generally known as JFM, JAN-FEB-MARCH, Tax saving season). There are mainly two varieties of this insurance plan called LIC Bima Account 1 and LIC Bima account 2, which differ a bit in terms of premiums, tenure, etc. No wonder that it’s the best time to launch the insurance plan as everyone is looking forward to investing in tax-saving, and when something has a tag of “Guaranteed returns” + “LIC” , its an instant favorite :).

LIC Bima account comes under sec 80C, you can save income tax on the amount invested.  A lot of risk-averse investors will be investing in these plans. However, It’s important to know what these plans have to offer in terms of returns and see if it’s as transparent as it looks like. The company claims to pay a 6% return, but will it be 6% by the time it reaches your hand? Let’s look at it.

LIC Bima Account

Did you notice the above picture? It’s very much related to our financial services industry. Every other financial product has a face, which is shown to public, but if you analyze it further and look at  it from the mirror of IRR, you can see its real face which is too horrifying sometimes .. Be it ULIP’s, Endowment plans and even PMS schemes, every other product has some real face which we need to find out . I have tried it find the real face of LIC Bima Account policy here. It’s up to you to decide is it beautiful or not!

Features of LIC Bima Account 1 and LIC Bima Account 2

The chart below gives you an idea of both the variants of the policy. While LIC Bima Account 1 is for investors who can pay smaller premiums, Bima 2 is for investors who are looking fo paying higher premiums.


The lock-in period for these policies is 3 yrs, You can surrender the policy after paying the premium for 1 yr, but you will be paid back only after completion of 3 yrs lock-in period. The common part of both the plans is that you will get 6% returns from these plans if you continue paying the premiums till maturity, but only 5% return if you make it as paid-up policy. There will be a bonus also paid by LIC in these plans, but it would depend on the company experience with the plan and bonus is not guaranteed. Also the bonus will only be applicable for investors who have completed the whole tenure.

Important: Taxation of LIC Bima once DTC is in Force

Another important point worth nothing is taxation of LIC Bima Account policy after the Direct Tax Code is in effect. As per DTC, the tax exemption will be allowed only if the Sum assured is more than 20 times the yearly Premium, however, both LIC Bima Account 1 and LIC Bima Account 2 offers options where a person can choose Sum Assured which is less than 20 times the yearly premium (see the chart above).

In that case, they will be able to claim the tax deductions in this current year and next year also, however there after they won’t be able to claim any deductions on this policy. I am not sure how many investors are looking at this point. The majority of investors in LIC Bima are going to be from small cities, who will definitely have no idea about this taxation point.

Commission for agents in LIC Bima Account 1 & 2

So what is the commission LIC agents will make from selling these policies? Here are the numbers shared by an LIC agent with me over the phone.

  • 16.5% for first year
  • 3.5% for the second and third year
  • 2% for 4th year onwards

What are the returns from LIC Bima plans?

This is where one has to pay attention to. Note that the returns of 6% are offered only in the Net amount invested (Final Amount in the charts below). We will take an example of LIC Bima account 2 Plan 806 below which I got from. Suppose you invest 1,00,000 per year in this plan for tenure of 10 yrs,  then at the end of the tenure you will receive 12,36,911, guess how much actual return does it translate to? So we have to do an IRR analysis for this to find out the actually CAGR return an investor will get. As per IRR analysis, the returns turn out to be 4.217 %. So this is the return an investor would earn in 10 yrs, note that is the return without considering any bonus.  For investors who will make the policy paid up or surrender it, for them the IRR would be drastically low and might be as low as 0% or negative also depending on how early investor makes it paid up.

Look at the chart below which shows you the IRR analysis for LIC Bima Account 2 policy, The numbers below are provided by an LIC agent over email to me.

LIC bima account insurance plan returns

So the main point here is that why is an investor not informed about the actual return which he gets in his hand? Why the returns of 6% are shown in a way that common public will not be able to find it out. One can also show the returns like 9% or 10% and then increase the charges to such a level so that the investors in hand returns are just 4-5 %. These plans are going to generate a lot of attention and crores and crores will be generated. Do you feel it can be called misselling or Mis-use of Public trust, as the returns are in a way misleading? This is a question from you as an investor !.

A trusted source Dhawal Sharma had a talk with LIC Development Officer and here is what he found out –

I met with an LIC DO yesterday and he explained to me that BIMA ACCOUNT is for someone looking for other option than Saving Bank Account and thus the name.. Bank Account gives 3.5% and here it is with Minimum Guarantee of 6%, that too with Insurance Cover and tax benefit.

It’s another LIC stunt of JFM (JAN-FEB-MARCH) Tax saving season..Remember, LIC launched WEALTH PLUS last year on 8th FEB…Crores of policies were sold and crores of premium was raised by LIC in 2 months flat..I am eye-witness to last year’s madness when LIC agents were asking people to come along with FILLED FORMs for WEALTH PLUS and public obliging..and there we were, the KOTAK (or PVT PLAYERs) doing everything for the client but still being made to look second-grade in comparison to LIC..That the NAV of WEALTH PLUS now is Rs 9.63 is a different matter altogether 😉 Just wait and look for a new product from LIC every year in FEB..

Actually its not misselling, its MISSUSE of the TRUST that people have in LIC..”Whatever LIC come up with must be good” according to Indian public and thus the result..

Note that the actual returns from LIC Bima after considering the non-guaranteed bonus will be higher, but still it would hardly be attractive enough.

Comments? Are you buying it? What kind of investors should buy LIC Bima Plan?

154 replies on this article “LIC Bima Account Policy [with Return analysis]”

  1. shashank says:

    This lic plan of bhima account is real worst plan.. .i invested 40000-00k for 5 years and after the maturity date the amount i received is 40672-00 that is an increase of 672 rupees …
    if i had done an recurring account also i would have got better interest… few LIC agents are such frauds that they misguide people like us giving false promises…we jus trust these fraud agents words blindly and n we too make the mistake of not reading the plan completely …
    i am amazed to see now that the first years agent commission is 27%….jus see who is minting our hard earned money soo easily with fake promises..
    LIC people are soo brilliant that they have plans with the same name…like Bima account-1, Bhima account-2, bhima gold….all are bhima plans only…is it not soo confusing…
    we people trust LIC as our safe guardians ,so please live up to that…give few greedy agents that value lesson…
    Dont hurt the sentiments of our trust,,,
    hereafter if any one is planning to buy LIC policy please read the policy documents and then only buy it…

    i advice all my fell

    1. Hey shashank

      Thanks for sharing your experience with all of us. It was a great learning.


  2. Sumeet says:

    I have taken Bima Account II policy with yearly premium of Rs.15000 ans S.A. of Rs. 150000 for 10 years. I have already made payment for the two instalment premia i.e. Rs. 15000*2=30000. But I somehow dont find this product attractive enough.For the current Fin year i.e. 2012-13 ,under section 80 C I am left with another Rs. 28000 to invest with the ceiling being just Rs. 100000. Will it be wise to stop any further payment of premia w.e.f. Feb 2013 as the DOC is 28.02.2011 and look to invest that in some other instruments or should I continue to carry on with this. The plan specifies that the policy can be surrendered after paying one year premium though the Surrender value will be payable only after the expiry of 3 years from the DOC. Also if I surrender the policy now, How much surrender value will I get. Kindly suggest me .

    1. Sumeet

      You need to go through the policy document first .. also read –

  3. Madhukar Anand says:

    I take back my comment … it ‘s a pure insurance policy my bad 🙁

  4. Madhukar Anand says:

    I think this policy is to be taken for covering the cost of medical examinations that are not covered by health insurance companies. Thus a guranteed income of 6% sacrificing a 2.5 % compared to PF for covering your medical bill expenses.
    This is not too bad considering you invest just 10K per year. You make a loss of 300 Rs each year but you are covered against medical examination bills.. Not very bad

  5. Chandan says:

    A LIC agent of Najafgarh branch, Delhi sells LIC policy giving 50% of his commission. One of my close relative got benefit, when I introduced the agent to him. When, I tried he gave me wrong policy and also not giving commission discount. Can I withdraw or change policy?


    Can you please inform/ comment about the advantages/disadvantages of Jeevan Sneha policy for women to which am paying a premium of Rs.8260/- annually.

    Actually have also invested Rs. 1 lac in 2007 for which am getting a yearly credit of Rs. 11000/- + which I think is ok to this day.

    Your advise on the above please

    1. Most of the endowment plans do not give high returns in long term .. which is the real issue , do you know how much will be final return from your Jeevan Sneha ?

  7. anil verma says:



    An LIC Agent has offered the following Jeevan Saral Plan:

    Invest 6000PM for 10 years, then earn 120000 PA for next 10 years, then earn 6000 PA for Life time. After 10 years of Policy paying term risk cover of 15 Lakhs ceases and now a Family Fund of 9Lakhs is given to Nominee after death.

    This plan may be modified by paying 12k,15k,18k,20k etc per month….hence returns too will be high.

    Kindly Guide regarding the above.

    1. Krantivir

      Amazing 🙂 . Let me tell you this .. This plan looks so attractive .. but do you know much is the return at the end from this policy ? I did a IRR Analysis for this whole deal and guess what .. the returns are 5.9% . yes.. you can also do an IRR analaysis and see yourself .. check this post :

      Also see :

  9. Paresh says:

    Dear Ujjwal,,

    Rather just using such words,,why don’t you provide your own analysis and calculation of LIC products and prove yourself.

    1. ujjwal says:

      ok…..sorry about my words….
      i will do it after some time…..
      i will give my argument why you should go for LIC, PSU banks….rather than to pvt companies with some economical data…..
      sorry chauhan ji….
      i am so frustated about the mis-match between the advertizements and marketing with the actual services provided by them…..i am himself a sufferer….but i think as population of india so huge…if everyone get trapped for once in their life-time, this will ensure enough business for them….as they will constantly change their strategy and make innovative way to cheat….

      1. Ujjwal

        What you are saying is not just for pvt companies but almost every company wheater its LIC or non-LIC. almost all the companies have sold (mis-sold) policies based on wrong information and giving rosy pictures . So I am still not clear why you feel LIC is not in that game of misselling , Take Wealth Plus , it was sold saying that one will get 12% return “guaranteed” , after 3 yrs , its NAV is less than 10 .

        And its not just LIC . ICICI , Kotak , Birla , HDFC everyone is same . So i want you to understand that i am not against LIC, its every company which missells .


        1. Smart Persona says:

          Dear Manish

          As you are greatest financial consultant, please tell me the defination of Insurance and its impact in Balance Sheet and Profit and Loss Account? Further Why you compared all and give your nonsense answer without having a indept financial instrument? I think you are working for Pvt. Insurance Company they all are cheater at the time of settlement of Claim? Dear All reader ask to Manish to Provide Claim Settlement details or other wise you all are request that kindly visit for details which company is better performed? And not compare Insurance with Mutual Fund and SIP. Both are worked on differant Basic my dear Manish. If you want to compare Mutual Fund Return compare it with Other Instrument like Share Market, Real Estate, Gold and Silver Market… I think Mr. Ujjwal you are right, Mr. Manish i think work for Pvt. Insurance Company or With Mutual Fund AMC Co.

          1. Hi

            So are you saying if a person has to invest his money for next 10-20 yrs , he should not compare term+MF with Insurance policies ?

            Do you know why claim settlement of pvt insurers is low than LIC ?


        2. Sudhakar Menon says:

          Doesn’t matter Nav goes down. don’t you have an idea of LIC wealth Plus. LIC’s Wealth Plus (Table No.801) is a ULIP insurance plan that protects your investment from market fluctuations, so that your investments are protected in financially volatile times. Wealth Plus offers Guarantee of the highest NAV in the first 7 years of the policy.

          Ulips Long term will give better return.

          Don’t you think its too early to comment on a performance in a year.
          wait atleast for 6 year.

          1. Sudhakar

            What is the point you are making ? Can you elaborate ?


  10. ujjwal says:

    i think, manish himself have term plan with LIC, as he knows very well about pvt companies ( as he is a paid up agent of them)….and then mis-guiding netigens…..

  11. moon says:

    the fact of the matter is its not only LIC but all insurance companies do like this.

    I do not understand why we have only LIC products reviewed here lolz looks like some one here is promoting some thing ha ha ha

    anyways problem in our country is ‘Corruption’ and ‘Scams’ a large no of people only go for LIC for fear of a scam in pvt insurance cos in LIC they still seem to have a bit of hope …….. but honestly i don know how true is that 🙂

    To give you an example :
    My friend bought the a ULIP from a Pvt Insurance co (Which always suck) just because some one of his relatives was an agent and had to complete his target.

    He filled the form for 5 years and received the policy document for 15 years.
    when he tried to approached the DO he made all kind of excuses and even offered some money for not complaining in Insurance ombudsman……..

    My friend did not made any further payment to the company ……. after 3 years he received the letter from the company about policy forfeiture with form which needed to be completed and deposited in nearest branch.

    As per normal process the company has to return the amount after deducting the charges etc.

    However when we went to the company the clerk said unfortunately he cannot enter the ‘forfeiture ‘ in the system as there is no provision!!! he told us to come back later as he will consult his IT dept


    To this I ask people here even if one has to go for TERM INSURANCE which co should be trusted !!!! what is the guarantee of the maturity or claim processes of these new pvt cos again the entire thing comes down to CORRUPTION had the laws in our country been strictly imposed then we would have had to face the above mentioned situation.

    By da way am a trader and have BSE membership if this can happen to people like us what will happen to retail investor ………….

    Hence my advice for retail investors do your research carefully before choosing any company REMEMBER CHEAPEST MAY NOT BE THE BEST.


    1. Dhawal Sharma says:

      Just to add to your line that CHEAP may not be THE BEST always – the other side of the coin is that GOVERNMENT is also not TRUSTWORTHY or RELIABLE always 😉

      Dhawal Sharma

    2. srinivasu says:

      yes, every word is true,this cases happens all overy india irespective of education, social status etc.. because we either simply trust or hates takes one hour to fill policy proposal form so to save our valuable TIME or let him/her do all this paper work attitude is also one of the reason for mis selling !

  12. Shyam says:

    This is the first time I visited jago investor website and I am pleased with the quality information for the mass. Thanks all of you

    1. Shyam

      thanks . welcome and keep reading 🙂

  13. S S says:

    Nope. Again LIC did it. I have stopped looking at LIC policies in general.

    1. SS .. I only look at their term plan , nothing else

  14. Smart says:

    Dear Manish,

    I think that you are a writter who is appointed by the Pvt. Insurance Co. and give you to right to write against LIC. As you mentioned for LIC’s wealth Plus, my dear tell me about the same plan was launched by Pvt. Insurance Co. also and where the NAV stand. Further if you are a news paper reader and particulary reader for Finance Section then read the case of Widow at where Kotak Mahindra refuse to pay Claim Amount. Why? Dear read paper and donot apply your own mind because in your mind you are agsinst LIC, why? Just you tell me why pvt. insurance co. launch various scheme for agent? and for this from where money come? You are just misguiding a reader of Jago Investor. If you are not capable to write aginst Pvt. Insurance Co. then i think that you have also not have right to write against LIC. You idiot.

    Smart Person.

    1. smart person

      i will tell u the reason behind writing aginst this plan . Its because these plans reaches masses , lic has biggest player and all pvt companies combined cant match lic reach , so it makes sense to review lic plans , but its about the kind of policy and not company as such .

      All plans in market which are like these are bad .


      1. Sanjay says:

        Wish the reader used better wording in the end. He has no business calling you an idiot. Every one has say. So Mr.Smart Person please use good language. is giving a platform to express ones views freely. It is upto an individiual believe it or leave it.

        1. Sanjay

          Thats fine .. we just have to focus on our work . I assume Mr Smart is agitated may be because he is biased for LIC , which is ok .


          1. Dhawal Sharma says:

            dear Manish, you can have some more masala to irritate this MR SMART by writing review of the latest offering from LIC by the name SMRIDHI PLUS..

        2. srinivasu says:

          yes,many rural innocent persons trust lic as a govt. backed institution.only simple trust can not a buying factor.
          We may all recall what happened to uti mutualfund pla
          ns like childrens rajyalakshmi scheme and us 64.
          A loss of money and mental agony.
          yes, never use bad language in public form,
          even today can any one guess the bonus declared by huge trusted LIC ?
          thanks and all best wishes for JI and its readers.

          1. moonlightdriver2004 says:

            @srinivasu go to LIC website and you will see the bonus declared by year.

            if you do a little maths you will be able to forecast this for coming years as well

            Bonus declared are between 3 to 5% and this is true for all insurance companies LIC or others so never treat insurance as an investment thx i hope this helps


      2. Prashanth says:


        This is my first comment/writing on these pages. JI caught my attention when I was trying to get some gyan about Life Insurance for myself. I much appreciate the contributions several people make in these blogs.

        Couple of points I would like to make here are:

        About returns…
        1. The ULIP product offered by Insurers are not governed by SEBI and therefore the holdings/investments are not disclosed in the manner MF are obligated to do. This brings a lot of concerns.. (A). ULIP fund managers are monitored only by their well meaning? employers.
        B. Private insurers who bank heavily on the ULIPs or Equity linked products are yet to declare any profits. So which insurer has got richer?

        2. The illustrations that private companies make/provide while selling products and the actual performance of these products should be available with all informed people. We have heard about how some companies have failed miserably in US and EU and millions of people have lost their life’s savings. Remember many of these companies have opened shops in India with limited liability. A country where financial prudence and aware is very very low.

        3. Contrary to the above, the promises LIC offers in its plans are conservative (probably the reason for public contempt??) but I hear that it has a proven record of delivering on most (except the market plus and money plus types which are so highly equity linked) of its promises.
        4. More importantly, what ever the returns are, the insured can avail the returns only if the policies run their full term ( long live everyone!) The percentage of policies lapsing in this country is significantly very high. This is a worry as public lose a lot of money this way ( hard cash loss)

        LICs reach and public awareness:
        5. It is true that LIC has the bigger brand value. They setup shops even before roads were laid in some villages!! They funded several infra projects, rural development projects and been here for several decades since nationalisation of insurance and so enjoys great brand equity. Private companies vying for level playing field will look for distributors in these areas. If agents in metros are so helpful, what do you expect in rural areas?

        6.Lets be reminded that the writings on this blog still reaches a very small population of educated, computer literate and net savvy people in this country. So what’s your argument about creating awareness among the masses through this blog. We should find a better medium.

        Lastly, without trying to judge your bias, subscribers to JI would be immensely benefited if informed people like you can provide comparisons or alternative products to show which is better..

        I am looking forward to a great insights from these blogs and hope to be benefitted as many have vouched for themselves.

        1. Prashanth

          Some good points from you . My replies to each are as follows

          1. Yes, ULIP’s are definately not that much transparent as Mutual funds , and no independent research or comparisions are available as in mutualfunds . I would hope that it will happen soon by someone , for now I would like to believe the Regulator and assume thats things are fine .

          2. You are correct ,take an example of LIC Wealth Plus , which has given negative returns to investors who were mis-sold those policies stating 15%-20% returns .

          3. If you promise 6-7% , how difficult it is to deliver , Its like promise-less , give little more , make everyone happy

          5. True , LIC has a dense reach and I dont see any one competing for next 20-30 yrs

          6. Agree .. A little better can be done if each reader understands his reponsibility of educating others and make other 10 people aware about it .

  15. Paresh says:

    Dear Manish,,
    I do not know whether you have mentioned or not ,,,the effect of compounding…..
    First yr charges are 27%
    So over a period of time 0f 10 yrs,,what the policy holders are actually loosing??????

    Disclaimer:I am mutual fund distributor and my comment may be biased..

    1. Paresh

      I am not clear what is your question . That first year charges has no significance in these kind of product which are not ULIP . There are other debt option like FD or Debt funds which have no charges .


      1. Paresh says:

        Suppose we consider only for first installment:Ignore remaining installments for calculation

        100000 (1 lac) in Bima Account.
        100000(1Lac) in fixed deposit.
        For Bima account:after deducting charges of 27% balance amount remains to invest is 73000
        so if we consider returns of 8.75% compounded quarterly( rate offered by IDBI) for 10 yrs then after 10 yrs maturity value comes to be :1,73,473.
        Now for fixed deposits
        Rs 1lac will get fully invested
        After 10 yrs consideing rate of 8.75%,, maturity value comes to 2,37,635.

        So consideing only for first installment:difference after ten yrs comes to
        2,37,635 – 1,73,473 =64162….i.e indirectly first yr charges of 23000 resulting into loss of 64162 after 10 yrs.Thats what i mean.

        1. Thats good point Paresh

          1. paresh says:

            Dear Manish,

            Thank you for your reply.
            If we calculate for compelete term,then the returns are no where.
            Adding inflation returns are below0%.

            1. Paresh

              Yea , thats what small investors do not understand , they concentrate on numbers , not worth

  16. pralhad mali says:

    The illustration given is totally differ from lic circular / authentic information / and way of calculation. If someone not knowing about the fact is giving his own perception with pretending that he is doing write then what others can do? Before publishing why not check authenticity? If someone is pretending some fact with his available knowledge (may be differing from reality) and inducing others to be away from fact then what is our duty? Do you accept whatever calculation done in the illustration is giving 6% effective return in monthly cumulating? If not why to give publicity for wrong based calculation and comment on it?

    1. Prahlad

      Which part is wrong ? Can you clarify , Is the IRR not around 4.5% considering 10 yrs period and without bonus numbers ?



    people like you are real unsung heros of india who open eyes of finanacially uneducated masses of india falling as preys of eagles like lic and others.
    please continue to provide financial eye openers like this
    dr rjaeev

    1. Rajeev

      thanks 🙂 . Keep reading and spreading the word

  18. B R Sanjay says:

    I hope the regulator will take action on this product from LIC that is taking the poor innocent public for a ride every year in the JFM period. Just like the EGYPT crisis wish one could use FB to take on IRDA and ask them come down heavily on mis-selling by all Life Insurance companies.

    1. BR Sanjay

      How can IRDA take action on LIC product when the same IRDA approved the product , note that all the products gets passed from the IRDA only .


  19. Pankaj Vasudeo says:

    Manish, gr8 article as usual
    what is the best option( plan, policy) available for 80 C.
    i wanna invest 1 lakh for pure 80 C.
    Please throw some light on it
    If possible write a topic as many people want to save tax through 80c

    1. Pankaj

      Are you salaried or not ? If yes ,then your EPF is also under 80C which employer cuts from salary , so 1 lac minus EPF is what you have to invest .

      You should not look out for “Best” option ,as there is no best option , it all depends on the time frame and risk you can take, for risk takers ELSS (tax saving mutual funds would be a good option) . For non-risk takers , Bank FD for 5 yrs might be ok


    2. Manish saurav says:

      Hi Pankaj,
      The best plan to invest is PPF if you can live with the 15 yr lock in or ELSS (if an agressive investor)


  20. Jitendra Solanki says:

    Hi Manish,

    Nice work.

    Even my neighbour is an LIC agent and the way he is selling these plans, god help the general public.I asked him why did he became LIC Agent and teh answer was-” i m retired now and was getting bored.So i took up the easiest job i can do.Now i feel energized”.
    Guess whom he is selling.Not to the educated class but to workers and people with less education.


    1. Dhawal Sharma says:

      @JITENDER SOLANKI – Being an AGENT myself, i take great offence to this being labelled as the EASIEST JOB..No sir, it certainly not is..Talking to 8-10 people everyday, visiting all of them at least once, then going to office to submit the case, follow up, providing receipts for tax saving purposes etc. will not allow any agent to sit and relax, let alone mr RETIRED UNCLE JI…

      Do you yourself believe that to convince someone not to use a 2 rupee pen of TODAYs and switch to REYNOLDs pen of 5 rupees is easy?? then how can it be EASY to ask someone to part with a sum of Rs 5000 to Rs 10000, and that too for some intangible product like insurance??

      ..and let me tell you with my experience of last 4 years, its not the question of EDUCATED or UNEDUCATED, it takes the same kind of effort and conviction to convince somebody about the product..EDUCATED, UNEDUCATED, WORKERs – they all ask lot of questions (Sometimes outright stupid questions) before signing a cheque..

      UNCLE JI must be ENERGIZED because he is seeing MONEY now which is kind of a bonus in his retired and avilable-time life..

      Might look easy to outsider but its not..Try convincing somebody who is buying LIC BIMA ACCOUNT that your returns will be negative, that IRR is less etc and you will know 🙂

      1. Dhawal

        Your “Akrosh” is genuine and correct . But I think you missed the point here :0

        That retired uncle ji said its the easiest job for him considering he wont get any other job at the moment, this is only thing which he can do and its “easy” to enter in this .

        Also remember that he is doing it for LIC, being an agent yourself , you know how easy it is to work as an LIC agent compared to other pvt companies ?

        right ?


        1. Basavaraj says:


          I agree Manish that it is easy to be agent with LIC compare to other private insurers as their is huge advantage of publicity about it. But what Dhawal told is also correct, because it is restless profession if someone taken it as fulltime.

            1. dhawal sharma says:

              Fully agree with Basavraj…Half of the job of LIC agents is done by LIC itself, as they promote their products aggresivly and on a nation-wide ad campaign..Initially hype is already created by LIC for its agents to cash it on..

      2. Rajaguru says:

        Its really a sad comment about LIC Agents. Sir, I would like to pint out that i had been in USA for 5 years with one of the large financial firm, i have taken up LIC agent role with so much pride. I am proud that LIC investments in INDIA’s Assets such as power plants, Ports, state electricity boards and Infrastructure helping GDP growth of our nation. People should change their perception of LIC. LIC invests only in India. Share 90% of their profits with its policy holders. Please tell me – which company / corporate in the World share their profits / returns with their real customers. Loyalty addition bonus only exist in LIC and of course its available for the policy holders who stay with their policy for the entire term.

        Not every one missell their services to their clients? we need to walk with them for long years. I know people who are LIC Agents who have two generations of the same family as clients and some of them treated as GOD in that family.

        May be LIC Agents may not be writing in your blog – do not underestimate their services in rural India. Today every private firm wants to make quick profit? do u agree?

        Thanks for your reading and allowing my opinion to post in your blog.

        with all respects and humility

        M Rajaguru

  21. kumar says:

    Agreed that its not a great product. I dont mix investment and insurance. However if you do IRR analysis on other products whether LIC or from others wont you get the same slightly lower return?

    I have seen several SBI life agents quote more interest than allowed by IRDA in several ULIPs.

    There are several bad products from all privates. See no reason to pick on LIC alone. Mis-selling is done everywhere.

    People will have to stay away from insurance companies for investment. then only things will improve.

    1. Basavaraj says:


      You are right. All insurance companies may play with investors blind faith. So it is the responsbility of investors to woke up and get some basic knowledge about the products which they going to purchase.

  22. Amit says:

    LIC agent does neither ask for PAN from their client nor they insist for cheque/DD. It is win-win situation for those who want to park their black money at a safe place and for LIC agent also. Since a person can not go for any amount of sum assured the amount is restricted to a range of 50k to 150k only..otherwise there wouldn’t be any need of going to swiss bank.
    Any LIC officer who is reading your post must be laughing in his mind as LIC is not running becoz of those investors who are earning by the legal means and would not invest in LIC after reading this post but by the large chunks of corrupt politicians, govt officers and industrialist.

    1. Basavaraj says:


      Their is point in Proposal Form to fill your PAN no. but they didnt made it mandatory. Hence everyonce is feeling that they are not asking. About asking of Chaque/DD, here also they made some restriction in accepting minimum range of cash acceptance. Above that range they will not entertain cash transaction.

      1. Dhawal Sharma says:

        @AMIT/BASAVARAJ – PAN card details are MENDATORY only if the premium paid is more than or equal to 50 thousand by CHEQUE or more than 1 lakh if payment made in cash, not only in LIC but also in all PVT companies..So you must be mentioning the cases where premium paid annually is less than these limits and hence PAN is not mendatory..

        In any other case, proposal form will not be logged in without completion of documents…

        1. Basavaraj says:


          Thanks for your information. I am also with LIC but doing it as part time. Since 6 months not doing business as I am busy in doing CFP.

  23. Krish says:

    Two benefits are omitted from the Illustration chart i.e. First is Tax Benefit and the second is final bonus. A new employee looking for tax saving investment under 80c, the TDS and final bonus could boost the IRR perhaps at par with other market instruments. ELSS may give slightly higher return of 1-2% more, but you are compromised on insurance.

    Overall it is not spectacular product but for sure decent product for risk averse investors.

    1. Krish

      Yes agree . I will mention these points too in the article

  24. Rajat says:

    Hi Manish,

    Good article.

    I was wondering how did you achieve your interest rate figures? I agree that for the first year the interest will be 0.0. For year 2 the interest should be 4253.4 (06*161780).

    Or is it that I am missing something?

    1. Rajat

      Which interest rate are you reffereing to ? Give more details ?

      1. Rajat says:

        Hi Manish,

        I am referring to your illustration on LIC Bima Account 2 policy. (Screen shot of excel sheet) in this post.

        For year 2011 the customer does not earn interest. For year 2010 he earns 6% of what he has deposited in 2011 i.e. 6% of 70890 which amounts to 4253.40

        Please let me know if I am missing something or calculating it wrong?

        1. Rajat

          The chart is provided by an agent itself , so in that case looks like the interest is given on the closing amount in the next year . So in 2011 year there is nothing accrued, it starts at the end of the year .


          1. Rajat says:

            Hi Manish,

            Sorry in my above post i meant 2012 and not 2011. So in 2012 the interest should be 6% of what we have given to LIC in 2011. It amounts to as 4253.40

            1. Rajat says:

              Year Premium Paid Charges Mortality Servict T Final Amount Interest Accured Closing Balance
              2011 100000 27500 1460 150 70890 141780
              2012 100000 7500 1460 150 90890 4253.4 256923.4
              2013 100000 7500 1500 155 90845 9706.8 353176.8
              2014 100000 5000 1560 161 93279 15157.5 454340.5
              2015 100000 5000 1640 169 93191 20754.24 553040.24
              2016 100000 5000 1730 178 93092 26345.7 651624.7
              2017 100000 5000 1850 191 92959 31931.22 750036.22
              2018 100000 5000 1990 205 92805 37508.76 848264.76
              2019 100000 5000 2150 221 92629 43077.06 946286.06
              2020 100000 5000 2330 240 92430 48634.8 1044074.8
              2021 54180.6 1098255.4

              So the final amount is 1098255.4

            2. Rajat
              What is 141780 in the first line , how did you get that ?

              Remember the interest is given only on the closing balance of previous year , explain the chart given by you

  25. Basavaraj says:


    But I didnt get the point here, why they started to charge from investor’s money as it is not the ULIP Plan? If it is ULIP plan, they have to mention where they are going to invest and in what proporiton (like usual ULIPs)?

    1. Basavaraj

      I am not sure on that .. Why those charges as its not a ULIP plan ! . Need to find answer ?


      1. Dhawal Sharma says:

        @MANISH/BASAVRAJ – Sir ji, who told you that there are no charges in traditional plan??? he he he 🙂 Did you believe that Insurance companies are running TRADITIONAL PLANs out of charity?? No sir, in fact TRADITIONAL PLANs are the highest COMMISSION generating products because charges are hidden..Everybody is happy in sale of TRADITIONAL or NON-ULIP product (COMPANY as its getting business volumes, AGENT as he is getting the maximum commission on this product, BUYER as he thinks or sees that there are no charges in this product)..Please ask any LIC agent how much his comission for JEEVAN SARAL or JEEVAN ANAND is and you will be astonished..

        Psst: Jeevan Saral and Jeevan Anand gives 35% commission to the agent 😉

        That is why ULIPs are known as transparent because they show you how much are they charging you for investing in them.

        1. Dhawal

          I know of the agent charges , I was reffereing to the charges which are told as expenses charges and cut from the installment , In traditional policies also. Like in Bima Account its said that 27.5% charges will be cut and on;y the remaining will get invested . l;ike that

          1. ganit says:

            Hi manish
            Nice article yaar! great analysis!
            Did you have any vehicle insurance or not! Probably yes! But why?
            only because of fear that if your vehicle is stolen or meet any accident then………
            Yes that is the fact why people choose insurance on their life. Why not you suggest people to avoid their car, bike autoinsurance etc. Friend har cheej ko paise ke taraju me mat taula karo. Money also has a neutral point above that it is useless. Today each and every person knows very well that what the LIFE INSURANCE is meant for. Don’t misguide the people with these simple mathematics. Tell them the real fact behind all these policies. One thing more all the private banks also send their agents on commission basis to the customers, and this is the rule of network business. Because wide network more money and definitely good service for any company or individual.

            1. Ganit

              thanks for your comment , Can you point out which part of the article you doing agree with ?


        2. Basavaraj says:


          I know that in traditional Plans also some expenses are their which Insurance companies are not disclosing since long. What my point of asking is, usually in traditional policies they will not disclose all the expense like ULIPs. But in this case they mentioned it as ULIP product but they missed to mention where they are going to park that money and in what proportion (Like what they did with Wealth Plus previous year). Hence I raised this question.

          1. Dhawal Sharma says:

            @Dear Basavaraj, please read the LIC BIMA ACCOUNT brouhcer or details at the LIC site, its NOT a ULIP product..Yes, its kind of an innovation on LIC’s part that even in a traditional plan, they are showing you charges..

            In WEALTH PLUS, they have a single fund by the name WEALTH FUND which will have a equity exposure of not more than 30% at any time…

            1. Dhawal

              I think you are saying the same thing as Basavaraj , He knows that its not a ULIP , he was just mentioning what peoples perception is all about .


            2. Basavaraj says:

              Yes what Manish told is correct.

  26. kumar says:

    the pic is tell tale of your jago investor.
    u claim to make people wary,
    but end up mudslinging social motives like bima account.
    what the hell will happen if some crores lying wastefully in sb a/cs of banks are diverted to yet another govt FI like LIC whcih gives social security life cover tothe investors.
    unfair analysis, quite like the picture.
    be true to ur readers.

    1. “social motives like bima account” ?

      Ok , tell me which part of the article you dont disagree with , copy paste that line and lets debate .

      You tell me this, some one investing his money in balanced funds of mutual funds or any Equity mutual funds ( lets take from LIC MF only) and some one investing in Bima Account , which is better and why ?


    2. Basavaraj says:


      The owner of that “some crores lying wastefully in sb a/cs of banks” are not investing in such a Plans mind it. They know how to handle and where to invest that idle money or black money. People who are investing in such a plans are middle class, above middle class or persons who are ignorant about the products and who believe with agents. These people’s hard earned money they are sucking by by giving return which is neither suffice for their future financial dreams nor cover their life to the fullest. Then what is the use? Social security is the name attached to it nothing more than that. If they are so much bothered about society then they have to do social work instead playing with people’s trust.

  27. Jayant S Koppikar says:

    Hey Manish, The image illustration is very relevant ! 🙂 Dangerous indeed ! Unfortunately, people will still fall prey with LIC brand name and hard selling (read mis-selling) commission based agents.
    6% guarantee is even more pathetic than nationalized bank fixed deposits ! What can we say ! 🙂

    1. Jayant

      Yes .. The illustration with IRR shows you the real picture . I would like to differ slightly on one point and that mis-selling . There is misselling , but more than that its now customers way of looking at thigns also , If one goes by name and falls for things without studying it ,I would not feel bad if they got bad policies in their hands .


  28. Rakesh says:


    Once again very comprehensive analysis. There is no way i am going to fall prey to these policies now… Thanks to JagoInvestor.
    But LIC will still make crores of rupees because investors will still keep investing in these policies.


    1. Rakesh

      Thanks . Yes its sad that these policies will still make lots of money

  29. Thennarasu says:

    //The 6%Guaranteed interest amount will be calculated on day to day basis,The Corporation may also declare an additional interest rate on Policyholder’s Regular Premium Account for in force policies based on the experience under this plan.//
    You are not discussing this points.You are always writing harsh analysis when reviewing LIC products.Commission to agents mentioned here is wrong .As a responsible planner kindly check with official circular all the data before publishing this article,don’t misguide the readers.Why are you not published this photo while reviewing pvt cos product charging 70% allocation charges.Looting public money like this products .Be honest while review.

    1. Thennarasu

      Can you share the commission numbers here because the numbers mentioned here from an LIC distibutor only . Also the example taken for calculation for IRR is also provided by an LIC agent itself .

      Regarding Bonus , I have already mentioned it in the article , “There will be bonus also paid by LIC in these plans, but it would depend on the company experience with the plan and bonus is not guaranteed . Also the bonus will only be applicable for investors who have completed the whole tenure .”

      Please give me the link to official brochure ?


    2. kumar says:

      its a practice of manish to paint lic in tar like this,.
      ur comment is good.
      contine exposing the likes.

    3. Dhawal Sharma says:

      I have read the the way, this product from BAJAJ ALLIANZ is ULIP and so not to be compared with LIC BIMA ACCOUNT which is a Non-ULIP plan..Moreover, this product has 10% premium allocation charges in year one and two, 7% for 3 to 5 year, and 2% thereon and so no 70% as you have mentioned in your article..

      Please name one product in the industry which have 70% allocation charge in any year?? Where did you get this data of 70%, NO IDEA?? Sir ji, get IDEA 🙂

      Also get your figures straight – in BIMA ACCOUNT of LIC, savings will earn annual interest rate of 6% per annum and not on day to day basis as you have mentioned..

      You too should be honest with your comments…

      1. Thennarasu says:

        An insider account of a life insurance company’s sales tactics

        Working as a sales manager in a private insurance company, I came across the policy of a person of 30 years who had been unable to pay his premium for the second and third years. The sales operation person of the insurance company told him that he has to pay the rest of his premiums to reinstate his policy. He was also subjected to a sales pitch for a new policy. Later, he was sent to me. He wanted to know whether he would get something if he surrendered his policy instead of getting it reinstated. His policy had 100% allocation charges and so he won’t get a single penny. Yes, it is possible that a policy may have an in-built guarantee and the first premium goes towards the guarantee. But was the client made aware of this when it was sold?
        Read full article here..

        1. Hmm.. nice coverage ..

          What the story provided by you to moneylife ?


  30. Priya says:

    Excellent analysis! I dont look back to LIC now for anything but “Insurance”…But thats only after I have learnt “investment mathematics” on Jagoinvester ..Kudos!

    1. Priya

      Thanks .. The only think I can recommend from LIC at this point is their term insurance


  31. neeeraj saini says:

    i think today return of 8% is nothing if we go 5 years back, similarly today’s LIC bima account return of 6% seems not much but don’t forget it is guaranteed for coming 15 years. Second thing i would like to say that in small cities it is only due to LIC and its agents that people are having some savings and insurance. Just imagine the situation if there is no LIC then how many people are going to save money & having insurance. Manish g your calculation is good but it is good in theory but not very practical. I want to ask one thing from all the readers of that they all liked your all articles but how many readers are so disciplined that they did their insurance & retirement planning themselves. They cannot do it practically until some agent will follow them to do this.

    1. Neeraj

      “Manish g your calculation is good but it is good in theory but not very practical”

      In that case , what is your point ? Please elaborate . Whats the alternative ?

      There are enough number of readers who have taken action on their investments , the number is small , may be 5% , but its an achievement in itself for those readers ..


    2. Jayaprakash Kanreddy says:


      “I want to ask one thing from all the readers of that they all liked your all articles but how many readers are so disciplined that they did their insurance & retirement planning themselves”

      Your above statement is a big misconception you have about others. May be you have not tried to find out the truth and current change of trend in the people’s mindset.

      Here is the truth. I was not much aware about financial planning till I have come across this and some other blogs related to financial planning. Now, I’ve changed my complete financial planning and planned for my future as well, including the retirement planning. Also I guided more than 10 people of my friends and relatives and all of them have started their planning and they are doing it with discipline since last 1.5yr. And they are spreading the word. I know this is small time frame but its a good start I can say and the biggest point is they have started seeing results of it including me. The biggest result is peace of mind which we get when we think about our future.

      I think this proof is sufficient for you for the moment.

      1. Thanks Jayaprakash for the comment 🙂

    3. Saurav Sinha says:

      Mr Neeraj Saini… G’evening.. I was going through all the comments here & came across the Q U put up… I want to state that YES I AM DISCIPLINED ENOUGH (after religiously following JI stuffs) TO DO MY LIFE INSURANCE, RETIREMENT PLANNING, PLANNING 4 MY CHILD’s EDUCATION & MARRIAGE … and every single thing stated above ON MY OWN( a bit of advice from Manish & fellow JIians) …. I come from a very very small town in Jharkhand … but I took the initiative to understand the tit bits of saving & growing my hard-earned money myself & started searching things wherever I could… then I came across JI & few more grear blogs/sites/magazines which helped me in understanding the basics & 1 thing is for sure … Now ( a BBIIIGGG thanks to Manish) no one can sell me a policy just by stating “Guaranteed returns, Highest NAV etc etc ” kind of terms… U dont believe me then call me & U’ll figure out for Urself the learnings which are shared here in JI….
      And Sir by stating ” They cannot do it practically until some agent will follow them to do this ” U declare to the entire world that Ur living in a world of Ur own & think we poor guys cant do it on our own … I mean c’mon its simple Class 9th or 10th maths we have to go back to & all the claims by LIC & similiar kind of sellers are bang!!! crystal clear to us … a TRAP!!!!

      1. Thanks Saurav for the comment 🙂

  32. DB says:

    The discussion seems to be on the assumption that people buy policies only for insurance needs. Insurance cover is hardly the reason for buying insurance policy by the customers except those who are part of this discussion or the readers of JI as somebody has said. Now about 6% returns advertised by LIC I may add that this is being done by everyone who is in market to sell something. When we read advertisements about mileage of a car is it not misleading with the actual experience and without any responsibility on the manufacturer? When Banks advertise their loan products and boasts of hassle free processing etc. what is the reality? If the Indian public is buying tax savings schemes only in JFB, then manufacturers will try to market their products in these months only. This is practical market reality, otherwise term insurance in available throughout the year for anyone to buy from any company. PPF account once opened is open for 15 years but if you check the data from banks you will find that most of the credits come in JFB. Why tax saving bonds are issued in jfb, why nscs are sold or bought in JFB. Why mutual fund advertise elss schemes in these months and whey the sale is more in these months? If we wish this should not happen there is no other way than the one being followed by JAGO INVESTOR to relently run a campaign to educate more and more customers.

    1. DB

      Thanks for your comment .

      “Insurance cover is hardly the reason for buying insurance policy by the customers ” , what you mentioned is very right , but in itself its not a very good thing which is happeneing . one has to buy insurance for insurance purpose only and the article tries to show that only . remember that the product LIC Bima provides the insurance cover at very reasonable rate , the mortality rates are very standard . But the problem is that its bundled with low return generating policy , and that the killer !

      If they only provide Insurance at the cost of insurance, I would say BUY IT , it would be great


  33. neeraj saini says:

    LIC is giving guaranteed return of 6%(or somewhat less than 6 if one adjust initial charges) for coming 15 years. Perhaps today 6% seems very little but might be very good return in coming years because interest rates are coming down gradually. Second thing is that it is only due to LIC & its agents that people in small cities are able to save some money or having insurance. Just imagine the situation in LIC is not there how many people are going to save money or having insurance.

    1. Neeraj

      Do you really think that 15 yrs in India will bring us to a stage where 6% looks really good returns, I dont agree .

      may be it can happen in next 50 yrs , but not 15 yrs .. Our economy has opened up just 20 yrs back and we have so much to grow that it would take half a century for us to come to a level where we can say that we are saturated .

      This is obviously the way I feel , please share your thoughts on the same topic .

      Also the next point about smaller cities people buying insurance and investments just because LIC is there .. It was true till date , but times are changing, I come from very small town of UP and I can say it closely represents smaller Indian towns . People there are now getting all the options to invest like MF , Ulips and other kind of products . Still LIC is the biggest player and it will be , but things are changing now ..


  34. Dr Firoz says:

    excellent analysis…once again, thanks..

    one thing i have learnt after following your blog and which i think everyone should follw is “WHENEVER YOU HEAR THE TERM GUARANTEED RETURN, JUST RUN AWAY”

    actually i was expecting your analysis, but sadly only a few people will undersatnd the true picture, ..millions of people will jump into this “??oppurtunity”

    i also tend to agree with Radhey that investors must also equally share the blame..who has stopped them from doing research before putting their money in? don’t they haggle with the vendors over Rs 1 or 2 even…then why are they being so naive about their finances..

    hope more and more people understand this..

    1. Dr. Firoz

      Well ,.. i dont agree a lot with that .

      Guaranteed schemes are not always bad , things like infra bonds , FD’s , govt of Indian bonds are all guaranteed schemes and they are much transparant than many endowment or these kind of policies . there is always some section which will go for those plans .

      But if you are talking about plans which end up in tax saving seasons , and upto this level of hidden structure ,then yes i agree with you


  35. Arudra Kumar says:


    Thanks a lot for the detailed analysis. You proved yet again how looks can be deceiving. I think you dont have to do such detailed analysis to make us understand about this product, only the picture you posted explains everything :).
    No way I am going for this policy or for that matter any existing policies from LIC. I already surrendered my existing Jeevan Sree policy after I got enlightend on Jago Investor. As someone above rightly said, No JI reader would ever fall for such gimmicks.

    As per the calculations you say the actual return would be around 4.217%. then how come LIC is marketing it as 6% return. I think they are also summing the tax amount that one would be saving if they opt for this policy along with the non guaranteed bonus. 😉

    Also, I do not agree with the point “BIMA ACCOUNT is for someone looking for other option than Saving Bank Account and thus the name.. Bank Account gives 3.5% and here it is with Minimum Guarantee of 6%, that too with Insurance Cover and tax benefit” – coz one can take their money out from a savings account any time they want but here you are locked in for the term.


    1. Arudra

      The 6% returns are their on the net invested amount , So if you cut all the expense charges , mortality charges and servivce charges ,what is left is your NET AMOUNT , 6% return is on that amount . Its not because of the tax saved . See the chart in the article which shows the calculations 🙂


  36. learner11 says:

    …. as per direct tax code if the sum assured is not equal to or greater than 20 times of annual premium then that policy will not be eligible for tax exemption so here if we look at minimum sum assured is 10 times and the maximum sum assured is variable….so we are not even sure if this policy will be eligible for tax exemption after 2012??

    1. Thanks a great point ,thanks for mentioning it .. i have added it to the article


  37. rajesh says:

    Even I was thinking why would anyone buy this policy. The article reiterates my opinion on this policy more clearly. If the policy isnt scary enough, look at the picture :-))

    1. Rajesh

      haha .. thats true .. The policy will not look scary if you mention all these points to a small investor who heard the word LIC early in his life and has always dealt with it .


  38. Dhawal Sharma says:

    He he he…Another LIC stunt of JFM (JAN-FEB-MARCH) Tax saving season..Remember, LIC launched WEALTH PLUS last year on 8th FEB…Crores of policies were sold and crores of premium was raised by LIC in 2 months flat..I am eye witness to last year’s madness when LIC agents were asking people to come along with FILLED FORMs for WEALTH PLUS and public obliging..and there we were, the KOTAK (or PVT PLAYERs) doing everything for the client but still being made to look second-grade in comparison to LIC..That the NAV of WEALTH PLUS now is Rs 9.63 is a different matter altogether 😉 Just wait and look for a new product from LIC every year in FEB..

    Actually its not misselling, its MISSUSE of the TRUST that people have in LIC..”Whatever LIC come up with must be good” according to Indian public and thus the result..

    Met with an LIC DO yesterday and he explained to me that BIMA ACCOUNT is for someone looking for other option than SAVING BANK ACCOUNT and thus the name..BANK ACCOUNT gives 3.5% and here it is with MINIMUM GUARANTEE of 6%, that too with INSURANCE COVER and tax benefit..

    Could’nt say anything but nod..Yes, LIC rules and will continue to do so..

    1. Dhawal

      Yea , agree with you , I have included your comment in the main articles . Its important to know that what LIC people themselves think about their own products


    2. Dhawal Sharma,Manish
      You are entirely correct Dhawal.Its not misselling, its MISSUSE of the TRUST that people have in LIC.
      By the way, what do you think of LIC WealthPlus?Whats the fate of the customer who already invested in it?
      I request Manish also to add some point about LIC WealthPlus.

      1. Ravi

        Yea .. Its misuse

        Regarding LIC wealth plus , i dont have much details right now , but as told by Dhawal , its NAV is between 9-10 , so you can understand that it has not moved much . Will do finding in details


    3. Radhey says:

      Dhawal –
      I don’t quite believe on “its misuse of trust that people put on LIC” ? Are the investors not at fault here ? Isn’t IRDA at fault for having let LIC come out with such a crap product when it had put a stop on variable products iself.
      LIC, like other insurance companies, and other product selling companies, wants to make a profit and will sell unsuitable products. This has always been the case world wide and will continue to be so.
      It is the regulators and buyers who have to do due diligence to make selling and buying of such products a failure.
      In India, the regulators have been partial in their stance towards such practices (eg SEBI settling cases for cash against Anil Ambani for malpractices) and I don’t think its going to change very quick.
      In such a scenario where the product selling companies are playing truant and the regulator is sleeping, the only option is to empower investors with knowlegde so that they can become better decision makers themselves.
      In my opinion, investors are asking for their trust to be broken and LIC is milking it heavily and the regulator is snoring away.

  39. Mitr Singh says:

    Dear Manish,

    It’s again another eye opening articles. A lot of People will be influence because The Brand name LIC behind it. But i dont thing any reader of “Jagoinvestor” will go for 6%.

    Best Regards
    Mitr Singh

    1. Mitr

      Thanks , the idea here is to show that what is shown to public is not always the real thing , there is enough things to be looked at .


  40. I am not at all pleased with both the variants manish.The returns will not beat the inflation.Will they?
    Moreover I wonder whether this policy has any insurance privilege in case of sudden demise of the customer.

    With Regards,

    1. Ravi

      There is insurance component, and the mortality rates are good enough , but for someone paying 10k premium per year , he will get just 2-3 lacs of cover ,not appropriate from insurance point of view .


  41. Radhey says:

    Ok, I will park my article on this product for now, you beat me to it !
    Nice commentary.
    Since this is a VIP (variable insurance product), it should be the last one on one’s list of products. I have never understood why we need such policies. The ads are misleading and this will only result in mis-selling esp when IRDA themselves had put a hold on VIPs.
    By the way – appropriate picture in the article !

    1. The picture is really apt as said by Radhey.Thanks for great article manish.

    2. Radhey

      Yup, Even i am finding out the reasons why we need such policies . I am sure we have many banks offereing enough bank accounts , then why we need this Happiness ka account ?

      Pic shows the appropriate message 🙂


  42. Hemant says:

    Hi Manish,

    Even I saw full page ad & it was clear that it will look tempting to many investors.

    In morning I got a mail from a client asking about this policy 🙁

    1. Hemant

      haha .. good , Why dont you sell the policy to them , I am sure many need “Saving accounts” 🙂 . I hope you got the joke !


      1. Smart Singh says:

        Nice article Manish. And I knew this was coming once I saw your comment on Ranjan’s blog 🙂
        Minor detail here – IRR should be calculated on “Premium – Mortality Charges”, as MC is the cost of insurance. Then the 10 yr IRR would be around 4.53%. Still pathetic, but correct.

        1. Yea .. I think I made that mistake, but still the article still holds true 🙂


  43. Anand says:

    No chance!

    Even if the returns are truly 6%, then also I would call it pathetic…

    1. Anand

      Yea .. but its target market is not people like you , its people who are in love with LIC and wont listen to anyone except their heart . They dont like Maths they like names


      1. Rajni says:

        Dear Manish,

        I would like to add one thing about this product or any other endowment product of LIC is that…DIRECT MARKETING Team of LIC getting 33% of commission on every product except ULIPS but only for first year….add this also if u like to…..


        1. Rajni

          Can you explain that in details , what is DIRECT MARKETING TEAM ?

          1. Dhawal Sharma says:

            DIRECT MARKETING people are basically telecallers..They are provided data by the employer..They make calls to the public, explain them the features of the product and generate leads for the company..Company sales managers or agents then convert those leads into clients..Its a very profitable model, carried out by Big Broking houses as well (UNICON, SMC, ANGEL BROKING etc)..

            Flip side is, its the single biggest source of MISSELLING…

            1. Dhawal

              ok , I very well know those direct telemarketers 🙂 . I embarass them on each call !

            2. Amit says:

              As I was reading this post I got a a call from ICICI Prudential,saying that since I am their very old customer (even though I have taken their only one product i-protect only in last sept) they are willing to send a financial manager to me for helping me in managing my health insurance planning and financial planning plus also he will tell me about their latest product Guaranteed saving insurance plan. He was asking a appointment for that. However i politely declined his offer .
              However the fact is that even if he try 100 calls per day i am sure more than 50 to 60 people will definitely call him and half of them would definitely fall in their trap.

            3. Amit

              I think out of 100 not more than 10% poeple would be showing any interest and even that is very high 🙂


            4. Rajni says:

              Dear Dhawal,

              They are not telecallers…..they are professionals of insurance industry…telemarketing team work as a support for them. DIRCT MARKETING TEAM mainly work for cross selling as well as for lead generation. They are highly paid professionals……i am agree on ur point that they do mis selling….but they are educated agents…..tagged with manager or executives post.

            5. srinivasu says:

              yes, they get better updates of industry,well trained than anyone in this business.I know them personally and worked.
              really smart ones.

          2. Rajni says:

            Ya…actually LIC started a new sales channel….known as direct marketing….this is second year of this channel…..actually they are planning to hire professional in insurance….but as you know all insurance companies have interest in more and more selling….they absorbing simple graduates also……their profiles are like that…..they provided with LIC old customer’s database and they have to do cross selling along with customer selling……actually they are educated paid agents on contract….LIC paid them 11K fixed (plus other benefits like phone + Laptop & Bike on EMI + various software + and 30 to 33% commission on first year + renewal commission of their previous sells if they meet 12 lkh of target in one FY.

            They are known as DIRECT SALES EXECUTIVES in LIC…..or you can say that they are FUTURE AGENTS of INSURANCE INDUSTRY….

            Direct Marketing concept was started by ICICI PRUDENTIAL LIFE in year 2003 and awarded as best HR practice……and copied by various insurance companies….so as to LIC.

            1. Rajni

              Great , its a good information you have provided 🙂


            2. dhawal sharma says:

              Kind of paid agents, yes but agents, NO..To be an agent, one has to clear the IRDA Exam and none of these people (well, most of them have not cleared the exam)..

              Yes, they are Sales Executive but more in mode of DOCUMENT COLLECTORs…They just go the client, tell them to sign at the CROSSED section, and give them the requistie documents..They wont be able to tell you more than one product of their company..

              I dont agree even 1% that they are HIGHLY PAID PROFESSIONALs..Did you mean to say they are MBAs or POST-GRADUATES, working for 11k (As you have put it)..

              Attrition rate is almost 99% in this channel..You wont find these DIRECT SALES EXECUTIVE in any of the company (Be it LIC, IPRU, or KOTAK) after one year because of huge target pressures..

              ..and yes, the perks you have mentione (Cellphone, bike on EMI etc) are benefits for the LIC AGENTS (Only those who are chairman club members – the ones who have done 100 policies for 3 years)..

            3. Rajni says:

              Dear Dhawal,

              then i think u r not updated with current happenings in insurance industry at HR level……they are making educated sales force specially for youth generation….it was started by ICICI PRU……u heard about PGPMI course sponsored by ICICI PRU??? if not then type PGPMI in google….u’ll come to know…. i m agree that their a is attrition rate is high….but only because of their willing for not to work as paid agent…….

              the idea behind this type of hr practice is to make future manager in coming years….who are sucessful in sales also…..their name of post varies from company to company….in LIC it is names as DIRECT SALES EXECUTIVES and in ICICI PRU. they are named as FINANCIAL SERVICE MANAGER….or in BHARTI they are FINANCIAL PLANNER…..anyway name doesn’t matter……u talked about chairman club agent….they are totally different then DSE’s of LIC…..u can search in carrer option in LIC website…..

              U know one thing…..they are not only MBAs they are passout from XLRI & IIMs….they get HNIs client to deal with…MBAs from other colleges get retail clients to deal with….minimum fixed pay of 11k is of LIC private company it is varies from 15k to 45k….depends on their college…….

              anyway believe it or not….it is truth and as a insurance professional i can say it is changing the whole concept of agent selling.


            4. dhawal sharma says:

              @RAJNI – Yes, you are right..Just went through the details of the programme on GOOGLE as you have suggested..Really, i was not aware of these initiatives in full..

              2 years back when i was working with MAX NEWYORK LIFE as a SALES MANAGER, we use to include these MBA trainees as SUMMER INTERN TRAINEEs..

              Thanks for sharing this info and increasing my awareness about new initiatives 🙂

            5. srinivasu says:

              yes, every word is true.

            6. Sudhakar Menon says:

              dhawal sharma
              I think you got less knowledge. Are you an Agent of Private insurance Co.?

            7. Sudhakar

              Always make sure you put the point which you dont agree with and then say things like “Your got less knowledge” . It might be true , but whats your point ? Lets debate on that .

              Dhawal is an agent of Max Bupa and Kotak .


            8. srinivasu says:

              Oneday you will be a wikileaks.
              Hope god gives you all inputs to save middle class innocent customers before they loose money.
              thanks and all good luck !

            9. Haha .. I will be famous that day !

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