http://www.jagoinvestor.com/forum/lic-jeevan-anand-5/7307/
Free Financial Calculators said:
You should not by endowment policy for the following reasons:
1. Th life cover is small. You need at least 15 times your annual salary as insurance cover. If and when you have children you
will need more.
2. The life cover is not free! If the agent said that it is nonsense.
3. The returns you will get will be bet 6-7% (inc. all possible bonuses). for a goal like retirement 33 years away if you are not
invested in about 60-70% equity stocks or MFs you will not have financial independence after retirement
4. No pension plan. No child. The only plan is education plan. Yours that is: Learn and start investing in mutual funds/. For
retirement invest in a combination of PPF, EPF and mutual funds
Ramesh :
The amounts are NOT Guaranteed. And overall the TOTAL IRR is 6-7%. A big 1-2% less than PPF rate.
Just to give you a picture, the Inflation rate is 11-12% in CPI terms. Do not ask about the real inflation rates.
Multiple this by 30 years, and you are losing 4-7% on your investment, if you opt for debt based endowment plans.
Do not buy any plan which is being sold to you! Very simple thing. It is in the interests of the LIC agents and LIC to market themselves as the best, most dependable, etc. But it is not in your own interest to buy any plan from LIC.
Ask this:
1. Where does the LIC invest its money to give you those returns?
2. Ask the agent, what is the commission structure of this plan? He is bound to tell you his first year’s and subsequent percentages. If I recall correctly, it is anywhere between 40-70% of first year premium and 5-8% subsequently. But do not quote this, because I have never bought any such plan and I have never got a proper answer (Will check though, now).
3. If the agent is old enough, ask him the past returns. How much that policy has given in the past? Get a real example and then do the maths yourself.
Free Financial Calculators said:
You should not by endowment policy for the following reasons:
1. Th life cover is small. You need at least 15 times your annual salary as insurance cover. If and when you have children you
will need more.
2. The life cover is not free! If the agent said that it is nonsense.
3. The returns you will get will be bet 6-7% (inc. all possible bonuses). for a goal like retirement 33 years away if you are not
invested in about 60-70% equity stocks or MFs you will not have financial independence after retirement
4. No pension plan. No child. The only plan is education plan. Yours that is: Learn and start investing in mutual funds/. For
retirement invest in a combination of PPF, EPF and mutual funds
Ramesh :
The amounts are NOT Guaranteed. And overall the TOTAL IRR is 6-7%. A big 1-2% less than PPF rate.
Just to give you a picture, the Inflation rate is 11-12% in CPI terms. Do not ask about the real inflation rates.
Multiple this by 30 years, and you are losing 4-7% on your investment, if you opt for debt based endowment plans.
Do not buy any plan which is being sold to you! Very simple thing. It is in the interests of the LIC agents and LIC to market themselves as the best, most dependable, etc. But it is not in your own interest to buy any plan from LIC.
Ask this:
1. Where does the LIC invest its money to give you those returns?
2. Ask the agent, what is the commission structure of this plan? He is bound to tell you his first year’s and subsequent percentages. If I recall correctly, it is anywhere between 40-70% of first year premium and 5-8% subsequently. But do not quote this, because I have never bought any such plan and I have never got a proper answer (Will check though, now).
3. If the agent is old enough, ask him the past returns. How much that policy has given in the past? Get a real example and then do the maths yourself.
