Do you hold a current LIC Jeevan Saral Policy? If yes, here’s something important that you would like to know. This policy is likely to make a loss for you.
LIC Jeevan Saral policy has lately been in the news for all the wrong reasons. MoneyLife Foundation along with some policy holders filed a case on LIC highlighting the policy defects and to make adequate compensation to those who ended up buying it.
The worst part is that it is the senior citizens who are now facing a negative return on an investment based insurance policy.
… a 58-year-old person, paying half-yearly premium of Rs 4,076 for 12 years, had paid a total of Rs 97,824. The maturity sum assured, which was paid to him after 12 years, was a mere Rs 24,575 plus bonus, amounting to Rs 34,405. Even though the maturity amount was mentioned in the policy document, it was missing in the proposal, which only specified the death sum assured of Rs 1.25 lakh. While the death cover of 15 times the premium is good, it leads to hefty negative returns due to higher mortality charges for senior citizens. Some policies even have 20 times the premium as cover for senior citizens which would mean even lower returns. Even a younger person will barely get premiums back at maturity; hence, Jeevan Saral is a bad investment product.Money Life
Read the full note from Money Life here.
Oh yes, you had thought that LIC is a government company and protects your money and even offers a decent return.
Nothing can be further from the truth.
I have maintained for many years now that LIC stands for Loot India Corporation. And all endowment and money back products exist not to add to your returns but to take away from them.
Talk about returns, almost all such policies end up giving you a less than a Bank FD interest rate. And hence, you must avoid them.
What if you hold LIC Jeevan Saral Policy?
To add, the issue seems more with the (for profits) policy. However, this is what you can do now.
First, find out the current surrender value of the policy. If you think you can get out of it and reinvest in better options, you probably should.
Two, read this MoneyLife article link in which you will a format to send your details to help them build a stronger case. Do it!
If you haven’t bought any such investment based insurance plans, stay away from them, forever.
Read more: Insurance – an Investment Mirage
Now, do share your own experience with us in the comments so that the readers at large can benefit.