Suggestions needed to choose best LIC plan for age under 30

[sunit123]

best is skip LIC as the max returns you would get ranges from 1% to max 6%, since there was no online banking or exposure to other investment options some 30-40yrs ago, folks went for LIC as it required no effort from them as the agent would do all the job and they used for 80C exemption..

to be on a safer side, best is SFB where currently the interests have gone down below 9% as earlier Unity/NESFB/Suryoday were giving above 9-9.5% and per account its 5L insured and expecting the limit to further increase to 10L by this year..again all depends on how much you are planning to invest every month..

Problem with LIC is that they are now puppets and invest according to Wishlist of their master....so do not expect them to make wise investment decisions.

 

[Ram1]

When you pay some 30K as premium per annum to LICs Jeevan XYZ plans. They take some 2-5K as mortality and make a life cover for you. Heavens forbid, if something happens to the insurer his survivors get some meger 10L. The rest of the 30K , in invested in some low yielding instruments and their maturity amount may not even yield 8% annual returns.

Instead, enroll for a term insurance of 1crore cover and be done with it. Any company is ok
Investment go by SIP route. Consult a financial planner.

Got it bro. Thanks for explaining in detail

 

[Ram1]

best is skip LIC as the max returns you would get ranges from 1% to max 6%, since there was no online banking or exposure to other investment options some 30-40yrs ago, folks went for LIC as it required no effort from them as the agent would do all the job and they used for 80C exemption..

to be on a safer side, best is SFB where currently the interests have gone down below 9% as earlier Unity/NESFB/Suryoday were giving above 9-9.5% and per account its 5L insured and expecting the limit to further increase to 10L by this year..again all depends on how much you are planning to invest every month..

I unable to trust banks bro. In this online world, fraudsters have become a headache. Cant trust any transaction with unknown persons. Recently my sbi acc got freezed because of cyber complaint for the transaction that happened almost a year back.
Sbi not giving full details and asking me to contact Mumbai police for more details. I dont have energy to either visit sbi or Mumbai ps. So left it.
Imagine if had fds in sbi it would be gone to.
In chain my other accs might gone.
So can't trust bank linked investments like fds.

May be I'm ok with banks which provide fd without savings account

 

[ozzy_ausbound]

I unable to trust banks bro. In this online world, fraudsters have become a headache. Cant trust any transaction with unknown persons. Recently my sbi acc got freezed because of cyber complaint for the transaction that happened almost a year back.
Sbi not giving full details and asking me to contact Mumbai police for more details. I dont have energy to either visit sbi or Mumbai ps. So left it.
Imagine if had fds in sbi it would be gone to.
In chain my other accs might gone.
So can't trust bank linked investments like fds.

May be I'm ok with banks which provide fd without savings account

If you're unable to trust the large public sector banks like SBI, then you should be doubly cautious of the Small Finance Banks, under which the FDs are booked if you use an app like Stable Money. If you're looking for an alternative to Fixed Deposits, which similar returns and safety, you can look at debt funds like Liquid Funds or Money Market Funds, which are not linked to the equity (stock market).
Do read about it and understand what they are before investing. Avoid the endowment plans by LIC - they promise you good insurance and good investment, but give you neither. Go for a simple term plan, that gives you a good cover till age 60.
Read books like Let's Talk Money (or listen to the audiobook) to get a good basic understanding of personal finance.

 

[Ram1]

If you're unable to trust the large public sector banks like SBI, then you should be doubly cautious of the Small Finance Banks, under which the FDs are booked if you use an app like Stable Money. If you're looking for an alternative to Fixed Deposits, which similar returns and safety, you can look at debt funds like Liquid Funds or Money Market Funds, which are not linked to the equity (stock market).
Do read about it and understand what they are before investing. Avoid the endowment plans by LIC - they promise you good insurance and good investment, but give you neither. Go for a simple term plan, that gives you a good cover till age 60.
Read books like Let's Talk Money (or listen to the audiobook) to get a good basic understanding of personal finance.

Ok sure thank you

 

[Amit_1]

I would suggest Term plan + investments separately, don’t mix it up

 

[Ram1]

I would suggest Term plan + investments separately, don’t mix it up

Ok will thunk,that what majority suggested

 

[cardio_guycardio_guy is verified member.]

My requirement is ,
I have to keep paying everymonth until some age,
If something happens to me, family has to get amount.
If nothing happens to me, whole amount i have to get in lumpsum not as pension.

Any suggestion for this ?

Lic plans all of them give 5 to 6% returns of you calculate interest per se. But it is not fixed. Like if you start the policy today and die next week, then your dependant will get sum insured, in such case return will be high.
But we dont take insurance to die. It's not wise to calculate returns in lic policy.

Coming to types -
Money back policy - you keep paying for 15 years. Every 5 year you get some money back and at the end of 15 years you get the remaining sum insured + little more.

Then, another type is keep paying for some years and start getting it back afterwards.

Then, pay one shot and get pension next month onwards (NPS people will have to do this)

For your requirement jeevan anand policy will be better. Keep paying for some 15 20 years. If nothing happens, you get the money + little more back upon maturity. After that, whenever you die, dependant will again get the sum insured + little more. This is better if you don't die during policy period. Only jeevan anand has this special thing.
Now other policies are like if you don't die during policy period, you get the sum insured back on maturity, and afterwards nothing, nobody gets anything later when you die..

 

[Ram1]

Lic plans all of them give 5 to 6% returns of you calculate interest per se. But it is not fixed. Like if you start the policy today and die next week, then your dependant will get sum insured, in such case return will be high.
But we dont take insurance to die. It's not wise to calculate returns in lic policy.

Coming to types -
Money back policy - you keep paying for 15 years. Every 5 year you get some money back and at the end of 15 years you get the remaining sum insured + little more.

Then, another type is keep paying for some years and start getting it back afterwards.

Then, pay one shot and get pension next month onwards (NPS people will have to do this)

For your requirement jeevan anand policy will be better. Keep paying for some 15 20 years. If nothing happens, you get the money + little more back upon maturity. After that, whenever you die, dependant will again get the sum insured + little more. This is better if you don't die during policy period. Only jeevan anand has this special thing.
Now other policies are like if you don't die during policy period, you get the sum insured back on maturity, and afterwards nothing, nobody gets anything later when you die..

Thanks for the detailed analysis. Will look into it

 

[EliteUser]

I unable to trust banks bro. In this online world, fraudsters have become a headache. Cant trust any transaction with unknown persons. Recently my sbi acc got freezed because of cyber complaint for the transaction that happened almost a year back.
Sbi not giving full details and asking me to contact Mumbai police for more details. I dont have energy to either visit sbi or Mumbai ps. So left it.
Imagine if had fds in sbi it would be gone to.
In chain my other accs might gone.
So can't trust bank linked investments like fds.

May be I'm ok with banks which provide fd without savings account

Option 1: If liquidity is not an issue and want high security then RBI floating rate bonds , It gives 8.05% currently and are very secure ( Interest paid semi annually, Maturity - 7 years). Add term insurance to it and you are done. (Returns expected - 7 to 7.8%)
Option 2 : If you want to take little bit risk but highly secure way, then you may go for multi-bank FD's. Go for SFB's or small banks , as they are secure till 5 lakhs deposits each bank by DICGC. Also liquidity is not an issue as you will have multiple banks FD's. Add term insurance to it. (Returns - 7-8% for smaller banks and 6-7% for larger banks)
Option 3 : If you are ready to take moderate risk then go for Debt MF's. Now there are categories, I would say, If you don't have any knowledge then go for dynamic bond funds as in these funds, Fund Manager will decide the duration of bonds. In case funds are required in shorter time then go for Liquid or Short duration debt funds as they are immune to interest rate risks. Also, Add term insurance to it. (Returns - 7-10% on dyanmic bond funds, Short term - 6-7 % or liquid has almost lesser than repo rate)
Option 4: If you are okay taking risks then you may look into equity but i won't dig deep here as you seems risk averse. ( Returns 10 - 18%)
Option 5: This is the last option I would take i.e. mixing insurance with investment but if you want to go this way then I did research in policy bazaar and tried to calculate XIRR of all policies. I found Kotak life plans to be most reasonable, as they give 3% of annual premium as extra units from year 6. Also, On policy expiry you will get 2x of your mortality charged for entire policy period. If you are young then go for only Market linked plan, as it will be more rewarding. But, If you are old then you may go for capital guarantee plan ( but returns are way too sub par). Also, to get an idea, for 7.5k sip you get life cover of 9lakhs in Kotak e-invest plus plan. So, base term insurance may still be required.
Pro tip - If you go for option 5 then get a good cashback card like using HDFC millenia DC , you can buy Amazon pay GC at 5.9% off and use that for premium payment to get extra off. Using this method (Discount using amazon pay GC), I calculated XIRR of kotak e-invest plus. At 8% returns for 5 yrs payment and policy term of 10 yrs, the XIRR came out as 8.17% ( 2nd highest, the highest being Canara HSBC life). (Do note recent devaluation of amazon pay)
Pro tip 2 - Use some junk number to login to policy bazaar, then put your details superficially, then proceed to buy insurance. In upper right corner you ill get one icon named " Benefit illustration". Click that and download pdf, You will get table of all the charges applicable yearwise. Put that in excel to calculate XIRR. If this seems complicated just see " Net Yield" i.e. the returns you will be making in you policy ( at 4% or 8% rate post charges).
Pro tip 3 : If you go for mutual funds, then always buy Direct- Growth funds. Not those Regular funds sold by banks and full brokers.

Finally, I am not a financial advisor. So, opinions are personal and non binding. Your investment your profits or losses.

 

[Ram1]

Option 1: If liquidity is not an issue and want high security then RBI floating rate bonds , It gives 8.05% currently and are very secure ( Interest paid semi annually, Maturity - 7 years). Add term insurance to it and you are done. (Returns expected - 7 to 7.8%)
Option 2 : If you want to take little bit risk but highly secure way, then you may go for multi-bank FD's. Go for SFB's or small banks , as they are secure till 5 lakhs deposits each bank by DICGC. Also liquidity is not an issue as you will have multiple banks FD's. Add term insurance to it. (Returns - 7-8% for smaller banks and 6-7% for larger banks)
Option 3 : If you are ready to take moderate risk then go for Debt MF's. Now there are categories, I would say, If you don't any knowledge then go for dynamic bond funds as in these funds, Fund Manager will decide the duration of bonds. In case funds are required in shorter time then go for Liquid or Short duration debt funds as they are immune to interest rate risks. Also, Add term insurance to it. (Returns - 7-10% on dyanmic bond funds, Short term - 6-7 % or liquid has almost lesser than repo rate)
Option 4: If you are okay taking risks then you may look into equity but i won't dig deep here as you seems risk averse. ( Returns 10 - 18%)
Option 5: This is the last option I take i.e. mixing insurance with investment but if you want to go this way then I did research policy bazaar and XIRR of all policies. I found Kotak life plans to be most reasonable, as they give 3% of annual premium as extra units from year 6. Also, On policy expiry you will get 2x of your mortality charged for entire policy period. If you are young then go for only Market linked plan, as it will be more rewarding. But, If you are old then you may go for capital guarantee plan ( but returns are way too sub par). Also, to get an idea, for 7.5k sip you get life cover of 9lakhs in Kotak e-invest plus plan.
Pro tip - If you go for option 5 then get a good cashback card like using HDFC millenia DC , you can buy Amazon pay GC at 5.9% off and use that for premium payment to get extra off. Using this method (Discount using amazon pay GC), I calculated XIRR of kotak e-invest plus. At 8% returns for 5 yrs payment and policy term of 10 yrs, the XIRR came out as 8.17% ( 2nd highest, the highest being Canara HSBC life).
Pro tip 2 - Use some junk number to login to policy bazaar, then put your details superficially, then proceed to buy insurance. In upper right corner you ill get one icon named " Benefit illustration". Click that and download pdf, You will get table of all the charges applicable yearwise. Put that in excel to calculate XIRR. If this seems complicated just see " Net Yield" i.e. the returns you will be making in you policy ( at 4% or 8% rate post charges).
Pro tip 3 : If you go for mutual funds, then always buy Direct- Growth funds. Not those Regular funds sold by banks and full brokers.

Finally, I am not a financial advisor. So, opinions are personal and non binding. Your investment your profits or losses.

Wow thanks for the detailed options man. I really appreciate these efforts🙏