LIC has come out with a new conventional insurance plan called as ,'Jeevan Ankur'. As per LIC, ' LIC's Jeevan Ankur is a conventional with profits plan, specially designed to meet the educational and other needs of your child. If you are the parent of a child aged upto 17 years, LIC's Jeevan Ankur is the most suitable insurance plan for you which ensures that your responsibilities are met whether you survive or not and without depending on anyone else.'
The fact that you need not buy this plan is obvious from more than one reason. Let me put reasons one by one:
1) There is no doubt that you need to give protection to your child and you must buy insurance to fulfill this commitment. But, it is not at all essential to buy any child insurance plan. Buy term plan which comes at a lower cost and can buy you larger insurance protection at a very low cost.
2) Those who oppose term insurance say that in event of survival of the person assured, term insurance does not give any return. Yes, it is true but that is how insurance is designed.
3) LIC Jeevan Ankur does not assure any guaranteed addition and hence is worse than other plans where you have guaranteed additions. The returns offered by the policy as very poor which can be seen from this example:
Premium Premium Premium
1-Feb-12 -9192 -9192 -9192
1-Feb-13 -9192 -9192 -9192
1-Feb-14 -9192 -9192 -9192
1-Feb-15 -9192 -9192 -9192
1-Feb-16 -9192 -9192 -9192
1-Feb-17 -9192 -9192 -9192
1-Feb-18 -9192 -9192 -9192
1-Feb-19 -9192 -9192 -9192
1-Feb-20 -9192 -9192 -9192
1-Feb-21 -9192 -9192 -9192
1-Feb-22 100000 110000 120000
Return= 1.53% Return=3.23% Return=4.79%
Premium paid is shown as cash outflow, hence negative sign.Premium includes service tax.The entire data is based on second illustration given on LIC website. The calculation does not include the insurance cost. Even with insurance cost excluded from premium paid, the returns will be very nominal.
4) Bonus or loyalty addition does not earn compounded return unlike PPF or NSC and hence suffers from weakness of simple interest paid on such conventional products.
5) It has been repeated time and again that insurance is not an investment product. If you want assured return for your child start a PPF scheme for him or invest in bank fixed deposits. Additionally buy a term insurance.
Jeevan Ankur is old wine in the new bottle and it is better to avoid this policy. Even you want to protect future of your child , this policy should be avoided at all cost
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