Jeevan Shree Vs Term Insurance + Mutual Fund

 A) Jeevan Shree

Product summary: This is an Endowment Assurance plan offering the choice of many convenient premium paying terms. It provides financial protection against death throughout the term of plan with the payment of maturity amount on survival to the end of the policy term.
Premiums:Premiums are payable yearly, half-yearly, quarterly or through Salary deductions, as opted by you, throughout the premium paying term or till earlier death. Alternatively premium may be paid in one lump sum (Single premium).

Guaranteed Additions:The policy provides for the Guaranteed Additions at the rate of Rs. 50/- per thousand Sum Assured for each completed year for first five years of the policy. The Guaranteed Additions are payable along with the Basic Sum Assured at the time of claim.

Bonuses:The policy participates in the profits of the Corporation’s life insurance business from the 6th year onwards. It will get a share of the profits in the form of bonuses. Simple Reversionary Bonuses will be declared per thousand Basic Sum Assured annually at the end of each financial year. Once declared, they will form part of the guaranteed benefits of the plan.

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B) Term Insurance + Mutual Fund

One can buy Term Insurance + Mutual Fund in order to out beat the low returns of Jeevan Shree.

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Now take a real time example of Actual Sensex Return for last 25 years(April 1992-April 2016) for same worked example:

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My Take :

Invest in Term Insurance + Equity Mutual Fund through S.I.P / S.T.P. route as your horizon is long for plans like Jeevan Shree. Tax saving is only a part under Investment Planning don’t limit yourself to Tax Saving , Investing in right product will give you better CAGR returns, thereby surpassing the drawbacks of low return associated with traditional insurance plans.

NOTE:

  • Remember under Jeevan Shree the actual returns aren’t @10% i.e.INR 15,98,000. It’s an example of an ideal scenario where expected returns assumption is @ 10%. The Jeevan Shree write up is taken from the official site of LIC.
  • Past performance is no guarantee of future results. The value and returns/income derived from investments can go up or down.
  • Many Mutual Funds have given better return than Sensex during the same tenure, for convenience Sensex Returns are taken.

     

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