Ranjan Varma

LIC’s Samridhi Plus March 7, 2011

LIC has launched another ULIP called Jeevan Samridhi Plus. In India, the highest selling financial products seem to be those that combine insurance and investment. Even when Financial Planners are rationally arguing to keep insurance and investments separate.

The reason is very simple. Insurance is not bought, it’s sold by Agents. And when they have the incentive to sell a product which combines insurance and investment, it’s easier for them. And we have around 3 million insurance agents pushing such products.

Moreover, people are not aware of the costs and the implications. Just look at NPS and it’s extraordinary low costs, and no one is buying!

Coming back to the Samridhi Plus review, check out the details on LIC’s website. This new ULIP from LIC comes at perhaps the lowest premium allocation charge of just 6% in the first year. However it continues upto the 5th year @ 4.5%, while earlier ULIPs, the charges dropped radically after the first year.

LIC’s Samridhi Plus is a unit linked plan that safeguards your investment from market fluctuations, so that your investments are protected in financially volatile times. This plan offers payment of Fund Value at the end of policy term, based on highest Net Asset Value (NAV) over the first 100 months of the policy, or the NAV as applicable on the date of maturity, whichever is higher.

LIC’s website has some benefit illustrations prescribed by the IRDA @ 6% and 10%. As per LIC’s site, the yield (IRR) for the 6% calculation comes to 3.92% while the 10% assumption gives areturn of 7.90%.

This 6% and 10% prescription by IRDA is puzzling. While it is known that the yield of Insurers hover between 6-10%, the returns on stock market investments can be very volatile. Why apply the prescription for ULIPs really baffles me.

Moreover, this one rule for all, can mislead. For example, the NAV of Pension Plus launched last year (Feb, 2010) by LIC is 9.9751 (Mixed Fund, effecctive dt 4/3/11) and 10.1964 (Debt Fund, dt 4/3/11). Remember, you received units only after deduction of charges and so you did not get units for all your money invested.

For example, if you invested Rs 10000/- with a premium allocation/other charges of 20%, you got units for Rs 8000/- only. If the opening NAV is Rs 10, you get 800 units. After 1 year, if the NAV is 10.1964, the value of your investment is 800×10.1964 = 8157 only.

ULIPs as a concept of combining insurance, investments and even tax planning sounds good. Add to it the convenience of dealing with a ubiquitous insurance agent (Each one of us have some relative as an agent, no?), ULIP has become a hot selling financial product.

But it’s worthwhile to take a deeper look at the product and then decide for yourself. To me, it’s uncomfortable riding two-three boats at the same time.

We know the cost of falling off, No?

Cross posted on Personal Finance Online Resources

Thanks for reading. Please check out our financial planning workshops and You can send us email for details about the workshops and book.

Connect with Ranjan Varma

Ranjan Varma has written 471 post on this blog.

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

Recommended posts

Blogger PostLinkedInTwitterFriendFeedFacebookEmailShare/Save
close

LIC’s Samridhi Plus

15 Comments

  1. SATISH

    LOYALTY ADDITION IS NOT GUARANTEED BY L I C. AGENTS ARE GIVING ASSUMPTION OF 10% P.A. AT THE TIME OF MONEY PLUS PLAN SAME FUNDA PUBLISHED BY AGENTS AND OFFICERS OF LIC FOR THEIR OWN INCENTIVES.
    NOW MONEY PLUS IS GOING IN MINUS.AGENTS AND OFFICERS EARNED HUGE COMMISSION AND INVESTORS ARE LOOSING THEIR HARD EARN MONEY.
    DON’T TRUST JEEVAN SARAL AS GOOD INVESTMENT.
    ALL INSURANCES ARE GIVING ONLY 3to5% return. NOT MORE THAN THAT.GO FOR LONG TERM RECURRING IN BANKS.

    Read more: http://www.bloggerspoint.com/compare-lic%e2%80%99s-jeevan-saral-atm-plan-with-recurring-deposit-public-provident-fund-which-way-jeevan-saral-is-more-beneficial-than-recurring-deposit-public-provident-fund/#ixzz1GDlChDdG
    Under Creative Commons License: Attribution


  2. Venkatesh Iyer

    Sir, I quite agree with you. I am an agent working for LIC.

    I feel that we should be quite frank with our clients. It is not only the first time business we should look for but the trust that should be developed with our clients.

    Regarding your statement ‘ALL INSURANCES ARE GIVING ONLY 3to5% return’, this too depends on the age. Jeevan Saral is a good product promoted by LIC. For youngsters ie. for those between the age of 25-35-40 it is quite good and the returns they can expect would be around 7-8%. But as age progresses,the returns as you say is on the lower side, may be 3-4%.
    Insurance protects family and it should be looked from the longer perspective. Please do not misunderstand me as I am just casting my views.


  3. Venkatesh Iyer

    Sir, I quite agree with you. I am an agent working for LIC.
    I feel that we should be quite frank with our clients. It is not only the first time business we should look for but the trust that should be developed with our clients.

    Regarding your statement ‘ALL INSURANCES ARE GIVING ONLY 3to5% return’, this too depends on the age. Jeevan Saral is a good product promoted by LIC. For youngsters ie. for those between the age of 25-35-40 it is quite good and the returns they can expect would be around 7-8%. But as age progresses,the returns as you say is on the lower side, may be 3-4%.
    Insurance protects family and it should be looked from the longer perspective. Please do not misunderstand me as I am just casting my views.


  4. Ranjan

    @Venkatesh I know some very good LIC agents who enjoy their customers trust. Thanks for sharing. Best wishes


  5. Raaz

    Rajan sir, what will be the agent comission in samridhi plus for a FD of rs30,000/-


  6. suraj kumar

    i want to invest a lump sum amount of Rs. 1 lac in LIC Smridhi plan.pls suggest me is this a good plan? pls suggest this is my hard earned money….


  7. Venkatesh Iyer

    Sir, Regarding your plan of investing Rs.1,00,000 in LIC’s Samridhi Plus, no doubt it is a good idea. LIC’s Samridhi Plus is a market related plan which gives highest NAV over the first 100 months of the policy. So it depends on the market conditions. In case you are ready to take market risks, it is well and good.

    The other alternative is that you can go for plans that are not market related like Jeevan Saral or Jeevan Anand. This too depends on your age. If you are below 35 years, I would advise you to go for Jeevan Saral.

    Suppose a person of age 30 years is investing Rs.10,000 per month for 27 years, he or she will get more than 1 Crore on maturity. Here you get 250 times insurance coverage and there is a partial withdrawal option also. You can withdraw part amount may be after 10 years or so when loyalty amount gets added to the maturity amount.

    In case of Jeevan Anand, even after maturity, there is insurance coverage. It provides life time coverage.

    In case of any clarifications, you can contact me on venkatesh_iv27@yahoo.com.


  8. swamy

    Dear Sir,

    I am interested with LIC Samruddi Plus, I am planning to invest Rs.15000*2=30K p/a for 5 years. How much approximate amount can i get at the time of maturity in case worst,average, good market situations? Exactly I don’t have much idea about ULIPs.
    Can you please assess how much would be my returns after maturity.


  9. Venkatesh Iyer

    This plan is a unit linked plan or market related plan which safeguards your investment from market fluctuations. It offers payment of Fund value at the end of policy term based on highest NAV over the first 100 months of the policy or the NAV applicable on the date of maturity, whichever is higher.

    In this case, it would be quite difficult to predict what maturity amount you would get. Everything depends on the market conditions.

    You can contact me on venkatesh_iv27@yahoo.com in case you require any assistance.


  10. Prasad

    Sir,

    If I invest Rs 100,000/- now in LIC Samruddi Plus as single premium. How many units I will get? What would be the net amount in rupees after completion of policy term (10 Years)? Please assume that highest NAV in this whole period is Rs 20/-

    Regards,
    Prasad


  11. Venkatesh Iyer

    Sir, when you are investing Rs.100,000 in this plan, there are charges which will be taken into account and the balance amount will be invested. For single premium there are allocation charges to the extent of 3.3%, accident benefit charges of 0.50 per thousand, policy administration charges of Rs.30 per month thereafter going upto 3%p.a. throughout term, Fund management charges of 0.90% p.a. of fund value, guarantee charges of 0.40% per annum. You can also refer to my blog.


  12. Soham

    sir,

    I have two questions regarding LIC policy which i need you to resolve ,one concerning jeevan saral & the other being LIC market plus or any other ULIP plan.

    1) As far as jeevan saral is concerned , i want to specifically ask you that if i invest 2500-3000 per month for 30 years , currently my age being 25,what would be the return after the maturity? Or, apart from this do you suggest any better option which would fetch me a good long term return without incuring any risk?

    2) a. As far as LIC market plus or any other ULIP plan is concerned,do you suggest plans of these sort at all in the first place & does it have anything to do with the age of the person who invests & if so, i would require your explanation.

    b. If one decides to invest Rs.1,50,000 or 2,00,000 in this plan, then after what period of time will i get double the amount in return?

    c. Is pension plus policy a good option?


  13. Venkatesh Iyer

    I)As far as jeevan saral is concerned , i want to specifically ask you that if i invest 2500-3000 per month for 30 years , currently my age being 25,what would be the return after the maturity? Or, apart from this do you suggest any better option which would fetch me a good long term return without incuring any risk?
    In these cases there is no risk involved. ——a) In case you are investing Rs.3000 per month, the insurance amount would be 3000 x 250 times in Jeevan Saral i.e. 750,000 (you would be paying a premium of Rs.3063 per month instead of Rs.3000) and Maturity Amount that you will get after 30 years will be approx. 43 Lacs (returns in the range of 7-8%).
    b) Another option is Jeevan Anand where you will get lifetime coverage. Insurance amount is Rs.16 Lacs – Premium Payable will be 3049 per month for 40 years and maturity amount will be approx. 96 Lacs (returns in the range of 7-8%)
    c) Another option is Jeevan Anand – Insurance amount is Rs.10.70 Lacs – Premium Payable will be 3031 per month for 30 years and maturity amount will be approx. 40 Lacs (returns in the range of 7-8%).

    II) As far as LIC market plus or any other ULIP plan is concerned,do you suggest plans of these sort at all in the first place & does it have anything to do with the age of the person who invests & if so, i would require your explanation——In these plans like Market Plus, Samridhi Plus, Pension Plus, Endowment Plus, these are all market related plans and obviously there is little risk factor involved. Returns are good when market conditions are good. So it depends on you whether you are ready to take market risk. Moreover, in these plans, there are charges involved that will be deducted from your premium amount and the balance amount will be invested in the market.

    III) If one decides to invest Rs.1,50,000 or 2,00,000 in this plan, then after what period of time will i get double the amount in return?—–All depends on the market conditions.

    IV) Is pension plus policy a good option?——-No doubt, this pension plus is a good plan but returns depend on the market conditions. You can have a look at my blog http://getlifeinsurancetoday.blogspot.com/2010/09/pension-plus-plan-from-lic.html

    b) The minimum period is 10 years and on completion, the amount depending on that day’s NAV is distributed as pension. You will have an option to commute upto a maximum of one third amount or go for full amount as pension. There are charges which shall be deducted and the balance amount will be invested in markets.
    Regular premium (other than monthly (ECS) mode) : Rs. [15,000] p.a.
    Regular premium (for monthly (ECS) mode) : Rs. [1,500] p.m.
    Single premium: Rs. [30,000] Mode of Payment: Single, Half Yearly, Quarterly, Yearly or Monthly (ECS)

    In case of any clarifications, you can contact me on venkatesh_iv27@yahoo.com


  14. alokc06

    dear sir i have joined lic this month as a lic agent. is this a good idea to earn money with social service. give me some tips


  15. Venkatesh

    Sir sorry for the delay in replying. This is a good profession. The most important aspect to be kept in mind is that you should have a wide range of contacts. Try to get business. Once you get business, servicing is very important. Even though you have few customers, those customers should give you recurring business. So servicing is very important. LIC gives you training.


  16. Anand

    Sir i invested 1 lakh in samrudhi plus, but i think it is not going well.


Leave a Reply

Ranjan Varma

Ranjan Varma has over 20 years of work experience in the financial services industry. Ranjan has worked with LIC & LIC Housing Finance in various positions like Branch Manager, Manager Sales, Area Manager, Deputy Regional Manager, etc. Ranjan has experience working in areas like Sales, Marketing, Investments & HR. Ranjan Varma has been interacting on his blog @ http://ranjanvarma.com since 2007, with posts on how to manage money. Ranjan Varma edits a personal finance website and has built products & tools for financial management @ http://rupeemanager.com. Ranjan also delivers training on personal finance. Ranjan has spoken at various seminars/workshops at Corporates and many Educational Institutions. Ranjan believes in Vipassana, a way of self-transformation through self-observation (to see things as they really are). Ranjan also aspires to create new businesses & projects from time to time.

LIC’s Samridhi Plus March 7, 2011

Contact


Search