Increase in Exposure of the life insurer to the Government

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  1. Ankit Agarwal says:

    In spite of so much investments in G-secs, equities, corporate bonds, government schemes, etc the policies of LIC can’t even beat inflation. What is the benefit of taking such policies and paying such huge premiums?

    • ranjeet says:

      Life insurance can’t be compare with anyone.it is a risk coverage ,if something happens to someone then it will help that person’s family member to adjust with world.LIC premium is high as it guarantees to pay the amount.so bring a life jacket first after that u can buy any dresses.

      • Ankit Agarwal says:

        I am not against Life Insurance. I am against the traditional policies sold by LIC. We can opt for term plans, that’s my point.

    • Mayank says:

      LIC can’t beat inflation because they are more working as a lender to the govt. If the government ask them to buy, they will grab a chunk of NPO also!

      • Ankit Agarwal says:

        That’s not the only reason. Another reason is LIC pays a very big amount of our premiums via commissions to its agents. But the reason u mentioned is also very relevant. 🙂

  2. ar.komal03 says:

    By investing in policies u can do long term saving, can get tax benefit bla blaaa…everyone know! Beside all this it has its pros and cons… you can compare it by calculations-
    Suppose, you have invested Rs.500 per year in stock market. If you earned annual return of 8%, after 20 years u would have Rs.22881 (before taxes and inflation). Considering the opportunity cost of putting that Rs. 500 per year into term life insurance premiums, you’re throwing away Rs. 23881. But if you die without life insurance during those 20 years, you’ll leave your heirs with almost nothing instead u can leave them with huge amount. And LIC is most trusted!!

    • Ankit Agarwal says:

      You’re right. Everything has its pros and cons.
      First of all we don’t get just 8% in stock markets. We can expect minimum 15% CAGR over 20 years. So we will get Rs. 51,222 after 20 years post-tax ( because long term gains on equities is exempt beyond 12 months).
      Secondly, i am not against life insurance. I am against traditional policies who don’t beat inflation. As you rightly mentioned a term life insurance is more necessary than investing in stock markets. Any person who has the capability of spending rs 750 p.a. must not fully spend it on traditional policies. S/He must spend Rs 500 on term plan and invest the rest wherever s/he wants i.e., debt or equity according to their risk tolerance capacity.
      Lastly, i totally agree that LIC is the most trusted brand. But recently i read in a Business Standard article that persistency ratio after 61 months of IDBI Federal is 54.47% and that of LIC is 44%.
      Link – http://www.business-standard.com/article/pf/go-by-performance-not-only-insurance-premium-116052200709_1.html

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