Return Calculations: LIC Jeevan Sugam Policy: Finance Trading Times

Return Calculations: LIC Jeevan Sugam Policy

Continuing further from our previous article LIC Jeevan Sugam Policy Review, here are the further details on Return Calculations.

Is the LIC Jeevan Sugam Policy worth investing?
Going by the example cited on LIC's official website, they quote a scenario of a 30 year old person who pays Rs. 33759 as one time single premium for basic sum assured as 60,000 Rs and at the end receives total amount ranging from Rs. 60,000 to 67,200 based upon assumptions that LIC will be able to earn throughout the term of the policy will be 6% p.a. or 10% p.a. LIC Jeevan Sugam

So basically, even with the example on LIC site, this case is of invested amount Rs. 33759 turning it into a best return scenario of Rs. 67,200. In essence the investor has doubled his money in 10 years.

But here it gets interesting. If I assume that a bank Fixed Deposit is paying me 9% interest and instead of putting my money in LIC Jeevan Sugam Policy, I put my money for 10 years with reinvest option in 9% Bank FD, then the calculations give me better return at the end of 10 years:

LIC Jeevan Sugam Policy Return Calculations

YearAmountMaturity at end of year
133,759.0036,797.31
236,797.3140,109.07
340,109.0743,718.88
443,718.8847,653.58
547,653.5851,942.41
651,942.4156,617.22
756,617.2261,712.77
861,712.7767,266.92
967,266.9273,320.95
1073,320.9579,919.83
So this Bank FD investment gives me almost 80,000 Rs. at the end of 10 years assuming 9% interest rate. This is much better than what LIC Jeevan Sugam Policy is offering.
However, there is one important point being missed in Fixed Deposit. It does not offer any guranteed sum assured, in case of death of investor. If investor dies in 4th year, all his nominees will get is 4 years of interest from bank (around 47,643 Rs.). But in LIC Jeevan Sugam Policy, it will be 10 times of sum assured that will be 60,000 Rs.
Another thing is that Jeevan Sugam policy offers you tax benefits under section 80(C), which may not be available in Bank FD. Yes, there are tax saving FD's, but the interest the tax saving FD's pay may be less.

So this offers some kind of insurance cover compared to Fixed Deposit. Someone looking for partial insurance + investment return can look at investing in this Jeevan Sugam Policy.
Probably that's why LIC is limiting the maximum entry age at 45 years. :) They dont want elderly people benefit from this insurance cover. :)
If you see any errors in this article, please inform us via email or post a comment (at the end of this article)

Are there and tax exemption or tax benefits available for LIC Jeevan Sugam Policy?
Yes, tax benefit is available for investments made under LIC Jeevan Sugam Policy under section 80(C).

What are the other Policies from LIC other than LIC Jeevan Sugam Policy?
Here is a list of All LIC Policies

What are the other competitor products for LIC Jeevan Sugam Policy?
Jeevan Sugam Policy is a invest and forget policy. It has a simple alternative as Bank Fixed Deposit with 9%-10% interest rate offering in reinvest mode.
Other option is to invest in index based ETF or exchange traded funds and forget the money for 10 long years with equity exposure expecting high returns. Here is an example of ETF with returns calculations: ETF – Exchange traded fund example

LIC Jeevan Sugam Policy
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