LIC New Jeevan Anand vs PPF Account – Is it fare to compare both the products

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LIC New Jeevan Anand vs PPF Account comparisonRecently one of my friend asked me should I buy LIC New Jeevan Anand Plan or open a PPF account with SBI to save income tax? Although he has asked me only one question, but I sense he has mixed couple of question in one line without understanding the products. Immediately I asked him couple of question based on his question.

  1. Do you have enough life insurance cover, may more than 50 lakh or 1 crore?
  2. Do you know how much life cover you need? People say at least 15 times of your annual income.
  3. Do you have a long term goal? E.g. child marriage, education expense, world tour, buy a dream home etc
  4. Do you want to plan for your retirement corpus?
  5. Do you know what are the best income tax saving tips for you?
  6. Do you really know about the benefit of PPF account? In that case why you have not yet opened a PPF account with any bank?

Then he asked me back, why you are asking me all these questions, I just wanted to know more about lic new Jeevan anand plan. One of my relative who is an LIC agent suggests me that Jeevan Anand is the best selling LIC policy. And even my colleague also bought this policy to save income tax under section 80c. So I was thinking to buy a policy which will save income tax as well provide long term return, something like New Jeevan Anand. But I heard that PPF account provide a very good return in long term, at least better than Jeevan Anand plan.

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LIC New Jeevan Anand vs PPF Account – Not at all fare

As this is the high time to save income tax, insurance companies and agents are very busy to sell their products in the name of income tax saving. At the same time due to personal finance blogs, people are started reading insurance policy reviews before buying. This further makes them confuse as many people mix various financial products and compare. How come one compare LIC new Jeevan Anand plan return with PPF account return? Both of them are different product to fulfill different financial need.

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New Jeevan AnandPPF Account
This is a popular endowment plan from LIC India. Earlier it was Jeevan Anand plan which has been restructured to follow IRDA guidelines and rename to New Jeevan Anand. Endowment plans provide life cover as well as maturity return amount. In other way this is an insurance + savings scheme from LIC. Generally these products doesn’t able to perform in long run from interest point of view. But one should not forget that your life will be covered till entire policy tenure.PPF or Personal Provident Account is nothing but a long term savings scheme. One can deposit amount for long term. The current maturity period is 15 years, although discussions are happening to increase the PPF maturity period. The current interest rate 8.75%. In 15 year one can expect a very good return from PPF account. But it will not provide you life cover.
The premium paid under this policy is exempted under section 80c. Also maturity value is also tax free under section 10(10D)Amount deposited in PPF account is tax exempted. Even the interest earned and maturity value is also tax free
One can surrender this plan after 3 years of premium payment. Jeevan anand surrender value will be calculated based on remaining years.The minimum lock-in period is 7 years. And one can’t withdraw the entire amount before maturity. For pre-mature withdrawal it has to meet with few reasons already set.
Maximum premium amount could be anything, but for tax exemption in a year up to 1.5 lakh is allowed under section 80CMaximum amount deposited for tax exemption in a year is 1.5 lakh under section 80C
Life will be covered till the policy tenure. In case of death sum assured with vested bonus will be paid to family No life cover. In case of death nominee will get the amount after maturity only
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Should I go for both New LIC Jeevan Anand and PPF Account?

So it seems clear that we should keep our insurance need and investment need separate and then plan accordingly.

  • But do you think LIC New Jeevan Anand is the best insurance product?
  • Did you heard about term insurance plans?
  • Why not buy a term insurance plan of 1 crore or more if you are eligible?

LIC Jeevan Anand fails to perform here as it is not able to provide a good life cover. To meet both insurance and investment need these products often fail to perform. So it is better to go with solo vanilla product, instead of mixed flavors. Check out the various online term plans and go for the best one to replace New Jeevan Anand plan.

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Regarding PPF account, you should open a PPF account as soon as possible without thinking anything. PPF account is the best low risk savings scheme. And having a PPF account has its own long term benefit. But did you consider Mutual fund investment? If you can take some risk why not go for MF investment in SIP way to get better long term return.

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Then how to plan my income tax saving this year?

We should not invest thinking about income tax saving only. But the reality is most people invest only to save income tax. 🙂 Anyway that’s why I think income tax is doing a good think indirectly by forcing people to learn the habit of investment. There are many investment schemes to save tax, e.g., section 80c and even beyong section 80c. You can look for these options and plan your investment accordingly.

Final take away from the topic “New LIC Jeevan Anand vs PPF Account”

The very first thing we should keep in mind that never compares products from different category. It will always confuse us and finally lead to a wrong decision. To make your financial planning proper simply follow the thumb rule of Term Plan + Long term Investment (PPF, Stock Market, Debt product etc). In fact you can apply the same rule while planning for income tax.

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Now I hope you are more clear about new Jeevan Anad plan and PPF Account and agree with me that one can’t compare these 2 products. Look at New Jeevan Anand plan from an insurance product point of view and then decide whether it is able to meet your expectations. There are many negative reviews about LIC New Jeevan Anand plan, which does not mean that people will not buy this plan after reading this article. Everyone has his/her own requirement, risk taking capability and own understanding. Just find out where exactly you are and how much you are able to understand before buying any financial product.

4 COMMENTS

  1. Hello sir
    I’m 34 yrs age and have 2 children’s.im planning to buy lic childrens policy worth 1500000 maturity/risk cover for tenure around 15 yrs.
    Is it better to buy term plan and ppf investment to meet the above requirements.
    Thnx

  2. can anyone show jeevan anand in terms of lines and arrows presented as life and an example of 10 lakh i could nont be able to search any such image all provide a chart.

  3. Dear Friend.
    Why you compared jeevan anand and PPF. I think it is not beneficial for investment. But My suggestion to the readers is that allocate your money depends on your needs. Also allocate in different investment options. Invest some money in Mutual funds, Bank RD, PPF, Stocks for long term, Endowment Based LIC policies also, Term plan is must, Personal accident cover policy and then Health insurance plan.
    LIC endowment policies are able to give 7 to 7.6% returns on long term if you are choosing more then 25 to 30 years, Plan for retirement with LIC Jeevan anand with 35 years term with Mutual fund and stocks investment. This is a one of the good idea to balance the retirement fund.
    Term plan is a best option but i will suggest to all of my clients go with a LIC e term or Amulya jeeevan. Dontb think premium is high compare to pvt players. Just 2k to 3 k of premium will not impact your investments but it will gives you a peace of mind. Insurance companies are struggling to survive in the market. but LIC is not in that kind of condition, If a client want to secure their life with term plan go with LIC for maximum term. Till 75 age you will get the cover with fixed premium.
    So PPF totally depends on Govt bond yield right. So In case if the Govt reduced the interest rate of PPF how to get good interest rate? So mutual funds are one of the ideal tool to get good returns. But the market volatility should be consider in the future.
    So always i will suggest my clients to invest in all sector by allocating their investments to get balanced returns.
    If any queries please fell free to contact me on my mob number 9964752416 or mail me to invest4futureplans @ gmail.com
    Best regards
    Srinivas M’
    Financial Consultant
    Bangalore.

    • Thanks Srinivas for providing your expert comment here.

      The purpose behind this article is to address a perception people are having regarding Jeevan Anand and PPF. I am not suggesting here how to plan for investment or retirement. My intention is to tell that we are not understanding a product before investing. Whatever people or agent say we believe that in most cases. It is better to always know about the product and then choose the same as per individuals risk taking capacity.

      Anyway thanks a lot for your suggestions on investment and financial planning. 🙂

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