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Life Insurance Corporation

LIC vs Mutual Funds- Understanding the Difference

LIC vs Mutual Funds- Understanding the Difference

There are numerous options given to an individual when it comes to investing. But choosing the best is an extremely confusing task. However, where a person wants to invest is a matter of personal choice and depends upon the goals of the investor, the amount of money he wishes to invest and the risks he might want to take.

LIC and Mutual funds are the most popular and trusted methods of investment in India and people often find it difficult to choose between the two. So here’s a detailed study regarding LIC VS Mutual Funds to help you choose the best for yourself.

LIC VS Mutual Funds

LIC

MUTUAL FUNDS

Meaning

 

LIC offers life insurance which is a protection scheme that helps you to secure your family’s future in your absence.

Meaning

 

 A Mutual fund is an investment scheme that helps in increasing your wealth through market-linked investments.

Goal

 

The main objective of choosing a LIC policy is to safeguard your dependent’s future. It could be anyone, the insured’s parents, spouse, or children. It is a financial asset for the insured and his family.

Goal

 

The main objective of investing in mutual funds is to meet your financial goals. They are highly rewarding and help you to fulfill long-term goals like paying for your education, purchasing a property, starting your own business, etc.

Benefits

 

Life insurance provides death benefits, which means a secured future for the insured’s family.

Benefits

 

Mutual funds do not offer any coverage in case of mishaps. However, it is the best way to manage your funds.

Risk Involved

 

There is very little or no risk involved in a LIC policy as the sum insured is paid to the insured at the time of maturity even if the insured is alive.

Risk Involved

 

Mutual funds are a matter of high risk as their prices keep fluctuating but at the same time, they are very rewarding.

Returns

 

Life insurance is a good choice for safeguarding one’s family’s future. However, the returns offered by the policy are comparatively low.

Returns

 

Mutual funds offering the option to diversify your funds, help you to maximize your returns without being dependent on a single source. Thus they are an excellent choice to make investments and offer high returns in the long term.

To choose the best way to invest your money from amongst the two or any other financial products, you must first decide your goal. It is imperative to get a detailed understanding of what each of them has to offer in terms of return, risk, and security.

You also need to understand the benefits the product would offer in your desired time period. All of this together will help you make well-informed decisions.

Be very careful while investing as it is your hard-earned money that you’re risking. Note down your requirements after comparing the different financial products, and then wisely choose the one that matches your goals, requirements, and expectations.

Great returns and fulfillment of your financial goals- enjoy the best of both worlds by making a smart choice!

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Life Insurance Corporation

LIC Vaya Vandana Yojana- Features and benefits

LIC Vaya Vandana Yojana- Features and benefits

Steady and regular income is one of the biggest concerns for senior citizens. Post-retirement, financial independence becomes difficult. Pension plans are an escape from issues like this. Also known as retirement plans, pension plans require you to invest a certain part of your savings for a fixed period of time and then help you to avail steady income after retirement. LIC Vaya Vandana Yojana is one such government-launched pension scheme designed exclusively for senior citizens.

Read further to understand what is LIC Vaya Vandana Yojana and how it is beneficial for senior citizens.

What is LIC Vaya Vandana Yojana?

Under this scheme, senior citizens are offered a guaranteed interest on the principal amount invested by them. The interest rate starts from 8% and can go up to 8.3%. The interest is given for a period of 10 years. The scheme has also been exempted from the Goods and services tax or the GST. The sole right to operate the Vaya Vandana Yojana has been given only to the LIC by the government. LIC has been offering this scheme from its launch date, 4th May 21017.

Features of the LIC Vaya Vandana Yojana

Here are a few key features of the policy:

  • INR 1,50,000 to INR 15,00,000 is the lump sum investment you need to make to purchase the policy for a monthly income.
  • There is no maximum age specified for purchasing the policy.
  • The policy has been made available for purchase in both online and offline mode.
  • The policy is exempted from GST.
  • The interval of payment can be chosen by the policyholder i.e., annually, quarterly, monthly, or semi-annually.
  • Payment for the policy is made through NEFT or AEPS i.e., Adhaar Card enabled payment system.

Benefits of the policy

LIC Vaya Vandana Yojana is one of the government’s flagship policy offering numerous benefits, some of them are:

1. Steady regular income

The most significant benefit of the policy is a steady and fixed income for the senior citizens in the form of a pension. This ensures the financial independence of the policyholder till the end of the policy tenure, 10 years.

2. Guaranteed returns

Returns at a fixed assured rate are guaranteed to the insured for a period of ten years. These rates are age-independent but they might vary for different policyholders depending upon the mode of payment chosen by them.

3. Facility of Loan

After the completion of three years of the payment tenure, the loan facility can be availed. A loan of up to 75% of the amount invested can be taken, the interest recovery of which is made from the interest paid to the policyholder. The recovery of the final loan amount is however made from the final claim of the policy.

4. Independence to choose the pension payment period

The policyholder has the independence to choose the pension payment interval as per his needs. He may choose to receive his pension monthly, quarterly, half-yearly, or yearly.


Pension planning is a way to ensure a healthy and independent life post-retirement. Starting off with it at an early age can be highly beneficial in the long run and help you have a backup plan for maintaining your financial stability.

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Life Insurance Corporation

Features and Benefits of LIC Varishtha Pension Bima Yojana

Features and Benefits of LIC Varishtha Pension Bima Yojana

LIC Varishtha Pension Bima Yojana, as the name suggests is a pension scheme primarily for senior citizens. It is one of the most popular schemes introduced by the government and incorporated by the LIC. This scheme was made available only to people above 60 years of age. Under this policy, the policyholder needs to pay a single premium to enjoy the benefits.

Let’s learn a little more about the policy. Here’s the purchase plan which the policy offers

Minimum Purchase Price

Maximum Purchase Price

Pension Frequency

Rs 63,960

Rs 6,39,610

Monthly

Rs 65,430

Rs 6,54,275

Quarterly

Rs 66,170

Rs 6,61,690

Half-Yearly

Rs 66,665

Rs 6,66,665

Yearly

The features and the benefits the policy has to offer are the reason for its extreme popularity, let’s have a look at them.

Key features of the LIC Varishtha Pension Bima Yojana

Here are the features of the LIC Varishtha Pension Bima Yojana:

  • No medical check-ups are required to avail of this policy.
  • LIC Varishtha Pension Bima Yojana provides for early availability of surrender value in case the policyholder is diagnosed with any critical issues or illness.
  • 15 years of lock-in period is allotted for the policy although the policyholder can withdraw the required amount of money by paying a fee known as the exit load.
  • Only 2% as exit load is charged if the policyholder decides to withdraw the amount before maturity. That means, 98% of the total amount will still be received by the policyholder.
  • A choice is given to the policyholder if he wants to receive the payment monthly, yearly, quarterly, or half-yearly.
  • Payments are made through ECS or NEFT ensuring that the policyholder receives the money without going through the trouble of encashing a cheque or demand draft.
  • The policyholder can surrender the policy after the completion of the tenure and receive the entire amount of premium paid to purchase the policy.
  • A loan can be availed on the policy after the completion of 3 years. A loan of up to 75% of the premium paid can be granted based on the interest rate decided by the LIC.
  • In case the age of the policyholder is proved to be incorrect, it can simply be changed. The policy is not canceled and nor is the policyholder fined.

Benefits of the LIC Varishtha Pension Bima Yojana

The policy offers numerous benefits that immensely attracts its target age group. A brief description of the benefits has been provided here:

  • A regular assured income is paid to the policyholder. This amount is directly transferred to the bank account of the policyholder.
  • The beneficiaries on the death of the policyholder receive the entire amount paid by the pensioner as a premium to purchase the policy.
  • Tax benefits are also offered to the policyholder on the premium paid by him.
  • As the policy is initiated by the government, its reliability is undoubted just like the other government pension policies.
  • The policy can be easily combined with other sources of pension such as the provident fund to obtain a good amount of sum.

Earlier pension planning was just restricted to limited sources such as PF but with the advancements in the banking and insurance sector, numerous ways are available to secure one’s post-retirement life. Utmost advantage should be taken of these advancements in order to live a healthier and independent retired life.

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Life Insurance Corporation

LIC Jeevan Umang Plan- The Dual Benefit Policy

LIC Jeevan Umang Plan- The Dual Benefit Policy

The benefit of Income and protection of the family are two main concerns for any individual, isn’t it? It is often very confusing and difficult when one has to choose between the two. LIC’s Jeevan Umang plan is here for your rescue. It combines both benefits of income and protection of the insured’s family under one policy.

Let’s learn a little more about this policy.

What is LIC Jeevan Umang Plan?

LIC Jeevan Umang is a life insurance plan which offers the dual benefits of Income and family protection under one policy. On the 1st of February 2020, this policy was launched by the LIC. The policy provides the annual survival benefits from the completion of the premium payment tenure till the time of maturity. Along with this, the insured is also paid a lump sum on maturity or the death of the insured, whichever is earlier. The policy offers great returns which can help the policyholder enjoy financial independence after a fixed period of time i.e., after the premium payment tenure.

Let’s Understand The returns of this policy with an example.

Let’s assume that the policy has been bought by Mr. Dixit who is 29 years old.  He has chosen the premium payment tenure to be 20 years, this means he’ll start receiving the pension every year after he turns 49. His sum assured is 6 lakhs.

He will receive the pension until the policy matures. Let’s see the premium he pays.

Premium Payment Frequency

1st year

After 1st year

Monthly

2,856

2,794

Quarterly

8,567

8,382

Half-yearly

16,961

16,596

Yearly

33,581

32,858

This is the premium value including GST

After the payment period is over, he will receive Rs 48,000 every year. On maturity he will receive Rs 6 Lakhs, the sum assured.

Adding up all the premiums and sum assured, he receives Rs 15,16,200 in total which is almost 3 times the sum he paid.

Benefits of the LIC Jeevan Umang Plan

Prime benefits offered by the LIC Jeevan Umang Plan are as follows:

1. Death benefits

On the demise of the insured during the policy’s tenure, the death benefit is availed to the beneficiary as:

  • On death before commencement of risk: The beneficiary receives the sum total of all the premiums paid till date without any deductions or applicable interests.
  • On death after commencement of risk: The sum assured is paid to the beneficiary along with a reversionary bonus and final bonus if any.

2. Survival Benefits

If the insured survives at the end of the premium paying tenure, 8% of the basic sum assured is paid to the insured on its completion. Thereafter, the policyholder is paid the same amount after every year till he is alive and before the maturity of the policy.

3. Maturity benefits

If the policyholder survives the entire tenure of the policy i.e., 100 years, he or she is paid the sum insured. Applicable bonuses, simple reversionary bonus, and final bonus if any are added to the sum insured.

4. Loans

Policyholders can even avail of the loan facility under the LIC Jeevan Umang Plan. After the completion of 3 years of the policy, the policyholder can take a loan of up to 90% of the surrender value. But it is required that the premium is paid thoroughly and is up to date.

This policy is a huge relief for the earning member of the family. It not only provides a source of regular income but also relaxes the policyholder regarding the protection of his family in his absence.

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