LIC products give good returns

BANGALORE: In today's uncertain times, investors are looking for guaranteed returns at low risk. And that's why Life Insurance Corporation of India (LIC) has managed to sell more than 3 lakh Jeevan Aastha policies across the country from its launch on December 8.
The word among senior LIC agents is that celebrities Sachin Tendulkar and Akshay Kumar have put in Rs 18 crore and Rs 10 crore respectively into this product.But TOI could not confirm this.
LIC has aggressively marketed this policy with heavy advertising and high commissions (around 2-3% instead of the usual 0.15%-1%) to agents. However, wealth managers say the market has other products that are equally safe and gives more than 11% returns. "Tamil Nadu Power Finance and Infrastructure Development Corporation offers 11% interest for a one year deposit and more than 12% for three years under the cumulative interest payment scheme,'' says Daya Paul of Nile Financial Planners.
"The tax deductions are as per fixed deposit rates and income slab. There are alternatives like this in the market but people are not aware of them,'' he says. The National Bank for Agriculture and Rural Development (NABARD)'s zero coupon bond Bhavishya Nirman (BNB) with a lock-in period of 10 years is another option. The initial investment is Rs 8,500 per bond and after 10 years, the investor will receive Rs 20,000 for each bond they own. The coupon is attached to a debt instrument and offers guaranteed interest. Investors also have the option to sell their holdings before maturity through the stock exchange as the bonds are traded on the BSE. The maturity proceeds from these bonds has no tax deduction at source (TDS).
Financial planners say the government and regulator IRDA has tried to dissuade LIC from issuing insurance products that are more in the nature of investment vehicles. Current regulations require the sum assured to be five times the premium paid, in order for the product to be tax free. But in case of Jeevan Aastha, from the second year onwards, when no premium is paid, the policy reduces the sum assured by one third. LIC agents claim that the maturity amount is tax free. "But its possible that the income tax department will look at the matter differently and you might run the risk of not getting a tax exemption during the maturity of the product,'' says Anil Rego, CEO of Right Horizons.