Despite the real return being between 4% and 7%, guaranteed by LIC, people seem to be enamoured by LIC’s Jeevan Aastha.
Despite the turmoil in the financial markets, Life Insurance Corporation’s Jeevan Aastha policy is on course to break the record for premia collection by a scheme in a single month. The policy has been lapped up by celebrities and middle-class investors alike during the 45-day window it was open for sale.
The policy, which closed on Wednesday, is expected to collect over Rs 8,000 crore. But some insiders said the collection could be higher. “The exact amount will take some time to collate. Some large proposers have deposited only a token amount as they did not want to lock their funds in case they did not clear the medical underwriting,” said an official. Although the corporation had said it was targeting Rs 25,000 crore, this was seen as a marketing gimmick and not a real target.
Sadly, even the “10% guaranteed return” was a marketing gimmick, and it’s entirely likely that the whole marketing infrastructure was paid obscene amounts of money and commissions to push the plan through. In a time when every asset class is losing value, people seem to clutch on anyone that they can trust who will guarantee a return, even if it’s low.
Having said that, there’s nothing wrong with the policy if you want to stay in for 10 years, and are happy with a post-tax 7% return. I’m quite sure we’ll ogle at that number in a few years.
