LIC’s SIIP is a Unit Linked, Non-Participating, Regular Premium, Individual Life Insurance plan which offers insurance cum investment cover throughout the term of the policy.
Although this is a LIC product but this is not a guaranteed plan, where you get assured returns.
If you are looking for safe returns than LIC SIIP plan should not be your choice because LIC SIIP Plan is market linked product.
Even if you choose bond or Govt. security fund choice, even than charges are applicable and your fund value will be reduced to charges
Please check the LIC SIIP Plan full details as under
LIC SIIP Plan Review -Is LIC SIIP good or bad?
LIC SIIP Plan has many ifs and buts attached to the plan. In my view, before purchasing the plan you should understand few very important facts:
- Although this is a LIC product but this is not a guaranteed plan, where you get assured returns.
- If you are looking for safe returns than LIC ULIP plans should not be your choice because LIC SIIP is market linked product. Even if you choose bond or Gov. security fund choice, even than charges are applicable and your fund value will be reduced to charges extent.
- If you are looking for insurance, than your purpose will not be met. The reason being, you will only get life cover 10 times of your annual premium.
- If you somehow choose higher sum assure than again you have to bear higher mortality charges.
- You have to compulsorily make the payment till premium paying term otherwise you will have to pay penalty and the money will be shifted to discontinued fund.
Should you buy LIC SIIP Plan?
The charges of the plan are very high. If you buy the plan you will end up paying 8% in first year,5.50% from 2nd to 5th year. From 6th year and thereafter 3% every year deducted from your premium amount.
There are other charges are also attached to the plan such as mortality charges, fund management charges and other charges.
Roughly assuming the fund generate a return of 10% on annual basis then you may get approximate return of around 4% in a year.
In addition your insurance need will also not be fulfilled because of low insurance cover amount.
In case one does not survive the policy term than the family will get fund value or sum assured. Which is again quiet low due to high charges and low returns.
Thus this policy does not provide inflation linked returns to you. Instead it is better to buy a term plan and invest rest of money in some other investments such as mutual funds, post office schemes etc. Where you get better returns and insurance cover.
Additional Reading
ULIPs Vs Mutual Funds – Which will provide you better Returns?
Mutual Fund or Insurance – Which is a better option for Investment
Importance of Financial Planning in your life?
