Comparing LIC's Jeevan Astha with NSC and Tax saver FD

Posted by Admin on 7

LIC(Life Insurance Corporation of India)’s “Jeevan Astha” which is available only for 45 days would serve as a better alternative for Tax saver Fixed Deposit and NSC as policy comes with a minimum term of 5 years.

Let us look at the basic features of the three investment instrument.

Jeevan Astha v/s Tax Saver FD v/s NSC.

F.D

NSC

Jeevan Astha

Min. Term

5 years

6 years

5 years

Interest

9%

8%

9% PA

Tax on Interest

Yes

Yes

No

Maturity Tax free

NA as tax paid on interest

NA as tax paid on interest

Yes

Insurance

No

No

Yes

Min. Amount

Rs. 10

Rs. 500

Rs. 25,000

Premature withdrawal

No

No

Yes

“Jeevan Astha” clearly scores over Tax saver Fixed Deposit (Tax saver FD) as well as National Saving certificate(NSC).

The main highlight in “Jeevan Astha” is interest earned is tax free which is not in the case of Tax Saver FD and NSC.

Because of this effective return on the investment for NSC and Tax saver FD is much less then 9% and 8% respectively compared to what “Jeevan Astha” provides.

Apart from this there is insurance cover as well as premature withdrawal facility.

Two down side of “Jeevan Astha” is minimum amount is Rs. 25,000 so people who wish to invest smaller amount may not be able to enter in to this scheme.

The second down side is it is available only for maximum of 45 days, so better hurry now ;-)

Click here for more on “Jeevan Astha”

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7 comments:

Manoj said...

This blog is good ! all essential info !!
I recommend u to change the theme !!

Bhargav said...

Yep, I know...
but the same old time issue ;-)
anyways thanks for suggestion.
would implement it soon :-)

Anonymous said...

Hi! you are promising 9% return on total premium amount paid.What I understand that the premium has three components--expense,mortality and investment. How much will be the investment part in the first year and then the subsequent year?

Bhargav said...

LIC is promising 9% return on MSA and not on premium paid. premium depends on age and term u choose and as u have rightly pointed out that premium has 3 components and due to this many time premium is higher then MSA.
This is Single premium plan and hence charges will be automatically adjusted from u r SP.

Swapnil said...

In FD or NSC, the interest is compounded every quarter or half yearly but that is not the case in LIC. Can you please post the actual gauranteed returns from each of these schemes.

Regards,
Swapnil

Sumit said...

The effective ROI would be between 7-8% that too for a 10 year policy. For 5 year policy its much lower(5-6%)

Anonymous said...

What people are not aware is that like in all LIC policies, the 9% which is guaranteed in calculated at simple intrest over the five years. That means if u invest Rs. 100000 then you get Rs. 9000 in the first year. This is onot given to you nor is it compounded. That means you will get Rs. 9000*5(years)= Rs. 45000 as bonus. This makes it very unattractive. Your 100000 grows to just 145000 at the end of 5 years. LIC and their agents do not tell you this fact that your bonuses are not compounded. This makes the 10 year plan still worse. Hope investors think of this before investing. This is not an FD.

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