A financial advisor has expressed disappointment with the returns offered by traditional Life Insurance Corporation (LIC) policies, stating that they provide “poor” benefits to policyholders. The advisor suggests that individuals should explore alternative investment options to maximize their returns.
Traditional LIC policies, such as endowment plans and money-back plans, are often marketed as safe and secure investments. However, the advisor argues that these plans typically offer low returns, often in the range of 4-6% per annum, which may not be sufficient to keep pace with inflation.
The advisor breaks down the components of traditional LIC policies, highlighting the high premiums, low bonuses, and limited liquidity. For example, many LIC policies come with high premium payments, which can be a significant burden on policyholders. Additionally, the bonuses declared by LIC are often low, which can result in lower returns for policyholders.
The advisor suggests that individuals should consider smarter investment moves, such as investing in equity-linked savings schemes (ELSS) or unit-linked insurance plans (ULIPs). These plans offer the potential for higher returns, often in the range of 10-15% per annum, although they come with higher risks.
Another alternative is to invest in term insurance plans, which provide a higher coverage amount at a lower premium. Term insurance plans are often more cost-effective than traditional LIC policies and can provide better protection for policyholders.
The advisor also recommends that individuals should prioritize their financial goals and invest accordingly. For example, if an individual is saving for a specific goal, such as a child’s education or retirement, they may be better off investing in a dedicated savings plan rather than a traditional LIC policy.
Overall, the advisor’s comments highlight the need for individuals to carefully evaluate their investment options and choose plans that align with their financial goals and risk tolerance. By exploring alternative investment options and prioritizing their financial goals, individuals can make smarter investment decisions and maximize their returns. It is essential for policyholders to review their existing policies and consider switching to more lucrative options to ensure they are getting the best possible returns on their investments.