Life Insurance Corporation of India, the government owned and the largest Insurance Company in India has flouted numerous and I really mean numerous ULIP Plans over the past 5-8 years. Every time they feel that a ULIP Plan isn’t performing well or if they feel people weren’t buying their plans, they went ahead and created/started a new plan and started selling it. The agents too sold them religiously by distributing pamphlets that claimed extravagant and frankly impossible returns. Anyways, the indian investor population, driven their greed to make quick bucks just bought into every one of those schemes. The past decade has been a real bumpy ride for the Indian Stock Market. Even the best fund managers have been unable to read the markets properly. So, how have the fund managers at LIC Fared? How have the various ULIP Plans flouted by LIC Fared? Well, this is what this article is all about.
So, what are those numerous ULIP Plans flouted by LIC?
1. Profit Plus
2. Fortune Plus
3. Future Plus
4. Market Plus
5. Money Plus
6. Market Plus 1
7. Money Plus 1
8. Child Fortune Plus
9. Jeevan Saathi Plus
10. Endowment Plus
11. Wealth Plus
Note that I haven’t included ULIPs that were started before 2006 as well as ULIPs that were Health Insurance Plans in disguise. If we include them as well, the number could be even more.
NAV Details of the above Mentioned ULIP Plans:
|Fund Name||Inception Date||Growth Fund||Balanced Fund||Bond Fund|
|Market Plus 1||39600||13.51||12.21||13.81|
|Money Plus 1||39569||14.1||14.95||14.7|
|Child Fortune Plus||39753||15.54||14.83||12.81|
|Jeevan Saathi Plus||39965||11.18||10.36||12.23|
Performance Summary of the above mentioned ULIP Plans:
Following are some points that were taken into consideration before arriving at the information below:
a. Only the Growth (Equity) Fund returns are used for comparison here
b. An Assumption that 1 lakh was invested on Inception date when NAV was Rs. 10/- per unit
c. No charges, fees etc are considered. I have assumed that the investor who purchased the policy got 10,000 units. This is because each plan has a different premium allocation charge, fund management charge, fees etc.
d. The net profit has been divided by the number of years the money has been invested in order to arrive at the average returns %.
|Fund Name||Inception Date||Amount Invested||Current Value||No. of Years Invested||Average Returns (%)|
|Market Plus 1||39600||100000||135100||4.1||8.56|
|Money Plus 1||39569||100000||141000||4.25||9.65|
|Child Fortune Plus||39753||100000||155400||3.8||14.5789473684211|
|Jeevan Saathi Plus||39965||100000||111800||3.2||3.6875|
a. Returns > 10% - 2 schemes
b. Negative Returns – 1 scheme
c. Less than 5% Returns – 5 schemes
d. 5 to 10% Returns – 3 schemes
As you can see, around 50% of the schemes have given less than 5% returns and one of the schemes is in negative. Only two schemes have given us returns that we can smile about and there are 3 schemes that we can be partially happy about.
The returns themselves, without considering any fees or charges are pretty dismal. There are only two schemes that have returns that we can talk about. If we consider the fees and charges for those schemes, the net Returns % could come down to around the 5-8% mark. The other schemes that already have a single digit returns % may come down to 0 or even worse Negative.
So, what are these fees and charges?
The surprising part is that the LIC India website does not have fund specific charges clearly available for investors to see. I was able to find the details only for Endowment Plus. For now, let us assume that the fees for the other plans will be around the same range as this scheme.
Premium Allocation Charges:
a. First Year – 7.5%
b. 2nd to 5th Year – 5%
c. From the 6th Year – 3%
Fund Management Charges: 0.8% per year for the Growth/Equity Fund. Other plans too have a charge of around 0.5 to 1% per year
Policy Administration Charges: Rs. 30/- per month during the first policy year and Rs 30/- per month escalating at 3% p.a. thereafter, throughout the term of the policy.
What do I think about this?
Whatever we have seen so far is not something we can be happy about. If you are someone who has not invested in any of these ULIP Plans flouted by LIC, then you can heave a sigh of relief and say “Thank God”. (Trust Me, I am doing just that as I am writing this article)
If you are someone who was unfortunate enough to have invested in any of those pathetic performing schemes, then you need to really think and decide whether to continue with the ULIP or not. I wrote an article titled Should you Exit your ULIPs Now? in May 2012 and I suggest you read it and take a wise decision.
A fun trivia before we end this long article:
6 of the above 11 schemes are already withdrawn by LIC. In other words, you cant invest in them anymore.
Only god knows if the other schemes will be continued or they too will meet the same fate as their withdrawn cousins.
Happy Insuring Yourselves!!!