Unlike mutual funds, the expense ratio determined by the regulatory authorities for traditional plans is quite high. Added to this a hefty commission given to insurance agents also eats into the premium paid. Both these factor adds up to a very low rate of return these plans offer to their customers. Even this low return is available after more than a decade and thus inflation further reduces the actual value of the return customer gets. The operational costs, commission and returns eat up a major chunk of premium so the insurance amount is very low in comparison to term plans……..
Recently a LIC agent visited my house, I didn’t buy any policy as my life insurance goals are already covered. But the conversation (which was almost 2 hours) made me think about a question.
Is LIC of India still a good option? If you are looking to buy a pure insurance product, LIC is comparable to other insurance companies. If you are looking for endowment, money back, etc (a policy which provides a return on the premium paid, on maturity), the story changes completely………….