LiC collects money from the small saver. It pays commission ranging from 4% to 40% based on the product that it has sold, the remaining money gets invested.

Where does it invest? Well to keep the people happy it invests in Secured Government Securities. Chuckle chuckle who decides the price? Government of India! Does LIC have a choice of how much to buy and at what rate? Of course, theoretically.

Then it invests in shares of companies owned and managed by the government. Theoretically these are companies which have an independent board (some sadistic people think otherwise), takes business decisions (like NTPC spending Rs. 5 crores on advertising Indira Gandhi’s contribution to the nation), does independent product pricing (a Fortune 500 company that makes LOSSES when oil prices GO up).

Forget the sarcasm, come to reality. Will LIC be in a position to sell 10% of its holdings in the market without scaring the daylights out of the market? If a Cairn energy said ‘give me 10% of Ongc, here is a premium, will it be able to do so?’ No. Forget 10% of Ongc will the babu ‘allow’ a sale of 10% of ITC to a buyer who wants to take control along with BAT? No. The babus at ITC know how to stall such a request, do they not?

Now in such a well managed portfolio what returns should you expect to get?

Returns? You got to be joking.

People buy LiC policies to save TAX. Lic sells policies for the following:

a) to encourage thrift

b) to create infrastructure in the country

c) to create employment for 2 million agents, 200,000 employees, 20,000 vendors, ….et al.

d) if there is a surplus after this declare a bonus.

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  1. @ Ashish And LIC also bails out the Government’s auction sale of its holding in one of the Fortune 500 companies 🙂

  2. As on 31 March 2011, the corporation’s total assets stood at 13,17,416 crore, up from Rs11,52,057 crore in the previous fiscal.
    State-owned life insurance giant LIC has recorded a 10% jump in net actuarial surplus for the 2010-11 fiscal at Rs22,716 crore which has helped it declare an additional bonus for seven of its ‘with-profit plans’.
    Subra sir throw some light on this
    surplus of 22176 on AUM at 1317416.

  3. Subra Sir Please take note that this year Lic Has given more than 1100 cr. to Govt. 2007-2011 Five year plan Lic contributed 528390Cr. In Housing and Infrastructure Lic Has Invested 165003 Cr. In year 2010-2011.

  4. Sir,
    Good analysis. The returns on bonus given for different products in LIC is given below and pittance.
    ** RATES OF BONUS PER 1000 SUM ASSURED **
    VALUATION DATE :- 31/03/2011 >>>>>>>>> VALUATION EFFECTIVE FROM 1/1/2012
    Whole
    Life
    ENDOWMENT TYPE
    POLICY TERM
    Plan 88,89,48
    Policy term
    Plan 133
    Policy term
    Money Back &
    Anticipated
    10
    &
    les
    s
    11
    to
    15
    16
    to
    20
    21 &
    Above
    15
    &
    les
    s
    16
    to
    20
    21 &
    more
    15
    &
    less
    16
    to
    20
    21 &
    more
    12
    &
    15
    20 25
    Reversiona
    ry
    & Interim
    Bonus
    70 34 38 42 48 40 44 48 40 45 50 32 39 44
    Whole life plans:- 2,5,6,8,10,28( before conversion), 35,36,37,38,49,77,78,85,86
    Endowment type plans:-14,17,27& 28( After conversion), 34, 39, 40, 41, 42, 50, 54, 79, 80, 81, 84,
    87,90,91,92,95,101,102, 103,109,110,121.
    Money back & Anticipated Endowment :- 24,25,26,73,74,75,76 & 93.
    Jeevan Surbhi
    Policy Term
    (
    106,107,108)
    JEEVAN ANAND (149)
    PREMIUM PAYING
    TERM
    JEEVAN REKHA-152
    Premium Paying Term
    JEEVAN
    TARANG-178
    Accumulation
    period
    15 20 25 UPTO
    10
    yrs
    11
    to
    15
    16
    to
    20
    21
    &
    above
    UPTO
    10 yrs
    11
    to
    15
    16
    to
    20
    21
    &
    above
    10 15 20
    Reversionary
    & Interim
    Bonus
    34 41 50 36 39 43 47 49 44 40 34 46 46 48
    JEEVAN ANURAG-168
    Policy term
    New Jeevan Suraksha-1
    Plan 147
    ( Deferment period)
    New Jeevan Dhara-1
    Plan 148
    (Deferment period)
    UPTO
    10
    yrs
    11
    to
    15
    16
    to
    20
    21
    &
    above
    UPTO
    5 yrs
    6
    to
    10
    11
    to
    15
    16yrs
    &
    above
    UPTO
    5 yrs
    6
    to
    10
    11
    to
    15
    16yrs
    &
    above
    Reversionary
    & Interim
    Bonus
    38 40 42 44 21 27 31 35 20 25 28 32
    Jeevan
    Madhur-
    182
    Child Career
    Plan-Plan- 184
    Policy term
    Child Future plan
    Plan- 185
    Policy term
    Jeevan
    Bharati
    Plan160
    JEEVAN AMRUT
    Plan no 186
    Policy Term
    Up
    to
    10
    yrs
    11
    to
    15
    yrs
    11
    to
    15
    yrs
    16
    to
    20
    yrs
    21
    yrs &
    above
    11
    to
    15
    yrs
    16
    to
    20
    yrs
    21
    yrs &
    above
    15
    yrs
    20
    yrs
    10
    TO
    15
    16
    TO
    20
    21
    YRS
    ABOVE
    Reversionary
    & Interim
    Bonus
    21 26 34 38 40 38 42 44 38 40 30 30 30
    JEEVAN SHREE-1
    Plan no 162
    Policy Term
    JEEVAN NIDHI
    PLAN NO 169
    JEEVAN
    PRAMUKH-167
    POLICY TERM *
    JEEVAN
    BHARATI-I
    TERM-192
    10
    &
    15
    20
    yrs
    25
    yrs
    UPTO
    10
    yrs
    11
    to
    15
    16
    to
    20
    21
    &
    above
    10
    &
    15
    20 25 15 20
    Interim
    Bonus
    42 46 50 32 34 36 38 44 48 52 29 31
    LOYALTY ADDITION AS PER VALUATION OF 31/3/2011è
    The loyalty addition rates in respect of the plans given below will apply to all maturing
    policies after remaining in force for full sum assured and also to policies discounted ( if
    eligible for discount)in the last policy year of the policy. The loyalty additions are payable
    in case of death claims ( if allowed under the plan) also. These rates are applicable during the
    period commencing from 1/1/2012 and ending 9 months from the date of next valuation where
    date of maturity /discount or death is on after 1/1/2012 to 31/12/2012.
    FOR PLAN 135,136,142,143,158,171. RATES ARE PER 1000 SUM ASSURED PAYABLE ON MATURITY
    ONLY AND PAYABLE ON DEATH CLAIM IF DATE OF DEATH IS IN THE YEAR OF MATURITY.
    ( IF DEATH TAKES PLACE PRIOR TO YEAR OF MATURITY , THEN LOYALTY ADDITION IS NOT PAYABLE UNDER
    FOLLOWING TYPE OF PLANS) ( UNDER FOLLOWING PLANS , DISCOUNTING OF MATURITY CLAIM IS NOT
    ALLOWED)
    PAYABLE ON MATURITY CLAIM AND IF DATE OF DEATH IS IN THE YEAR
    OF MATURITY ONLY- PER 1000 SUM ASSURED.
    PLAN TERM LOYALTY ADDITION RATE
    135- BAL VIDYA 11 250
    135- BAL VIDYA 12 300
    135- BAL VIDYA 13 350
    135- BAL VIDYA 14 400
    136- JEEVAN VISHWAS ALL 40
    137-NAV PRABHAT ALL 90
    142-NEW BIMA NIVESH 10 25
    143-BIMA NIVESH TRIPLE 10 100
    158- BIMA NIVESH 2002 10 100
    171-BIMA NIVESH 2005 5 70
    FOR PLAN 137- NAV PRABHAT ON DEATH CLAIM IN THE YEAR EXCLUDING THE YEAR OF MATURITY
    PAYABLE ON DEATH CLAIM PER 1000 SUM ASSURED
    PLAN TERM LOYALTY ADDITION RATE
    137- NAV PRABHAT ALL 40
    FOR PLAN 111- BIMA KIRAN ON MATURITY AND DEATH CLAIM BOTH ( DISCOUNTED VALUE OF THE
    MATURITY CLAIM IS NOT ALLOWED
    PAYABLE ON MATURITY AND DEATH CLAIM AS A PERCENTAGE OF
    PREMIUMS PAID EXCLUDING EXTRA PREMIUM
    PLAN TERM LOYALTY ADDITION RATE
    111- BIMA KIRAN 15 TO 19 25%
    FOR PLAN 150- NEW BIMA KIRAN LOYALTY ADDITION ON MATURITY AND DEATH CLAIM AS A
    PERCENTAGE OF PREMIUMS PAID ( NOT TO BE APPLIED ON SUM ASSURED) ( DISCOUNTED VALUE OF
    MATURITY CLAIM IS NOT ALLOWED)
    DURA
    TION *
    POLICY TERM UNDER PLAN 150- NEW BIMA KIRAN
    10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
    6 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%
    7 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
    8 4% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
    9 5% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4%
    10 20% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
    11 20% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6%
    12 20% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6% 6%
    FOR PLAN 113- CHILDREN MONEY BACK POLICY ON MATURITY AND DEATH CLAIM BOTH
    ( DISCOUNTED VALUE OF MATURITY CLAIM IS NOT ALLOWED)
    PAYABLE ON MATURITY CLAIM ONLY AND DEATH CLAIM- PER 1000
    SUM ASSURED.
    PLAN DURATION
    ELAPSED
    LOYALTY ADDITION RATE
    113- CHILDREN MONEY
    BACK POLICY
    UPTO 11 NIL
    12 10
    13 15
    14 20
    15 30
    16 40
    17 50
    18 65
    19 80
    FOR PLAN 124,125,126- JEEVAN SANCHAY – LOYALTY ADDITION PAYABLE ON MATURITY OR DEATH
    PER 1000 SUM ASSURED ( DISCOUNTED VALUE OF MATURITY CLAIM IS ALLOWED)
    LOYALTY ADDITION PAYABLE ON MATURITY OR DEATH CLAIM RATE PER 1000 SUM ASSURED
    DURATION
    ON DEATH
    AND TERM
    ON
    MATURITY
    JEEVAN SANCHAY PLAN NUMBERS
    124 125 126
    13 10
    14 25 10 10
    15 50 20 15
    16 30 15
    17 40 20
    FOR PLAN 128- JEEVAN SNEHA- LOYALTY ADDITION PAYABLE ON MATURITY AND DEATH CLAIM
    ( DISCOUNTED VALUE OF MATURITY CLAIM IS ALLOWED)
    PAYABLE ON MATURITY AND DEATH CLAIM – RATE IS PER 1000 SUM
    ASSURED
    DURATION ON DEATH OR
    TERM ONMATURITY
    LOYALTY ADDITION RATE
    13
    14 10
    15 15
    16 20
    17 30
    FOR PLAN 159- LIC’S KOMAL JEEVAN PAYABLE ON MATURITY OR DEATH CLAIM
    ( DISCOUNTED VALUE OF MATURITY CLAIM IS NOT ALLOWED)
    PAYABLE ON MATURITY OR DEATH CLAIM – RATE IS PER 1000 SUM
    ASSURED
    DURATION ON DEATH AND
    TERM ON MATURITY
    LOYALTY ADDITION RATE
    ON SUM ASSURED
    4 25
    5 30
    6 35
    7 40
    8 45
    9 55
    10 65
    11 75
    FOR PLAN 165- LIC’S JEEVAN SARAL PAYABLE ON DEATH CLAIM ONLY
    ( DISCOUNTED VALUE OF MATURITY CLAIM IS NOT ALLOWED)
    PAYABLE ON DEATH CLAIM ONLY – RATE IS PER 1000 MATURITY SUM
    ASSURED ( NOT DEATH SUM ASSURED)
    PLAN DURATION LOYALTY ADDITION RATE
    ON MATURITY SUM
    ASSURED
    165- JEEVAN SARAL 10 250
    FOR PLAN 154,155,156,157- JEEVAN SAMRIDHI – LOYALTY ADDITION PAYABL ON MATURITY OR DEATH
    PER 1000 SUM ASSURED ( discounted value of maturity claim is allowed)
    LOYALTY ADDITION PAYABLE ON MATURITY OR DEATH CLAIM RATE PER 1000 SUM ASSURED
    DURATION
    ON DEATH
    TERM ON
    MATURITY
    JEEVAN SAMRIDHI PLAN NUMBERS
    154 155 156 157
    6 20 20 20 25
    7 25 25 25 30
    8 30 30 30 35
    9 40 40 40 40
    10 50 50 50 50
    11 80 70 60 60
    PLAN 151- NEW JEEVAN SHREE – LOYALTY ADDITION PAYABL ON MATURITY OR DEATH PER 1000 SUM
    ASSURED ( DISCOUNTED VALUE OF MATURITY CLAIM IS ALLOWED)
    LOYALTY ADDITION PAYABLE ON MATURITY OR DEATH CLAIM RATE PER 1000 SUM ASSURED
    DURATION
    ON DEATH
    TERM ON
    MATURITY
    NEW JEEVAN SHREE PLAN NUMBERS
    151-10 151-15 151-20 151-25
    8 35 35 35 30
    9 70 40 40 35
    10 130 45 45 40
    11 50 50 45
    12 60 55 50
    PLAN 112- JEEVAN SHREE- LOYALTY ADDITION PAYABLE ON MATURITY OR DEATH PER 1000 SUM
    ASSURED FOR REGULAR AND SINGLE PREMIUM POLICIES ( DISCOUNTED VALUE OF MATURITY CLAIM IS
    ALLOWED)
    DURATION
    ON DEATH
    TERM ON
    MATURITY
    POLICY TERM UNDER PLAN 112- JEEVAN SHREE- SINGLE PREMIUM AND REGULAR PREMIUM
    BOTH
    10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
    9 40 30 20 10 10 10 10 10 10 10 10 10 10 10 10 10
    10 70 55 45 35 30 25 20 15 15 15 15 10 10 10 10 10
    11 0 105 70 55 40 25 25 20 20 20 20 15 15 15 15 15
    12 0 140 90 65 45 40 35 30 25 25 20 20 20 20 20
    13 0 175 105 80 70 60 50 40 40 30 30 30 30 25
    14 0 210 160 120 90 70 55 50 45 40 40 40 40
    15 0 180 150 120 90 70 65 60 55 50 50
    16 345 250 190 140 105 90 80 70 65 60
    17 450 300 200 145 120 100 85 70 70
    18 560 350 200 150 125 105 85 85
    19 680 260 200 150 125 105 105
    FOR PLAN 195- JEEVAN AASHTA – LOYALTY ADDITION PAYABLE IN DEATH CLAIM ONLY AS PER
    PREMIUM BAND ( DISCOUNTED VALUE OF MATURITY CLAIM IS ALLOWED)
    PAYABLE ON DEATH CLAIM – RATE IS AS PER PREMIUM BAND
    DURATION OF
    POLICY AS ON
    DEATH
    SINGLE PREMIUM BAND AMOUNT OF
    LOYALTY
    ADDITION
    5 YEARS UPTO 99999 NIL
    1,00,000 TO 1,49,999 300
    1,50,000 TO 2,49,999 600
    2,50,000 TO 3,49,999 1000
    4,00,000 AND ABOVE 2000
    NOTESè
    · A loyalty addition is NOT payable for policies which are surrendered. But it is payable if policy is
    discounted in last policy year provided last year’s premiums have remained to be unpaid.
    · In the case of policies with mode of payment of premiums other than yearly, unpaid premiums if any,
    falling due before the policy anniversary are deducted from the claim amount. Hence they should be
    treated to have been received for this purpose and accordingly loyalty addition will be paid taking the
    new duration.
    · In case of maturity claims, if no premiums have been paid during the last policy year, but the policy
    was in force for full sum assured on the policy anniversary prior to the maturity date. The claim is paid
    for full sum assured on the maturity date along with guaranteed addition, reversionary bonus and
    interim bonus sub to the deduction of the unpaid instalment of premiums with interest, if any, for the
    last year of policy. Such policies will be eligible for payment of loyalty additions for full sum assured if
    other qualifying conditions stated herein are satisfied.
    · Where a policyholder discounts the policy within one year preceding the date of maturity, the policy
    will be eligible for loyalty additions provided policy is in force as on date of discount or policy is in
    force on last policy anniversary prior to date of maturity and o/s premiums are deducted, PROVIDED
    PLAN IS ALLOWED FOR DISCOUNT.
    · The policies for which death claim is payable as per claims concession clause, the loyalty additions
    would be payable provided other qualifying conditions are satisfied.
    · In case of Komal Jeevan plan, the duration elapsed is reckoned from the date of commencement of
    risk. In short, loyalty addition is payable, if risk has commenced under the policy.
    · In case of Bima Kiran plan-111, if death occurs in 15th policy year i.e duration of 14 year and 1 day
    onwards, loyalty addition is payable provided policy is inforce for full sum assured and premiums are
    recovered for 15th policy year.
    FINAL (ADDITIONAL) BONUS PER 1000 SUM ASSURED FOR POLICIES
    AS PER 31/3/2011 VALUATION
    In addition to simple reversionary bonus and interim bonus, FAB is also payable in respect of
    participating policies resulting into claims by maturity or claim discounted or death claims
    during the period commencing from 1/1/2012 and ending 9 months from the date of next
    valuation, provided they are kept in force for full sum assured till the date of maturity or
    the date of discounting or the date of death as the case may be.
    For plans- 2,5,8,28,35,36,37,38,49,77,78,85,86,14,17,34,39,40, 41, 42, 50, 54, 79,
    80, 81, 84, 87,90,91,92,95,101, 102,103,109,110,121,88,89,48,133
    # No. of years means term in respect of
    maturity/ discounted maturity claim. In
    case Death claim, no of years means
    premiums paid or recovered.
    1) FAB is payable on maturity,
    discounted claim or in case of death
    claim provided policy is in full force and
    premiums have been paid/ recovered
    for 15 years or more.
    2) FAB is not payable under policies
    where guaranteed addition is payable.
    3) in case of death claims under single
    premium/ fully paid up limited
    premium payment policies the number
    of years in the first column means the
    no of policy years elapsed inclusive of
    the policy year in which the death takes
    place.
    No of
    years #
    Year of valuation 31/03/2011
    Up to
    25,000
    25,001 to
    50,000
    50001 to
    1,99,999
    2,00,000
    & above
    15 0 0 10 20
    16 0 0 15 25
    17 0 10 20 30
    18 10 15 25 35
    19 15 20 30 50
    20 20 25 40 70
    21 25 30 50 100
    22 30 50 80 150
    23 35 100 150 250
    24 70 150 230 350
    25 170 250 330 450
    26 270 350 430 550
    27 370 450 540 670
    28 470 550 650 790
    29 570 650 760 910
    30 670 750 900 1100
    31 800 900 1100 1300
    32 950 1050 1300 1550
    33 1100 1200 1550 1800
    34 1250 1350 1700 2050
    35 1400 1500 1850 2300
    36 1550 1650 2050 2550
    37 1700 1800 2250 2800
    38 1850 1950 2500 3050
    39 2000 2100 2750 3300
    40 yrs
    and
    above
    2150 2500 3000 3550
    FINAL ADDITIONAL BONUS AS PER 31/3/2011 FOR PLANSè24,25,26,73,74,75,76,93
    # No. of years means term in respect
    of maturity/ discounted maturity claim.
    In case Death claim, no of years means
    premiums paid or recovered.
    In case of fully paid up policies duration
    elapsed means policy anniversary
    following date of claim – DOC.
    FINAL ADDITIONAL BONUS FOR PLANS 106,107,108- JEEVAN SURBHI AS PER 31/3/2011
    # No. of years means term in respect of
    maturity/ discounted maturity claim. In case
    Death claim, no of years means premiums
    paid or recovered.
    In case of fully paid up policies duration
    elapsed means policy anniversary following
    date of claim – DOC.
    · Where a policyholder discounts the policy within 1 year preceding the date of maturity, the policy will
    be eligible for FAB provided other qualifying conditions are satisfied.
    · In the case of policies with mode of payment of premiums other than yearly, unpaid premiums if any,
    falling due before the policy anniversary are deducted from the claim amount. Hence they should be
    treated to have been received for this purpose and accordingly loyalty addition will be paid taking the
    new duration.
    · In case of progressive protection plan -79 which are in full force, the FAB will be based on the sum
    assured in force on the date of death/ maturity.
    · For payment of final additional bonus under CDA plans like 41,50,80,81, the term/ duration at death
    will be reckoned from the deferred date. In case of new CDA plan -92, the term/duration at death will
    be reckoned from the risk commencement date.
    · In case of Jeevan balya plan-101, the term / duration for paying final additional bonus would be
    reckoned from the vesting date.
    · In case of Jeevan Kishore plan -102 and Jeevan Sukanya plan- 109, the term or duration at death for
    payment of final additional bonus would be reckoned from the date of commencement of the policy.
    · In case of multi- purpose policies in respect of death claims, the FAB will be paid only at the end of the
    original term along with the reversionary bonus.
    · Where a non- participating policy has been altered to a participating policy, the period of FAB both as
    regards death claim and maturity claims will be reckoned from the date of such alteration i.e policy
    anniversary from which alteration has taken place.
    · In case of convertible whole life policy plan 27 converted to with profit endowment policy after 5
    years, the period for FAB will be reckoned from the scheduled date of conversion. Under plan 28, the
    period will be reckoned from the date of commencement of the policy.
    · In case of marriage endowment plan- 90 and Jeevan Chhaya plan- 103, in respect of death claim, the
    FAB will be paid at the end of the original term along with reversionary bonus. FAB will be paid as per
    rate of original term.
    · The policies for which death claim is payable as per claim concession clause, the final bonus would be
    payable provided in respect of number of years premiums recovered from claim amount.
    · In case of maturity claims, if premiums have not been paid during the last policy year, but the policy
    was in force for full sum assured on the policy anniversary prior to the maturity date, the claim is paid
    for full sum assured on Maturity date with reversionary and interim bonus subject to recovery of unpaid
    instalments of premium with interest for the last policy year. In such case, FAB is also payable for full
    sum assured.
    No of
    Years #
    Amount of final additional bonus per 1000
    S.A.
    Up to
    25000
    25,001 to
    50,000
    50,001
    to
    1,99,999
    2,00,000
    & above
    Upto 14
    yrs
    0 0 0 0
    15 to 19
    yrs
    0 0 15 20
    20 yrs 0 10 30 40
    21 to 24
    yrs
    10 20 30 40
    25 yrs 40 150 175 225
    No of
    Years #
    Amount of final additional bonus per 1000
    S.A.
    Up to
    25000
    25,001 to
    50,000
    50,001 to
    1,99,999
    2,00,000
    & above
    Up to 14 yrs 0 0 0 0
    15 to 19 yrs 0 0 20 30
    20 yrs 40 50 75 100
    21 – 22 yrs 40 80 100 125

    apart from this there are scams and we get nothing.

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