Update: 1 Jan 2010
Those who want invest in this plan should hold. The character of the plan has changed. I will update you as and when I receive more inputs.
Update: December 2009
Please buy Market Plus – I policies before 1st January 2010. After that it will have a lock in period of 5 years and minimum premium will rise.
Original Article
LIC’s Market Plus -1 has emerged as an alternative to a Mutual Fund – and a safe alternative too. This LIC Plan 191 is actually a pension plan. Like all policies, it has an mandatory lock in period of 3 years. After that you can withdraw. This plan is not a traditional ULIP plan. You get life cover only after the annuities start. It was launched on 17.06.2008. Look at the one year result:
(Initial Unit Value was Rs 10 on 17.06.2008)
BOND FUND: Rs. 11.3895
SECURED FUND: Rs. 11.0279
BALANCED FUND: Rs. 11.1270
GROWTH FUND: Rs. 11.5203
While some may argue that “GROWTH FUND: Rs. 11.5203″ is not up to the mark. You should see that in context of the September 2008 to June 2009 period which have been darkest as far as the economy and finances are concerned. So, if LIC Market Plus 1 has managed to keep head above the water, saved your capital and given you good returns, should you be complaining? You should also be looking at this note I wrote; the NAV of Market Plus – 1 fell by 23.71% during those dark days.
Another of the area where LIC Market Plus – 1 is attacked my the Mutual Fund sellers is the entry load and management charges. This is some kind of wedge Mutual Fund’s have created between the customer vs agents (even its own agents) and LIC. Mutual Fund’s say that your money could perform more than that without charges. But, a customer must understand the fact that LIC means safety and security and Mutual fund means risk. Mutual Funds are more risky and hence they do not have the capacity to charge.
Secondly, Mutual Funds have been catering to rich section of Indian society and there is a disconnect between rich and middle class and poor. LIC is for the common people who have earned money and would like to be safe money wise and give above average returns. LIC ULIPS are market driven, but their performance shows. Mutual Funds remind me of the story of a man who was cutting the branch on which he was sitting on. This is not LIC’s attitude where it rewards both its customers and its agents.
Another issue on charges is that LIC Market Plus -1 will help you to save taxes too and can be one time minimum payment of Rs 10,000/- to start with. Then you can start topping it up with multiples of Rs 1000/-, where the commissions and office expenses charged are negligible.
Now icing on the cake, you can switch between options. For example, equity market is going down then you can switch to bond option. Once you feel that the equity has reached the lowest point, you can switch back to equity and get more units. You can do 4 free such switches a year.
