I have been receiving calls from my agent and Branch managers of LIC and receiving literature showing 30 to 40% p.a. returns on Market plus plan of LIC. They are asking me to take loan on my son's policies and invest the same in LIC's Market Plus. I will receive 75, 000 excess without investing a single rupee from pocket. They are also claiming that this plan is closing on 31st march 2008. Last time during some other plan I was told that any insurance company can only inform 3 days in advance before shutting the plan, rules of IRDA. Have they bypassed the same?
Now I receive this from a friend as stated below which are the hard facts of the mis-selling being done by LIC. Please check the same and try to save innocent investors who have faith in LIC and have voted it the Best Service brand for the last 2 years.
Small Investor Beware
Read before you invest in Market Plus
• Why Market Plus is closing?
The reason given by LIC of India is that the fund size has become too big to manage. If this is the reason then why invest in already unmanageable fund at higher NAV, when the better scheme will be available at Rs-10/- after few days.
• LIC claims that Market Plus is the best Investment Scheme!
But Market Plus(MPlus) is not the investment scheme, it is a Pension Plan. If it is projected as Investment Scheme, then we must compare it with Mutual Fund (MF).
• On the very first day of your investment you will loose 3.30% in case of single premium and 16.50% in case of annual premium towards allocation charges in MPlus as there are no allocation charges in MF if invested directly.
• MFs are managed by professional Fund Managers who are accountable for Fund performance against benchmark index( e.g. sensex, nifty etc), However for ULIPs there is no benchmark index for comparisons.
• Performance of Market Plus as compared with Sensex and Nifty:
BSE Sensex NSE Nifty Market Plus NAV
As on 05/07/2006 10919 3197 10.00
As on 29/02/2008 17578 5223 12.50
Compounded Annual Growth 28.92% 29.76% 13.44%
Growth in NAV doesn’t reflect the returns on your investment. The Actual returns on investment will be as given below:
e.g; Rs-10, 000/- invested in MPlus in July 2006 @ Rs-10/- in single premium.
Total Units allotted: 967 (33 units deducted for allocation charges)
Current NAV in March 2008 i.e. after 20 months is Rs-12.50
The Total Fund value will be 967X12.50 = Rs- 12, 087
Amount deducted for charges = Rs- 1, 168
Balance Payable = Rs- 10, 919 i.e. IRR of 5.28% only.
• Beware of agents showing projected returns higher then 10%:
IRDA has made it mandatory to show projected returns @ 6% and 10% only and asked all the Life Insurance companies to get the benefit illustration signed by proposers giving all the details of expenses etc which will form part of the policy document. This is done to insure that no mis-selling takes place.
Make sure to sign the benefit illustration as per your specifications only.
• Returns under ULIPs are not Guaranteed:
Even the projected returns @6% and 10% are not guaranteed. The entire investment risk is yours. Even Government Sovereign Guarantee under section 37 of LIC ACT, 1956 is not applicable for ULIPs.
As per economic survey report 2007-08, the Indian Markets were most expensive and more volatile then global markets. The government also said that any slowdown in the excess capital flows from last year's high levels could affect the stock market in short-term.
IF you find any agent showing projected returns more than 10%, then please report to us. We will take up the matter with appropriate authority and initiate action against that agent.
Issued in Public interest by Small Investors Protection Forum (SIPF)
Contact us on firstname.lastname@example.org.