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[Edit: 06-Feb-2021] Over time, what started as a 500 word answer became too elaborate, too mixed up, too wayward and confusing. The main point went aside and to all it became a comparison between LIC and MF, which was not my intention and hence, this rewrite.To the OP, here is a TLDR answer.Stop and surrender now - whatever be the loss. The long term loss is huge. I have explained here: A deep digging of “Guaranteed or Assured Return” policies and here: Prasanna Bhalerao's answer to How is the LIC Jeevan Umang policy? Is it better compared to PPF?Even if the plans are different, all, I do mean ALL insurance plans of type endowment, moneyback, pension, guaranteed return perform more or less on the similar principle. The return is also from 5% to 7%, usually around 6.25%. You will be much better with:a) A Term Insurance plan of Rs. 1 Cr or more. The premium will be much cheaperb) Invest the balance of premium in MFs and get much better returns. Look at the article again.Now for the long answer.First a note on all LIC policies.Pros: LIC is a huge organiation, with huge funds. It has been in India since the 50s. At that time, LIC policies was the only method to get life insurance and get returns. LIC used to invest part(a very large part) of our premium into stock market and then return some part (a small part) of the profits to us at maturity. The LIC repayment and settlement was always prompt, still is. Thousands took out LIC policies for the double benefit - insurance and saving. In fact the LIC tagline changed to - Beema bhi, nivesh bhi (get insurance, get savings). LIC returns are tax free except for pension schemes.Cons: As I shall go and prove, LIC is very poor form on both counts - life insurance as well as investment. First the life cover of ₹5 lakhs to ₹30 lakhs is too less. You can of course opt for more cover but premium will be very high. Secondly, the investment return is very poor. At best the return is 6.5%.So why is LIC very popular? The reasons are as follows:a) LIC promises an assured or guaranteed return and they show an amount that will be paid out to you at maturity (usually between 20 and 30 years). This amount sounds like a FANTASTIC AMOUNT today.b) LIC keeps harping you on the fact that this money is assured. If one brings up market linked investment, the argument against always is: Sir, market ka kya bharosa? Aaj hai, kal nahi? Aapko vahan koi guarantee deta hai kya? (Sir, what is the assurity of the market? Today it is high, tomorrow not so. Can anyone guarantee market returns?)c) LIC never ever declares the returns in CAGR terms. Hence we remain ignorant.d) We hear that neighbour, colleague, family member purchased so-and-so LIC policy and we are also immediately concerned - I must have life cover also.So let us compare the LIC Jeevan Anand 915 policy (the 815 is closed now). The policy sum assured is an example but rest of the figures are based on this amount with realistic figures:[A] Sum assured: ₹25,00,000[B] Term years: 25[C] Age at start: 30D] Policy begins in year: 2020[E] Premium per ₹1,00,000: ₹4,581[F] Rebate on premium (2%): ₹-91.62[G] Final Premium per ₹1000: ₹4,489.38[H] Premium per year: ₹1,12,234.50[I.1] Premium for first year @ 4.5% GST: ₹1,17,285.05[I.2] Premium paid for next 24 years @2.25% GST: ₹1,14,759.78[J] Total Premium Paid for full term: ₹28,71,519.68[K] 125% of total premium: ₹32,26,741.88[L] Simple Reversionary Bonus rate per ₹1000 of SA (A): ₹49.00[M] Simple Reversionary Bonus Amount for 25 years (A/1000 * L): ₹30,62,500[N] Additional Bonus (considered at same rate for final year): ₹11,22,500[O] Final Benefit (Greater of A or K+M+N): ₹66,87,500[P] Payment upon death after maturity: Sum assured = ₹25,00,000What is the CAGR or return on investment?If you consider the full double benefit or O and P, it is a grand 6.53%!If you don't consider (P) because of "what is the use of this money after my death?" reason, then it is 6.02%Have you considered the value of ₹64,11,756 after 25 years, assuming you roll into the policy today? It is ₹14,52,263.67. It is still not bad but not grand as it looked, does it?Till the mid 80s, the stock market was just a steady performer. There were very little buoyancy. It was unknown. There were only a few stock exchanges - just four (BSE, DSE, CSE and MSE) and some branches. You had to trade physically and via a broker. One did not understand markets - even today very few do. Then came Harshad Mehta. He scammed his way to dizzy heights. This caused great interest in the stock market as well as scarred people who lost money. LIC remained a winner. Mutual Funds were unknown till late 90s and only became popular when SIP was introduced. On top of that, there was no term insurance (or LIC never promoted that) and there were no independent private insurance players. Hence LIC reigned like a king.Today LIC tactics are changed. The argument from all LIC employees and agents is - long established, always settled (the actual settlement ratio is 98%), trust over the years, government backed - will not run away with your money, will not fail, etc. But the biggest argument against Term Insurance by these people is - you are paying all this money but not getting anything in return? Nobody, repeat, nobody gives the real comparison.So, the alternative?a) A Term Insurance plan of ₹50 lakhs or more. The premium will be much cheaper. See examples at the end.b) Invest the balance of premium in MFs and get much better returns.I give it here (and I challenge anyone to contest this):a) For a LIC premium of ₹9,572 per month or ₹1,14,861 per year, you are getting a paltry ₹25 lakhs cover. For ₹12,000 to ₹14,000, the same 30 year old, non-smoker person can get a ₹1 Cr cover. For as low as ₹778 pm or ₹9336 pa, you will get twice the cover of LIC or ₹50 lakhs.b) One will be quick to jump, what about returns? So here is a comparison with investing into MF SIP[Q] LIC Payment per month ((J/B)/12): ₹ 9,572[R] Term Insurance for 50 Lakhs upto 65 years: ₹ 778[S] MF SIP per month: ₹ 8,794[T] MF Investment term in years (B): 25[U] SIP Return: 10%[V] Corpus at the end of 25 years: ₹ 1,17,65,408[W] Own contribution: ₹ 26,38,200[X] LTCG Tax on MF at 10%: ₹ -9,03,863[Y] Final MF Corpus Value (V+X): ₹ 1,08,76,262[Z] Difference (Y-N): ₹ 44,64,506. (I am not considering Death Benefit here because it is of no use to me. Even if I did, it is ₹ 19,64,506 more and lest one forgets, if the MF corpus is untouched, assuming 25 years of vesting, it will grow to ₹ 12,76,34,190.)c) You think MF is risky? Then try PPF. The limit is ₹ 1.5 lakhs per year. But by investing for same 25 years, you will get ₹1,10,39,881. But this assumes a 7.1% constant maturity yield and that can change. Still it is unlikely to come down to less that 6.5%. And this amount is tax free also.Here is the table:So there is the same cover for you as LIC JA but much-much better: more life cover and more return.Twice the life cover and ₹ 44,64,506 more than LIC. What double benefit? What returns? Is this even comparable? Some will quick to jump that 10% returns are not possible in MF. I will simply say - please go and re-examine. It is quite possible and in fact I have achieved higher results of 12.75% since Nov-2007. In the last 5 years, I have achieved 22.13%. 10% is very-very modest and completely possible as long as you do your research, select the right funds, keep monitoring returns and take remedial actions like switching. Markets rise and fall but over a long term of 25 years, you will always get a pretty decent returns because of the power of compounding and hedging + averaging due to SIP. I can promise this at least based on own experience.One USP about LIC is that it allows loan on policy. Hogwash! The loan is 90% of the policy surrender value at the time of loan and not the sum assured. The policy does not allow getting benefits early. If you wanted early benefits, the only way is to surrender the policy completely. With MF, you can dip into the corpus any time. No need of loan.So guys, please believe me when I say … No endowment or moneyback policy is good. Not only it is not good, it is PATHETIC!!! Do not fall in for false promises.These are the worst mistakes of my life:a) LIC Money back w/Acc. Ben, SA = ₹50,000, annual premium = ₹2,672, 30 years, matured 2013b) LIC Jeevan Mitra, SA = ₹50,000, annual premium = ₹2,234, matured 2020c) LIC Jeevan Suraksha (Pension Plan), annual premium ₹10,119, 25 years, for monthly pension of ₹6,000, maturing 2023 so continuing because maturity is near and I can't get surrender return. Just that pension will be adjusted.d) LIC Jeevan Chhaya, SA = ₹1,00,000, annual premium = ₹5,332, 25 years, matured 2014e) LIC Jeevan Anand, SA = ₹5,00,000, annual premium = ₹22,336, 25 years, maturing 2028, continuing because now just few years leftf) LIC Jeevan Saral, DSA = ₹10,00,000, annual premium = ₹47,040, 35 years, maturing 2044 (will stop immediately)g) HDFC Life Sanchay Plus Pension Plan, annual premium = ₹2,00,000, 10 years, was maturing in 2023, stopped after 7 years in 2020. I will get pension of ₹1,10,000 pa for 30 years on vested amount.Term Life: Start with 1 Cr constant:Term Life: Start with 1 Cr and step to 2 Cr (step up applies every 5 years or so):Term insurance for 50 laks (min offered by most) and used in calculation:Actually in calculation, I have used more amount for Term insurance premium. Just to verify, the settlement ratio is over 98%, better than LIC.Edit (01-Feb-2021, 00:07): This answer does not compare LIC insurance with MF. It advises - do not mix insurance with investment; do not confuse endowment as investment. It advocates Term Insurance for insurance and MF for investment. And then it goes on to prove how the advised route will yield better returns.If you wish to argue against, by all means, do so. But please base your argument with facts and figures. Do not bring emotions into finance. This is the typical strategy of insurance agents. Insurance is the easiest way to frighten people and sell them all kinds of nonsense. It happens with cars also - please get Teflon coating done, please consider under body coating, please consider extended warranty and all that hyperbole.I am tired of replying. So unless there is a counter argument with facts and figures, I will simply delete the comment from now on. If you have own point of view, feel free to write own answer. I won’t challenge you with my own comments.p/s. For those who want to look at calculations, check other policies, play around with figures, please download and use: LIC vs PPF and Gold.xlsx. There are many other analytics in there and I keep updating the sheet.

I have recently cleared LIC AAO 2019. (Scorecard is posted Below).First let me tell you about this Post, LIC AAO (Assistant Administrative Officer) is one of the most coveted jobs one can get in the Insurance Industry. It is a Class I officer in the LIC Cadre and the highest level of direct recruitment that is done by LIC currently. Work is mostly administrative in nature and the pay, perquisites, facilities and work-life balance is very attractive to aspirants.Boths freshers and working professionals apply for this exam, and many in our selected batch are even SBI POs and IBPS POs, so you can understand the liking for this post.But sadly, the vacancies are coming at a gap of 3 years (going by the previous trends). But, there is a probability that it can come soon in the near future, so prepare well for it.Now, coming to the exam pattern;There are 3 phases for final selection i.e Prelims, Mains & Interview. There is no negative marking in Prelims and Mains, but there is a 50% criteria for General Candidates, failing which, will lead to disqualification from the examination.Below is the section wise strategy and approach that I had followed and there are adjoining links to it that connects with other answers which are written in detail.For Prelims:There are 3 Sections; English (Qualifying in Nature) Reasoning & Quants.There is a 50% criteria for Sectional Cutoff in this stage except English (Just Qualify, Not Counted in Total). So the Marks will be out of 70 (35 for each section).The syllabus is just like Banking’s. Download it and prepare accordingly.The main thing about Prelims is Speed and Accuracy, So I would suggest you to give mocks religiously, not for LIC AAO, but for any Banking/Insurance Sector Examinations. They help immensely and will make your actual exam look a lot easier. I’ve relied on Oliveboard, PracticeMock, Adda247 & Testbook for Mock Series.There are many detailed answers regarding strategy for each of these sections in my profile, you can check them out.Soham (सोहम)'s answer to How do I improve my attempts and timing in the IBPS PO examination?Soham (सोहम)'s answer to How do I prepare for quantitative aptitude for bank exams?Soham (सोहम)'s answer to How do I prepare Reasoning for IBPS Clerk Mains 2020?Soham (सोहम)'s answer to What are some tips to score 20+ marks in the IBPS PO English section 2019?For Mains:There are 4 objective sections and 1 Descriptive section.They are; Reasoning, Quants, General Awareness, Insurance & Financial Awareness and an English Descriptive Section (Qualifying Nature).Again, Just like Banking, the topics of Quants, Reasoning are same as Prelims, but difficulty is higher. General Awareness is also like banking, download capsules from BankersAdda, AffairsCloud, Oliveboard, GK Today, GradeUp and other sites and prepare. For Insurance and Finance, you can again to through the above mentioned sites, they have special capsules covering both Current and Static Topics.To prepare for Descriptive, you need to be good in essay and letter. If you are already familiar with it, then no need to give extra attention. Just practice 3–4 hot topics before exam in the computer/laptop since it will be in typing. If you are not, then prepare well. There are answers covering these sections as well, you can find them in my profile.Soham Shome's answer to How do I easily improve my writing skills for the SBI PO? Soham (सोहम)'s answer to How do I prepare for current affairs and banking awareness for bank exams?Soham (सोहम)'s answer to How do I prepare for the bank PO Mains exam?Again, I’ve relied on Oliveboard & PracticeMock for giving Mains level Mocks of LIC AAO. They’ve helped me in the actual exam massively. So, mocks are very important for every stage of the examination.Below is the link about my review of the mains exam of LIC AAO:Soham (सोहम)'s answer to How was your LIC AAO Mains 2019? What was the difficulty level?For Interview:This stage basically has no syllabus, questions can come from anywhere. It all depends on the panel. Though it is recommended to learn about LIC, Insurance, Insurance Industry, Financial Awareness, Economy, Current Affairs, Graduation Subjects, Hobbies, Work and others, One cannot guarantee questions coming from these areas, so it’s better to prepare for everything which is relevant for the job and for your profile. You can go for Mock Interviews, they help, especially if you haven't faced an Interview Panel in your life, personally I did not went for it , but one can.For my Interview experience, go through this link: Soham (सोहम)'s answer to Can anyone list the interview questions generally asked at LIC AAO interview specifically from commerce graduates? You can get an Idea, as my Interview was mostly profile based.Some Do’s and Don’ts :DO’s:Prepare the concepts well, mains are conceptual, here tricks and shortcuts don’t work.Aim for speed and accuracy. Learn Fast Calculation, Squares, Cubes, Root, Ratio-Percentage-Fraction Conversion and other things that are beneficial for improving the performance.Attempt Mocks regularly and analyze post exam.Focus on GA/GK and special attention on Insurance & Finance Section (This was the deal breaker and maker for many candidates).Prepare comprehensively and not separate for mains and prelims barring some areas.Special attention in Quant and Reasoning since English is qualifying in nature.Prepare for Interview beforehand and not after mains result, LIC disqualifies many candidates in the interview stage so take it seriously.Each section is important as there is a mandatory criteria, so put extra focus where it is needed the most.Don’ts:Don’t take the prep casually, make sincere and consistent efforts.Don’t avoid GK and Insurance Section for the last.Don’t delay mock tests, the more the better.Don’t focus only on shortcuts and tricks, rely more on the conceptual part.Don’t treat every section equally, put focus according to needs.Don’t forget to prepare English, though it is qualifying, it is mandatory to get the required marks for passing the predetermined cut-off.Don’t Panic, Stay Optimistic and Remain Confident throughout the Prep.Don’t forget to take care of your physical and mental health, these are very important to ensure a smooth journey for preparations.Don’t Isolate or seclude yourself from people, interact with people you love, pursue your hobby and do everything but in moderation. The aim is to keep the mind fresh by making the prep days fun and interesting.These are more or less the things I followed, If I’ve missed out on anything, feel free to ask.Hope this answer helps.All the Best, Good Luck.

I have recently cleared LIC AAO 2019.There are 3 phases for final selection i.e Prelims, Mains & Interview. There is no negative marking in Prelims and Mains, but there is a 50% criteria for General Candidates, failing which, will lead to disqualification from the examination.For Prelims:There are 3 Sections; English (Qualifying in Nature) Reasoning & Quants.There is a 50% criteria for Sectional Cutoff in this stage except English (Just Qualify, Not Counted in Total). So the Marks will be out of 70 (35 for each section).The syllabus is just like Banking’s. Download it and prepare accordingly.The main thing about Prelims is Speed and Accuracy, So I would suggest you to give mocks religiously, not for LIC AAO, but for any Banking/Insurance Sector Examinations. They help immensely and will make your actual exam look a lot easier. I’ve relied on Oliveboard, PracticeMock, Adda247 & Testbook for Mock Series.There are many detailed answers regarding strategy for each of these sections in my profile, you can check them out.Soham (सोहम)'s answer to How do I improve my attempts and timing in the IBPS PO examination?Soham (सोहम)'s answer to How do I prepare for quantitative aptitude for bank exams?Soham (सोहम)'s answer to How do I prepare Reasoning for IBPS Clerk Mains 2020?Soham (सोहम)'s answer to What are some tips to score 20+ marks in the IBPS PO English section 2019?For Mains:There are 4 objective sections and 1 Descriptive section.They are; Reasoning, Quants, General Awareness, Insurance & Financial Awareness and an English Descriptive Section.Again, Just like Banking, the topics of Quants, Reasoning are same as Prelims, but difficulty is higher. General Awareness is also like banking, download capsules from BankersAdda, AffairsCloud, Oliveboard, GK Today, GradeUp and other sites and prepare. For Insurance and Finance, you can again to through the above mentioned sites, they have special capsules covering both Current and Static Topics.To prepare for Descriptive, you need to be good in essay and letter. If you are already familiar with it, then no need to give extra attention. Just practice 3–4 hot topics before exam in the computer/laptop since it will be in typing. If you are not, then prepare well. There are answers covering these sections as well, you can find them in my profile.Soham Shome's answer to How do I easily improve my writing skills for the SBI PO? Soham (सोहम)'s answer to How do I prepare for current affairs and banking awareness for bank exams?Soham (सोहम)'s answer to How do I prepare for the bank PO Mains exam?Again, I’ve relied on Oliveboard & PracticeMock for giving Mains level Mocks of LIC AAO. They’ve helped me in the actual exam massively. So, mocks are very important for every stage of the examination.For Interview:This stage basically has no syllabus, questions can come from anywhere. It all depends on the panel. Though it is recommended to learn about LIC, Insurance, Insurance Industry, Financial Awareness, Economy, Current Affairs, Graduation Subjects, Hobbies, Work and others, One cannot guarantee questions coming from these areas, so it’s better to prepare for everything which is relevant for the job and for your profile. You can go for Mock Interviews, they help, especially if you haven't faced an Interview Panel in your life, personally I did not went for it , but one can.For my Interview experience, go through this link: Soham (सोहम)'s answer to Can anyone list the interview questions generally asked at LIC AAO interview specifically from commerce graduates? You can get an Idea, as my Interview was mostly profile based.If I’ve missed out on anything, feel free to ask.Hope this answer helps.All the Best, Good Luck.