LIC launches “Jeevan Varsha” – Close Ended Money Back Plan with guaranteed additions

The Life Insurance Corporation of India (LIC) has a new offering – “Jeevan Varsha”. It is a close ended money back scheme, with guaranteed additions. Read on for more details.

The term / tenor of the policy

The policy has two durations – 9 years or 12 years. You can choose one of these two durations.

Periodic Payments / Survival Benefits

The Jeevan Varsha plan has a provision for periodical payments. At various times during the tenure of the policy, you would get an amount that is a fixed percentage of the sum assured under the policy.

These sums are payable as a survival benefit during the term of the policy, and on maturity.

This survival benefit is paid out every 3 years – so, you would get it after the 3rd year, 6th year, 9th year and, if applicable, after the 12th year.

(Download this spreadsheet that contains the detailed calculation regarding cash flow from the policy, and analysis of the rate of return from the policy.

You need to be logged-in to download the spreadsheet. Please take advantage of the free registration that takes less than a minute. To know the benefits of registration, please click here.)

Guaranteed Additions

The guaranteed addition is Rs. 65 per Rs. 1000 of sum assured for a policy with a term of 9 years, and it is Rs. 70 per Rs. 1000 of sum assured for a policy with a term of 12 years.

Death Benefits – How much is paid on death?

If the insured dies during the term of the policy, the nominee would get the sum assured on death. The nominee would also receive the guaranteed additions.

Some loyalty additions may also be paid in case the death of the insured occurs during the last year of the policy.

Minimum and Maximum Sum Assured (SA)

The minimum sum assured under this policy is Rs. 50,000.

However, if you opt for paying the premiums every month using Electronic Clearing Service (ECS), the sum assured can not be less then Rs. 75,000.

There is no limit on the maximum sum assured – the only condition is that it has to be in multiples of Rs. 5,000.

Age restrictions

You should have completed at least 15 years of age at the time of purchasing the policy.

Also, your maximum age the the time of the end of the policy should not be more than 75 years.

This means that the latest you can buy this policy is when you are 66 years old (for policy duration of 9 years) or when you are 63 years old (for policy duration of 12 years).

Premium Payment Modes

You can pay the premiums yearly, half yearly, quarterly or monthly. Monthly premium payment can be through ECS only.

Indicative Premiums

The premium for a 30 year old would be Rs. 162.05 for a sum assured of Rs. 1,000 for a policy duration of 9 years. If the policy term is 12 years, the premium would be Rs. 165.30 in this case.

If you choose to pay the premium half yearly, there is a discount of 1% available. If you opt for yearly premiums, the discount increases to 2%.

Rebate for high sum assured

A rebate is also available if the sum assured is higher than a certain limit.

If the sum assured is more than Rs. 1 Lakh but less than Rs. 2 Lakhs, the premium per Rs. 1000 of sum assured is reduced by Rs. 2.

If the sum assured is more than Rs. 2 Lakhs but less than Rs. 5 Lakhs, the premium per Rs. 1000 of sum assured is reduced by Rs. 3.50.

If the sum assured is more than Rs. 5 Lakhs, the premium per Rs. 1000 of sum assured is reduced by Rs. 5.

Income Tax Benefits

The premium paid for the Jeevan Varsha plan would be eligible for deduction under section 80C.

(Please read “Saving Income Tax – Understanding Section 80C Deductions” for more details on deductions available under section 80C)

Also, the income earned from the policy would be tax free.

Loan Facility

LIC provides a facility of taking a loan against some of its policies.

You can take a loan against this policy after you have paid at least 3 full year premiums and the policy attains a paid-up value.

When can the plan be bought?

The scheme is open for purchase from 16 February 2009 to 31 March 2009.

Illustration of Cash Flow

(Download this spreadsheet that contains the detailed calculation regarding cash flow from the policy, and analysis of the rate of return from the policy.

You need to be logged-in to download the spreadsheet. Please take advantage of the free registration that takes less than a minute. To know the benefits of registration, please click here.)

Sum Assured: Rs. 1,000
Policy Term: 12 years

(Download this spreadsheet that contains the detailed calculation regarding cash flow from the policy, and analysis of the rate of return from the policy.

You need to be logged-in to download the spreadsheet. Please take advantage of the free registration that takes less than a minute. To know the benefits of registration, please click here.)

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