LIC's Jeevan Nischay: Review

Posted by Admin on 4

After success of Jeevan Varsha and Jeevan Astha, LIC of India is back with the guaranteed return plan Jeevan Nischay.



This is close ended plan and will be available till 31st March 2010.



  • Policy is only for the existing policy holder of LIC of India and not for all.


  • This is a Single premium product with minimum premium at Rs. 10,000 and maximum at Rs. 10, 00,000.

  • The higher the premium you pay the more is your guaranteed maturity benefit is.


Following table shows % increase in maturity sum assured.



Premium

5 years

7 years

10 years

10,000 – 24,999

NIL

NIL

NIL

25,000 – 49,999

3.00%

3.75%

4.50%

50,000 – 99,999

4.00%

5.25%

6.50%

1,00,000 >

5.25%

6.75%

8.50%



  • Policy comes with an option of flexible terms of 5, 7 and 10 years with facility to surrender policy after first policy year and loan facility after first year.

  • In case of surrender 90% of premium will be returned back.

  • Apart from Guaranteed maturity benefit, policy holder will also get Loyalty addition which in tern will increase the return on investment.

  • Life insurance cover is 5 times the single premium in first year.

  • Minimum and maximum entry age is 18 and 50 years respectively.

  • No medical exam is required, Policy is allowed only to those who are not paying any additional health related charges.



Now let us take a look at return.

For a single premium of Rs. 1000 following is the MSA for age of 30 year.



5 year

7 year

10 year

1256

1409

1715

25.6%

40.9%

71.5%



The higher your premium is and the long your tenure is the more return you will get.

For instance if one put Rs. 1, 00,000 for a tenure of 10 years. MSA would be (Rs. 1715 * 100) Rs. 1, 71, 500.

Because of high premium benefit an extra 8.50% of MSA is added to the amount which is (1, 71, 500 * 8.50/100) Rs. 14,577.5. Total comes to 1, 86, 077.5 + Loyalty addition.

LA is not guaranteed however as per lic’s website if we consider a rate Rs. 350 per thousand premiums paid. It comes to (350 * 100) = Rs. 35,000.

Overall it would give you more then double of what you pay.

In addition to that

1) Life Insurance covers.

2) Tax benefits (Premium paid and Maturity benefit is tax free).

The only negative point I could see is policy lacks liquidity. If you surrender in between you would get only 90% of premium paid back.

Death benefit is high only in the first year and hence from risk point of view this policy doesn’t look promising.



Comparing Jeevan Nischay with NSC, PPF and FD.

Comparison considering Max Term of 10 years and amount > Rs. 50,000.

Return on high Single premium amount even for a lesser term also gives good return.



PPF

NSC

Tax saver FD

Jeevan Nischay

Term

15 years

6 years

5 years

10 Years

Return

8.5%

8%

7.5%-8.5%

8%-9%

Tax on Interest

No

Yes

Yes

No

Insurance

No

No

No

Yes

*Note: This is an updated version of my earlier post.

Feature of increase in MSA was missing in earlier post.

Because of this return is now in line with other fixed return investment instruments.

About the Author

Write admin description here..

Get Updates

Subscribe to our e-mail newsletter to receive updates.

Share This Post

Related posts

4 comments:

What should the maturity amount if i will invest Rs. 25000 for 5 years term

Bhargav said...

Hi Sameer,

Apart from premium, MA depends on Age and term.

please visit the link

http://www.licindia.com/Jeevan_Nischay_benefits.html

for more detail.

Piyush Kumar said...

What is MSA

Plz explain it or u can mail me at my email id piyush89@rediffmail.com

Bhargav said...

MSA means Maturity Sum Assured

Blogger templates. Proudly Powered by Blogger.
back to top