LIC’s Jeevan Varsha is a close ended Money Back Plan with Guaranteed Additions. The plan returns periodical payments as a proportion of Sum Assured at specified durations, on survival during the term of the policy and on maturity. This plan returns full Sum Assured on death irrespective of earlier pay backs. Guaranteed Additions are payable on death and Maturity. Loyalty Additions *may* also be payable during the last year of the policy on both maturity and death.
Since LIC couldn’t collect the expected amounts from Jeevan Astha policy, now they have come out with this Jeevan Varsha money back policy with a tenure to choose from 9 years and 12 years. The plan will be open for purchase from 16th February, 2009 to 31st March, 2009. Let us look at this policy features and analyse more.
Features:
* The minimum entry age for this policy is 15 years while maximum maturity Age is 75 years.
* Policy Term : 9 years & 12 years
* Premium Paying Term: 9 years
* Premium payment modes: Yearly, Half-Yearly, Quarterly, Monthly (by ECS mode only).
* Minimum Sum Assured Rs 75,000/- for monthly ECS mode while Rs 50,000/- for other modes
* Maximum Sum Assured: No limit. Also, sum assured shall be in multiples of Rs 5,000/-
Benefits:
Survival Benefits:
| Survival Benefit | Term 9 years | Term 12 years | |
| 3rd Year | 15% of SA | 10% of SA | |
| 6th Year | 25% of SA | 20% of SA | |
| 9th Year | 60% of SA + GA + LA (if any) | 30% of SA | |
| 12th Year | - | 40% of SA + GA + LA (if any) | |
Guaranteed Addition:
* Rs. 65 per 1000 of SA/year for a policy of 9 years term.
* Rs. 70 per 1000 of SA/year for a policy of 12 years term.
Loyalty Addition:
Applicable to those policies where in Life Assured has survived the stipulated date of maturity or on the Life Assured’s death during the last policy year. All this again at the descrition of LIC based on various factors which they haven’t specified clearly. For better understanding and benefits illustration visit LIC site here.
My take: Be specific on what you are looking for. If insurance is your basic need, go for pure insurance policies than compromising on both the insurance and profits via this kind of policies. Think about term insurance policies for cover while think of fixed deposits, mutual funds for investment. FD’s will give atleast 8-9% returns as compared against 6.5% of this LIC’s Jeevan Varsha. Prioritize what your needs and plan accordingly.
Update: Some of the readers requested for more detailed info with respect to calculations. So, here it is. I have compared the Jeevan Varsha with Bank fixed deposits and take a look at the image below to understand it before. I have considered the same example as that of a 35 years individual for the calculations at Rs 65 per thousand as Guaranteed Additions for a term of 9 years. However, I have not included Loyalty additions as there is no clarity on that from LIC of India. For bank FD’s I have considered interest at 8.5%. So, I leave the remaining analysis to your descrition. May be the elite knowledgeable LIC agents may be able to prove me wrong completely!
Disclaimer : This information is based on the details as available on LIC site at the time of writing this article. Please contact LIC agent / Development officer/ Regional office for official and accurate details.
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my father (age=62 years) has invested in lic jeevan varsha (sum assured=200000) he paid premium of 35000 in april 2009 how can he get out of this policy now what will he get back if he stops future premiums.
Thanks for your prompt reply. Let me give the policy details, may be beneficial for people who don’t really read the policy document before taking the policy. Like the way I did 5 years back , believing few statistics & photostats from the agent. Policy sum assured is :5Lakh, Yearly premium is 50,324, start date-Dec2004, date of last payment is sep 2014, maturity is Dec 2019.The benefits as per policy are as per policy document are as follows:-
1)sum assured 5 lakhs- hmmm which is nothing but the money I paid as premium.
2)Accident benefit of 5 Lakhs
3)Rs 50 per sum assured for each years premium paid for first 5yrs
4)Participation profit-Which is something vaguely described as “after completion of 5yrs the policy shall participate in profits of the “with profit assurance policies” at such rate as may be declared by the corporation.
Not sure of what the hell corporation decides, again there is no guarantee..hmmm
thats it, I paid 3 years premium and I stand to loose more than a years premium if I surrender the policy now as per the LIC official. I stand cheated as the agent told after 3yrs anytime u can surrender the policy, you will get the complete paid premium + interest. Now that’s my mistake that I didn’t properly enquire about the policy or read the document before signing the first premium amount. Anyways it happened during the early part of my career thought LIC was the best means to save money, actually my mom said so :). I have decided to surrender the policy. Ready to forget a years premium, may be a penalty to my foolishness. Reasons for making this decision:-
1)There is no real good benefit of continuing this policy, only the dent in my pocket will increase. 4150 per month, I can put that money in SIP and reap better rewards.
2)To restart the policy I ahve to pay 2yrs premium with penalty charges & interest.
3)I don’t like LIC any more, after talking to the official 1year back I felt cheated and dejected.
4)Lesson I learned that insurance is not investment.
5)The money I get, a little more than a lakh can be put in equity, and hope for the best :). A risky decison, but get some thrill of direct investment in stocks.
Comments are welcome!!
cheers
rahchand
Ah! sorry to hear that. You have set a true example for what to look in for before taking up any insurance or investment plan. I feel you have taken the right step. Go for term insurance to ensure the right cover on life at the lowest premium while the rest can go to investment to gain the best. I will quote your story as a case study in one of my future articles to re-iterate that “investment and insurance should never be combined in a single plan”.
Hi Mohan/Fellow investors
I did a mistake 5years back by investing in Jeevan Shree 1. My annual premium was close to 53k. I paid premium for 3 yrs, later I realized the mistake. I shouldn’t hae combined insurance & investment. When I went to cancel the policy, the agent told I will loose almost 56K, from the total premium I paid. I was depressed, they are deducting(35%) the money I paid forget the interest or returns. The money is idle there and now I have to decide whether to continue this policy by paying penalty and interest for breaking the policy or withdraw whatever money is there and close the account. Whats your opinion.
Thanks & regards
Rahchand
Dear Rah, there is no straight answer to your question. I suggest you do a complete end to end analysis of what is the benefit if you continue to hold this policy by paying regular premiums against exiting right away. Consider your other financial planning aspects as well in to account before coming to a conclusion. Feel free to share your thoughts once you make up your mind. Probably, people here will be able to tell you whether you are analysing in the right direction or not.
i did not understand pls make me understand this policy
i am an insurance adviser with max new york life insurance and bajaj allianz lfe insurance
if u anybody seriously interested in insurance investments, feel free to post your queries.
pahle policy hoti thi ki 2000000 laga kar 2000000 twenty years me le le.
ab aisi konsi policy hai
can you suggest me is investing in gold is profitable with small amount (say Rs 5000).
Mohan that what I am asking to you what will happen to CP_MB after 6 month that is 81480 at the end of 6 year and after cutting 60000 (60 % SA) remaing amt is 21480. Will there is no account for this amount.
Hey Mohan,
Lately am thinking of investing money in something (not in shares) like SBI ULIP, where i can expect high returns. Can you pls. recommend anything for me.
Thanks,
Vinod
@Sandeep
You got it wrong. It will be 118500 + money returned during 3rd and 6th year which amounts to 40000. So, the final would be 158500. Check the calculations above to get a better understanding.
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