Note: this is a guest post from Manish P on LIC Jeevan Saral.
LIC Jeevan Saral is a cash value insurance plan. Usually Parani does not like these products but I beg to differ. If my father would have foreseen the future, and invest as little as Rs 1,000/- a month in any long term investment plan for past 25 years, our family would have had a surplus amount today to bear with the rising prices.
That does not mean that we have a difficulty, but it would have been much better. I have always wanted a long-term investment. It keeps you financially secure and offers the needed assistance when the time arrives.
As I was aware of the financial conditions and started managing my accounts from the engineering college days, I decided to invest in a long-term investment after securing employment.
After research, collection of data and taking the opinions of the experts, I choose the Jeevan Saral plan from the Life Insurance Corporation of India. The periodic investment plan from the LIC is a fabulous systematic investment that accumulates to a larger sum at maturity.
Additionally, the regular investment is also the logic behind the recurring deposits offered by banking institutions across the country. The policy is an endowment assurance, and you will be choosing the preferred amount as well as the payment method.
It indicates you have complete authority over the investment. In this case, you will never lose a penny but rather accumulate over the years if there is no premature withdrawal/termination.
- Product Summary
LIC is the finest investment institution available in the country. The long-term plan gives complete control to the purchaser and ensures that you have a command over the entire investment.
In addition, the Jeevan Saral plan further offers death benefits during its active status. However, if you withdraw the program in the mid-way (only possible after three years), you will not receive any benefit. You will get back the amount for the three years without any interest deducting surrender charges.
If you are willing to continue for the long term, you will receive additional benefits such as loyalty bonus. These features of Jeevan Saral are attractive for risk averse investor like me and make it the best plan today for people who are ready to choose a risk-free long-term investment.
The death benefit offered by Jeevan Saral plan is to the extent of 250 times the monthly premium amount. For example, if you wish to pay Rs. 1,000/- per month as a premium, the death benefits tunes up to Rs. 2,50,000/- for the entire period.
At the time of the death, your family receives the actual premium paid until the date and the death benefits amount. It is a win-win situation for you and your family. Minimum age at entry for Jeevan Saral is 18 years and maximum entry age is 50 years. Maximum age at maturity can be 60 years.
Min Sum Assured = Rs 1,00,000
Max Sum Assured = Rs 25,00,000
The life protection cover is proving beneficial for the plan, as you no longer have to choose an additional policy to cover for the death benefits.
The length of the Jeevan Saral policy is minimum ten years to 35 years maximum. However, it varies according to your age at the time of enrollment. The length of the period defines the total benefits that you will receive at the time of maturity from LIC Jeevan Saral.
The accumulated amount is huge and gives you the chance to reinvest or use wisely according to your family requirements. Moreover, the Jeevan Saral does not charge any penalty for closure of the plan after 5 years. read more int he benefits section.
The accidental death benefit is another addition to the cap. According to LIC, 95% of its total investors in the plan survive until the end. However, the accidental death benefit is a boon for regular travelers that often move on work.
The flexibility offered is high, and you can choose to surrender it at any time without penalty. That is something unusual, which is not the case with other policies from different providers.
- Maturity sum assured
As a policyholder, you will enjoy the required liquidity through this plan. LIC Jeevan Saral offers the benefit of tax exemption and liquidity. For example, after five long years of the active premium payment, without any defaults and corresponds to the required term under the policy, you may receive 100% Maturity Sum Assured (MSA).
The LIC provides the MSA values at the beginning of the policy. It is giving the opportunity to remove full or partial MSA during this period. For illustration, if you are in need of funds during that period, you can just choose to withdraw the required fund from the MSA.
Through this way, you will meet your financial emergency and secure the future without additional loans. The full MSA is available after ten fruitful years of payment.
The benefits associated with the plan are incredible. Apart from offering the assured sum, LIC further adds loyalty bonus in Jeevan Saral plan. It is only applicable if you keep the policy active until its end or for minimum ten years.
For example, if your plan is for 15 years, you have to continue it for at least ten years to receive a loyalty bonus. You can surrender the policy after the 10th year.
It will not affect the loyalty bonus. The loyalty addition depends on the profits made by LIC. As the profits are variable, it will be difficult to state the exact figure at the beginning of the policy. However, past returns were in between 4 and 7% when held more than 10 years.
In best case scenario, if you consider 7% as a return at the end of the plan, it will add up another lakh rupees, considering that the minimum monthly payment is Rs. 1,000/-.
The best part of the entire program is its non-taxable factor. It means, you will not pay a single rupee as tax to the profits obtained through Jeevan Saral. That is entirely fascinating, as investing in recurring deposit still attracts tax on the interest earned.
Jeevan Saral has a good number of advantages over other policies in the market. The following are the advantages that you will receive by enrolling with the plan:
- The death benefit is 250 times the monthly premium in addition to the loyalty bonus, if any. LIC also returns the paid premiums, excluding the first year, to the nominee in a lump sum in Jeevan saral.
- The maturity amount along with the interest and loyalty bonus, if any, is payable at the end of the policy. You can also take a loan from LIC as a holder of LIC Jeevan Saral.
- Supplementary or additional benefits are applicable only when you choose to add new features into the policy. However, you will have to make the required premiums towards the added benefits.
- As the plan is a long-term investment, surrender value is applicable during early termination of the plan. The surrender value is usually greater than the actual guarantee surrender. However, it depends on the stage at which you are surrendering. The policy also enables you to abandon partially.
- If you find it difficult with the policy premium payment, you can do it after three years. Under such condition, LIC returns 30% of the premiums paid, excluding the first year of the payment if returned within 3 years. If you choose for additional benefits, you will have to exclude their premiums. So do not surrender the policy as much possible.
- The maturity sum assured differs according to the total number of years that you completed paying the premiums. For example, if you complete three years and surrender the policy, the MSA will be 80% of the premiums paid. It will be 90% in case of four years and less than five years. It will be 100% if it exceeds five years.
Jeevan Saral is a long-term investment plan offering an excellent opportunity to save a good amount of money for a committed person. Money is an essential tool to sustain in this world and a better way to manage it is through investment in risk free products.
The Jeevan Saral from LIC is surely an appealing product in the market offering benefits and assured sum for risk averse investors. The monthly endowment plan additionally offers death benefits and loyalty bonus.
Together, they add up lump sum, giving you good returns in the end. Surrender value and unique benefits are added attractions, and you can choose the required benefit to the policy. Enjoy maximum benefits by paying as little as Rs. 1,000 per month with LIC Jeevan Saral. Get yourself a cover that protects your money and helps it grow over a period.