This is a limited premium paying non-linked endowment life insurance policy that provides both savings and protection to policyholders. The plan offers both death and maturity benefits along with profit participation bonuses.
Eligibility Criteria for LIC Jeevan Labh
|Minimum entry age||8 years (completed)|
|Maximum entry age||
|Maximum Age at maturity||75 years (nearest birthday)|
Key Features of LIC Jeevan Labh
|Plan type||Non-linked endowment plan with limited premium paying term|
|Premium paying terms (PPT)||
|Premium payment frequency||
|Loan||Loans can be availed against this policy. Loans are available provided if at least 3 full years’ premiums have been paid and the policy has acquired a Surrender Value.|
|Revival||Policy can be revived any time within 2 years from the date of first unpaid premium by paying all the premium arrears along with interest and other expenses.|
|Free look period||15 days from the date of receiving policy documents. Premium amount already deposited will be returned after deducting proportional risk premium for cover period, medical examination expenses, reports, stamp duty etc.|
|Nominations||Nomination facility provided as per the Insurance Act|
|Basic Sum Assured||
|Policy coverage||Maturity Benefit, Death Benefit, Simple Reversionary Bonus and Final (Additional) Bonus (if any)|
Benefits of LIC Jeevan Labh
Major benefits of LIC Jeevan Labh policy are as follows:
- Maturity Benefit – On maturity of the policy, the policyholder will receive the Sum Assured on Maturity as lump sum, which is equal to Basic Sum Assured plus vested Simple Reversionary Bonuses and Final Additional Bonus, if any.
- Death Benefit – Death benefits are paid out as the sum of ‘Sum Assured on Death’ plus Simple Reversionary Bonuses plus Final Additional Bonus (if any). The Sum Assured on Death is the highest of either 10 times of annual premium paid or the Basic Sum Assured. The death benefit will not be lower than 105% of overall premium amount paid as of date of death.
- Profit Participation – This policy is participating in nature and policyholders are entitled to get the Simple Reversionary Bonuses as declared by the company if the policy is in full force. A Final Additional Bonus may also be given when a claim has been filed for maturity or death.
- Tax Benefits – Tax benefits are available as per relevant sections of the Income Tax Act, 1961.
- Loans – Loans are available as per the table given in the ‘Key Features’ section above.
- Rebate – In terms of premium frequency, 2% of annual premium and 1% of half-yearly premium payments are offered as rebates. Sum assured of Rs.2 lakhs to Rs.4.9 lakhs receive a rebate of 1.25% of Basic Sum Assured, Rs.10 lakhs to Rs.14.9 lakhs receive 1.50% and Rs.15 lakhs and above receive 1.75%.
- Surrender Value – The policy can be surrendered at any point of time in the policy term subject to payment of at least 3 consecutive years’ premium. The Guaranteed Surrender Value will be equal to the total amount of premiums paid (minus any additional charges incurred such as underwriting decisions or rider premiums) multiplied by the Guaranteed Surrender Value Factor. The Guaranteed Surrender Value Factor at different points in the policy term are as follows:
|Guaranteed Surrender Value Factor|
|Policy Year||PPT 16 years||PPT 21 years||PPT 25 years|
Example of LIC Jeevan Labh Policy
Suppose Mr. Gupta opted for LIC’s Jeevan Labh Plan with a tenure of 25 years, premium paying term of 16 years, Yearly premium payment mode and Sum Assured of Rs.2 lakhs. He is 35 years old and paying an annual premium a little over Rs.9,100.
At the end of 25 years on maturity, he will receive Rs.2.2 lakhs which includes interest at 4% p.a. or Rs.3.7 lakhs at 8% p.a. interest. In case of his unfortunate demise in the 22nd policy year, his nominees will receive a lump sum amount of Rs.2.17 lakhs (4% interest) or Rs.3.41 lakhs (8% interest) as death benefit. The interest rates are subject to company policies. In either of the above cases, Mr. Gupta will be paying an overall amount of Rs.1.46 lakhs as premium in 16 years to avail a basic sum assured of Rs.2 lakhs and other bonuses.
There are 2 riders that may be availed with this policy to increase coverage:
- LIC’s Accidental Death and Disability Rider: This rider can be purchased on payment of additional premium over the base policy premium. The rider is available for ages 18 years to 70 years (maturity). It offers additional sum assured in case of accidental death during policy coverage. In case of disability, the Accident Benefit sum assured will be paid out in 10 equal instalments spread over 10 years.
- LIC’s New Term Assurance Rider: This rider increases the cover in case of death benefit. The rider can be opted for at inception of the policy by paying additional premium over the base policy’s premium.
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GST of 18% is applicable on life insurance effective from the 1st of July, 2017