The Life Insurance Corporation of India offers a range of life insurance plans which allow you to fulfil your coverage needs effectively. One such type of plan is the pension plan which allows individuals to plan for a financially free retired life. There are different types of pension plans offered by LIC and LIC New Jeevan Suraksha I Plan is one such plan which the company offered earlier but is now withdrawn. Let’s understand the plan in details –
LIC New Jeevan Suraksha I – Overview
LIC New Jeevan Suraksha I is a deferred annuity plan. This is a traditional policy which promises guaranteed benefits on death or maturity. Being a deferred annuity plan, LIC New Jeevan Suraksha I allows you to create a retirement corpus over a selected period of time by paying premiums and earning the returns promised under the plan.
Features of LIC New Jeevan Suraksha I
Here are the salient features of LIC New Jeevan Suraksha I which make the plan beneficial –
- This is a participating annuity plan which earns bonuses declared by LIC. Annual bonuses are added to the policy till death or maturity providing enhanced plan benefits
- Premiums for the policy can be paid regularly throughout the policy tenure or once through a single premium
- Once the plan matures, it is said to vest. On vesting, 25% of the accumulated corpus can be commuted and withdrawn in cash
- The vesting benefit gets converted to annuity to fund your life after retirement
- There are different annuity options which you can select to receive annuities post vesting of the policy
- Term assurance rider is available as an optional coverage benefit with the plan
- You get premium rebates for premium payment modes and also for choosing a higher amount of notional cash option
Eligibility parameters of LIC New Jeevan Suraksha I
|Entry age||18 years to 70 years|
|Vesting age||50 years to 79 years|
|Term of the policy (deferment period)||2 years to 35 years|
|Premium payment term||Regular – equal to the term of the planSingle – once|
|Premium||Regular premium:Minimum – INR 2500Maximum – no limitSingle premium:Minimum – INR 10,000Maximum – no limit|
|Notional cash option||Minimum – INR 50,000 for regular premium policiesMaximum – no limit|
Benefits under LIC New Jeevan Suraksha I
The benefits paid under LIC New Jeevan Suraksha I are as follows –
- Death benefit
If the insured dies during the term of the plan, 105% of total premiums paid till the date of death would be refunded back along with the bonuses accrued till the date of death and any final additional bonus payable.
- Vesting benefit
When the term of the plan comes to an end the policy matures and is said to vest. At the time of vesting, the vesting benefit is the notional cash option selected and the vested reversionary bonuses and any final additional bonus. You can commute 25% of the vesting benefit and receive the benefit in cash. This commuted benefit would be tax-free. The remaining vesting benefit would, then, be used to pay annuities. The annuity options which the plan offers are as follows –
- Uniform rate of annuity payable for your life
- Uniform rate of annuity payable for a guaranteed period of 5, 10, 15 or 20 years and thereafter for your life
- Joint life annuity wherein a uniform rate of annuity would be payable for your life. On your death, 50% of the annuity would be paid for the lifetime of your spouse
- Uniform rate of annuity payable for your life and after your death the purchase price would be refunded back
- Annuity payable for your life which would increase @ 3% every year on a simple interest basis
Term life rider is available with the policy on an optional basis. The rider promises a sum assured ranging from INR 1 lakh to up to INR 25 lakhs. Under this rider, the rider sum assured is promised to be paid if the insured dies during the term of the policy. You can opt for this rider for an enhanced death benefit by paying an additional premium. The rider would be available only if you choose the regular premium payment option under the policy.
- Premium rebates
Rebates are discounts which help in lowering the premium payable for the policy. Under LIC New Jeevan Suraksha I, there are two types of premium rebates which are offered. These are as follows –
- Modal rebate
This rebate is allowed on the premium payment mode that you choose. The applicable modal rebates are as follows –
|Premium payment mode||Rebate available|
|Annual||2.6% of the tabular premium|
|Half-yearly||1.3% of the tabular premium|
|Quarterly||0.5% of the tabular premium|
- Large cash option rebate
If you choose higher values of notional cash options, then also you get premium rebates. The available rebates are as follows-
|Notional cash option level selected||Rebate for single premium plans||Rebate for regular premium plans|
|INR 100,000 to INR 199,999||3%||6%|
|INR 200,000 to INR 499,999||4%||7%|
|INR 500,000 and above||5%||8%|
LIC New Jeevan Suraksha I is a participating pension plan. As such, the policy earns bonuses declared by LIC based on the company’s profit experience in a financial year. Bonus is payable every year if the due premiums have been paid and the policy is in force. The plan pays simple reversionary bonuses. Moreover, a final additional bonus might also be paid at the time of death or maturity depending on the term the policy has run and at LIC’s discretion.
Other plan benefits under LIC New Jeevan Suraksha I Plan
- Surrender value
If you do not continue the plan till the end of the chosen tenure, you can surrender the policy and available the surrender value. Surrendering is available only if a minimum of two years’ premiums have been paid and after two years from the date of commencement of the policy. On surrender you would receive higher of the guaranteed surrender value or the special surrender value. These values are calculated as follows –
Guaranteed surrender value for regular premium plans – 90% of total premiums paid excluding first year premium
Guaranteed surrender value for single premium plans – 90% of single premium paid
Special surrender value would depend on the profit earning experience of LIC and would be calculated and determined by LIC periodically.
- Paid-up value
If premiums for at least two full years have been paid and later on the premiums are discontinued, you do not lose the benefits under the policy. In such cases, the policy becomes paid-up and runs on a reduced paid-up value. This value would be calculated as follows –
Paid-up value = notional cash option * (number of premiums paid / number of premiums payable) + bonuses added till paid-up
- Revival benefit
If your policy is in a paid-up state and you want to revive the plan you can do so any time that you want. To revive you would have to pay the outstanding premiums along with an interest. Interest would be payable @ 10.50% per annum compounded half-yearly.
- Tax benefits
LIC New Jeevan Suraksha I allows different types of tax benefits. The premiums that you pay for the policy are allowed as a tax-free deduction under Section 80CCC of the Income Tax Act, 1961. You can claim a maximum deduction of up to INR 10,000 on the premiums paid for the plan. Moreover, the commuted amount of pension that you receive would also be completely tax-free in your hands under Section 10(10A) of the Income Tax Act, 1961.
How does LIC New Jeevan Suraksha I Plan work?
Let’s understand the working of LIC New Jeevan Suraksha I with a simple example –
Example– a 35 year old non-smoking male buys a regular premium policy for 25 years. The sum assured is INR 1 lakh and the premium amounts to INR 3130. If bonus is assumed to accrue @6% and 10%, the death benefit at the end of different policy years and the vesting benefit would be as follows –
|Period of death||Aggregate premiums paid||Bonus @ 6% per annum||Bonus @ 10% per annum||Death benefit payable at 6% bonus||Death benefit payable at 10% bonus|
|End of 10th policy year||INR 31,300||INR 4648||INR 12,438||INR 35,948||INR 43,738|
|End of 15th policy year||INR 46,950||INR 15,568||INR 37,222||INR 62,518||INR 84,172|
|End of 20th policy year||INR 62,600||INR 29,027||INR 74,718||INR 91,627||INR 137,318|
Maturity benefit = INR 1 lakh + bonus
= INR 1 lakh + INR 53,000(Bonus @ 6%) = INR 153,000
= INR 1 lakh + INR 156,500 (Bonus @ 10%) = INR 256,500
Under LIC New Jeevan Suraksha I policy, once the plan vests you can receive annuities annually, half-yearly, quarterly or monthly as you choose.
Yes, grace period is allowed for payment of the outstanding premium after the due date. The period is 30 days for premiums which are paid annually, quarterly or half-yearly and 15 days for premiums which are paid monthly.
No, loans are not allowed under LIC New Jeevan Suraksha I.
LIC New Jeevan Suraksha I has been withdrawn by LIC and is, therefore, not available for buying currently. You can, however, buy other available pension plans offered by LIC like LIC’s New Jeevan Nidhi or LIC’s Jeevan Shanti.