lic jan suraksha plan
Is the LIC Jan Suraksha Plan genuinely a valuable financial safety net, or does its appeal fade once you examine the actual benefits?
Can the LIC Jan Suraksha Plan offer sufficient protection for your family, or could you be underinsured despite having a policy?
Does choosing the LIC Jan Suraksha Plan bring real financial security, or merely the comfort of owning an LIC policy?
This article reviews the features, advantages, and limitations of the LIC Jan Suraksha Plan, with a focus on understanding the importance of adequate life insurance coverage and an appropriate sum assured.
What are the features of the LIC Jan Suraksha?
Who is eligible for the LIC Jan Suraksha?
What are the benefits of the LIC Jan Suraksha?
Grace Period, Discontinuance and Revival of the LIC Jan Suraksha
Free Look Period for the LIC Jan Suraksha
Surrendering the LIC Jan Suraksha
What are the advantages of the LIC Jan Suraksha?
What are the disadvantages of the LIC Jan Suraksha?
Research Methodology of LIC Jan Suraksha
Benefit Illustration – IRR Analysis of LIC Jan Suraksha
LIC Jan Suraksha Vs. Other Investments
LIC Jan Suraksha Vs. Pure-term + PPF/Equity Mutual Fund
Final Verdict on LIC Jan Suraksha
LIC Jan Suraksha is a Non-Par, Non-linked, Individual, Savings, Life Micro Insurance plan which offers a combination of protection and savings.
This plan provides financial support for the family in case of the unfortunate death of the policyholder during the policy term and a lump sum amount at the time of maturity for the surviving policyholder.
| Minimum Basic Sum Assured | ₹ 1,00,000 |
| Maximum Basic Sum Assured per life | ₹ 2,00,000 |
| Basic Sum Assured Multiples | ₹ 5,000 |
| Minimum Age at entry | 18 years (completed) |
| Maximum Age at entry | 55 years (nearer birthday)53 years (nearer birthday) in case of policies procured through POSP-LI/ CPSC-SPV |
| Maximum Age at Maturity | 70 years (nearer birthday)65 years (nearer birthday) in case of policies procured through POSP-LI/ CPSC-SPV. |
| Policy Term | 12 to 20 Years |
| Premium Paying Term (PPT) | Policy Term minus 5 years |
On death of the Life Assured during the LIC Jan Suraksha Plan policy term, provided all due premiums have been paid, “Sum Assured on Death” along with accrued Guaranteed Additions, shall be payable.
Where “Sum Assured on Death” is defined as the higher of:
The death benefit shall not be less than 105% of total premiums paid as on date of death.
On the life assured surviving to the end of the policy term, provided all due premiums have been paid, “Sum Assured on Maturity” along with accrued Guaranteed Additions shall be payable. Where “Sum Assured on Maturity” is equal to Basic Sum Assured.
Under an in-force policy (in which all the due premiums have been paid), the Guaranteed Additions shall accrue at the end of each policy year throughout the LIC Jan Suraksha Plan policy term.
The rate of Guaranteed Additions shall be 4.00% of Total Annualised Premiums in respect of premiums paid.
If at least three full years’ but less than five full years’ premiums have been paid in respect of a policy and any subsequent premium is not duly paid: Auto Cover Period of six months from the due date of first unpaid premium (FUP) shall be available.
If at least five full years’ premiums have been paid in respect of a policy and any subsequent premium is not duly paid: Auto Cover Period of two years from the due date of first unpaid premium (FUP) shall be available.
Grace Period
Under this plan, a grace period of 30 days shall be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums from the date of the first unpaid premium.
Discontinuance
If less than one full year’s premiums have been paid and any subsequent premium is not duly paid, all the benefits under the policy shall cease after the expiry of the grace period, and nothing shall be payable.
If at least one full year’s premiums have been paid and any subsequent premiums are not duly paid, on completion of the first policy year the policy shall not be wholly void but shall subsist as a paid-up policy till the end of the LIC Jan Suraksha Plan policy term.
Revival
A lapsed policy can be revived within a period of 5 consecutive complete years from the date of first unpaid premium and before the date of Maturity, as the case may be.
If the Policyholder is not satisfied with the “Terms and Conditions” of the policy, the policy may be returned to the Corporation within 30 days from the date of receipt of the electronic or physical mode of the Policy Document, whichever is earlier.
The policy can be surrendered by the LIC Jan Suraksha Plan policyholder after completion of the first policy year provided one full year’s premium(s) has been paid.
However, the policy shall acquire Guaranteed Surrender Value (GSV) on payment of at least two full years’ premiums and Special Surrender Value (SSV) after completion of the first policy year, provided one full year’s premium(s) has been paid.
On surrender of an in-force or a paid-up policy, the Corporation shall pay surrender value higher of a) Guaranteed Surrender Value and surrender value of any accrued Guaranteed Additions; or b) Special Surrender Value.
Before investing in any financial product, it is important to assess the returns it is likely to generate.
To evaluate the LIC Jan Suraksha Plan more effectively, let us examine the returns based on the figures provided in the policy brochure and calculate its Internal Rate of Return (IRR).
Consider a 35-year-old male paying an annual premium of ₹18,160 for a 10-year Premium Payment Term under a 15-year Policy Term, with a Sum Assured of ₹2 lakh.
| Male | 35 years |
| Sum Assured | ₹ 2,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 18,160 |
At maturity, he would receive the Guaranteed Sum Assured along with the accumulated Guaranteed Additions, resulting in a total maturity benefit of approximately ₹2.81 lakh.
Based on these cash flows, the plan generates an IRR of only 4.18% as per the LIC Jan Suraksha Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -18,160 | 2,00,000 |
| 36 | 2 | -18,160 | 2,00,000 |
| 37 | 3 | -18,160 | 2,00,000 |
| 38 | 4 | -18,160 | 2,00,000 |
| 39 | 5 | -18,160 | 2,00,000 |
| 40 | 6 | -18,160 | 2,00,000 |
| 41 | 7 | -18,160 | 2,00,000 |
| 42 | 8 | -18,160 | 2,00,000 |
| 43 | 9 | -18,160 | 2,00,000 |
| 44 | 10 | -18,160 | 2,00,000 |
| 45 | 11 | 0 | 2,00,000 |
| 46 | 12 | 0 | 2,00,000 |
| 47 | 13 | 0 | 2,00,000 |
| 48 | 14 | 0 | 2,00,000 |
| 49 | 15 | 0 | 2,00,000 |
| 50 | 2,81,039 | ||
| IRR | 4.18% |
A return of 4.18% over a 15-year period is relatively low, particularly when considered against inflation.
Long-term investments need to generate adequate real returns to help investors build wealth and achieve their financial goals.
Moreover, the ₹2 lakh Sum Assured is insufficient to provide meaningful financial protection for a family.
Therefore, the LIC Jan Suraksha Plan may not be an attractive choice for those seeking adequate life cover and long-term wealth creation, as it falls short on both fronts.
The returns from the LIC Jan Suraksha Plan are relatively low when compared with typical debt investment options.
For long-term financial goals, investors may need better-yielding investments to build an adequate corpus.
At the same time, the life cover provided by the plan is insufficient.
A more effective approach is to separate insurance from investment and evaluate the same scenario using a pure-term insurance policy along with a suitable investment option.
As per the applicable IRDAI guidelines, a pure-term insurance plan such as Saral Jeevan Bima offers a minimum Sum Assured of ₹5 lakh.
Since the earlier example considered a Sum Assured of only ₹2 lakh, we will assume ₹5 lakh of life cover for this comparison.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 5,00,000 |
| Policy Term | 15 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 3,600 |
| Investment | ₹ 14,560 |
A ₹5 lakh pure-term policy for a 15-year policy term, with a 10-year premium payment term, costs approximately ₹3,600 per year.
This leaves ₹14,560 per year from the original ₹18,160 premium, which can be invested separately based on the investor’s risk profile and financial goals.
| Term Insurance + PPF | Term insurance + Equity Mutual Fund | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + Equity Mutual Fund | Death benefit |
| 35 | 1 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 36 | 2 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 37 | 3 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 38 | 4 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 39 | 5 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 40 | 6 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 41 | 7 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 42 | 8 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 43 | 9 | -18,160 | 5,00,000 | -18,160 | 5,00,000 |
| 44 | 10 | -15,660 | 5,00,000 | -18,160 | 5,00,000 |
| 45 | 11 | -500 | 5,00,000 | 0 | 5,00,000 |
| 46 | 12 | -500 | 5,00,000 | 0 | 5,00,000 |
| 47 | 13 | -500 | 5,00,000 | 0 | 5,00,000 |
| 48 | 14 | -500 | 5,00,000 | 0 | 5,00,000 |
| 49 | 15 | -500 | 5,00,000 | 0 | 5,00,000 |
| 50 | 3,04,346 | 4,75,114 | |||
| IRR | 4.96% | 9.26% | |||
The potential outcomes can be illustrated through two investment choices:
This approach has the potential to create a significantly higher corpus while providing higher life cover through term insurance.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 15 years | 5,04,331 |
| Purchase price | 1,45,600 |
| Long-Term Capital Gains | 3,58,731 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 2,33,731 |
| Tax paid on LTCG | 29,216 |
| Maturity value after tax | 4,75,114 |
The key advantage is the power of compounding. In a bundled insurance-and-investment product such as LIC Jan Suraksha, the potential for wealth creation is constrained by its structure and relatively low returns.
Separating insurance and investment allows each to serve its intended purpose: adequate life protection through term insurance and focused wealth creation through appropriate investments.
The LIC Jan Suraksha Plan is a non-participating, limited-pay endowment plan that combines savings with life insurance protection.
However, the maximum Sum Assured under the plan is only ₹2 lakh, which may be inadequate to meet the financial needs of a family.
When determining the required life cover, it is important to consider your financial responsibilities, outstanding liabilities, and future goals to ensure sufficient protection.
The benefit illustration also raises concerns about long-term wealth creation and it also has a high agent commission.
Even with the maturity benefit and Guaranteed Additions, the final corpus may struggle to keep pace with inflation and the rising cost of long-term financial goals.
The bundled nature of insurance and investment can limit the potential for wealth creation.
A more effective approach is to separate insurance from investment.
A pure-term life insurance policy can provide substantially higher life cover at a relatively lower cost, leaving more of your savings available for investments.
These funds can then be allocated across suitable investment options based on your risk appetite, financial goals, and investment horizon. A well-diversified portfolio can help manage market volatility while supporting long-term wealth creation.
Before choosing any financial product, evaluate your risk tolerance, financial goals, liabilities, and investment horizon.
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