“80% of urban Indians are not prepared for retirement.”

Have you planned your retirement? How can you determine the corpus you need after retirement?

To plan for retirement, estimate future expenses and income, considering factors like healthcare costs and inflation. Diversify investments and regularly review your plan for financial security.

LIC’s new annuity plan, “LIC Jeevan Dhara – II,” claims to provide a worry-free retirement by addressing these factors.

We are not going to trust this statement blindly! This article analyses LIC Jeevan Dhara – II with its advantages and disadvantages to help you decide if it fits your retirement planning and the viability of insurance plus investment plans.

Let’s begin!

Table of Contents

1.)What is Jeevan Dhara – II Plan?
2.)What are the Features of LIC Jeevan Dhara – II Plan?
3.)Who is eligible for the LIC Jeevan Dhara – II Plan? Analysis with Illustration
4.)Review of Annuity options under LIC Jeevan Dhara – II Plan
5.)LIC Jeevan Dhara – II Plan – Review of Benefits in detail with Illustration
6.)The grace period, Paid-up and Revival of LIC Jeevan Dhara – II Plan– Analysis
7.)What is the Free-Look Period of LIC Jeevan Dhara – II Plan?
8.)How to Surrender LIC Jeevan Dhara – II Plan?
9.)What are the Advantages of LIC Jeevan Dhara – II Plan?
10.)What are the Disadvantages of the LIC Jeevan Dhara – II Plan?
11.)Research Methodology of LIC Jeevan Dhara – II Plan

• Benefit Illustration – IRR(Internal rate of Return i.e. Interest Rate) Analysis of the LIC Jeevan Dhara – II Plan

12.)LIC Jeevan Dhara – II Plan vs Other Investment Products – Review

• LIC Jeevan Dhara – II Plan Vs. PPF / ELSS (Accumulation phase) + 7% return instrument (Distribution phase)|
• LIC Jeevan Dhara – II Plan  vs ICICI Pru Saral Pension Plan
• LIC Jeevan Dhara – II Plan vs HDFC Life Systematic Retirement Plan

13.)LIC Jeevan Dhara – II Plan vs Other Investment Products – Review Conclusions
14.)Final Verdict on LIC Jeevan Dhara – II Plan – Good or Bad Investment Option?

1.What is LIC Jeevan Dhara – II Plan?

LIC Jeevan Dhara is a non-participating product under which benefits payable on death or survival are guaranteed and fixed as per the chosen Annuity Option. Hence the LIC Jeevan Dhara – ll policy is not entitled to any discretionary benefits like bonus or share in Surplus.

Read the official policy brochure of LIC Jeevan Dhara – II Plan for further policy details.

2.What are the Features of LIC Jeevan Dhara – II Plan?

• Flexibility to choose Premium paying term and deferment period.
• Single Life Annuity and Joint Life Annuity options are available.
• Wide range of annuity options to suit your needs.
• Mode of Annuity could be yearly /half-yearly/quarterly /monthly.
• Option to take death benefit as a lump sum or in the form of Annuitization or installments.

3.Who is eligible for the LIC Jeevan Dhara – II Plan? Analysis with Illustration

4.Review of Annuity options under LIC Jeevan Dhara – II Plan

Based on your preference and requirement, one may opt for any one of the following annuity options. Basically, it is categorized as Single premium and Regular premium with single life or Joint life option. In some plan options, the premium is returned to the nominee or the annuitant. The available annuity options under LIC Jeevan Dhara II Plan are: :

Premium Payment	Annuity Type	Annuity Options
Regular Premium	Single Life Annuity	Option 1	Life Annuity for Single Life
		Option 2	Life Annuity with Return of premium for single life
		Option 3	Life Annuity with 50% Return of Premium after attaining age 75 years for single life
		Option 4	Life Annuity with 100% Return of Premium after attaining age 75 years for single life
		Option 5	Life Annuity with 50% Return of Premium after attaining age 80 years for single life
		Option 6	Life Annuity with 100% Return of Premium after attaining age 80 years for single life
		Option 7	Life Annuity with 5% Return of Premium after attaining age 76 years to 95 years for single life
	Joint Life Annuity	Option 8	Life Annuity for Joint life
		Option 9	Life Annuity with Return of premium for Joint life
Single Premium	Single Life Annuity	Option 10	Life Annuity with Return of premium for single life
	Joint Life Annuity	Option 11	Life Annuity with Return of premium for Joint life

5.LIC Jeevan Dhara – II Plan – Review of Benefits in Detail with Illustration

Annuity Option	During Deferment period	After Deferment Period
		Annuity payable	Death benefit
Option 1: Life Annuity for Single Life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive	NIL
Option 2: Life Annuity with Return of premium for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive	100% of total premiums paid
Option 3: Life Annuity with 50% Return of Premium after attaining age 75 years for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive 50% of purchase price at 75 years of age	100% of total premiums paid (Less) Sum of early return of premium
Option 4: Life Annuity with 100% Return of Premium after attaining age 75 years for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive 100% of purchase price at 75 years of age	100% of total premiums paid (Less) Sum of early return of premium
Option 5: Life Annuity with 50% Return of Premium after attaining age 80 years for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive 50% of purchase price at 80 years of age	100% of total premiums paid (Less) Sum of early return of premium
Option 6: Life Annuity with 100% Return of Premium after attaining age 80 years for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive 100% of purchase price at 80 years of age	100% of total premiums paid (Less) Sum of early return of premium
Option 7: Life Annuity with 5% Return of Premium after attaining age 76 years to 95 years for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive 5% of the purchase price on each policy anniversary from 76 to 95 years of age	100% of total premiums paid (Less) Sum of early return of premium
Option 8: Life Annuity for Joint life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the last survivor is alive	NIL
Option 9: Life Annuity with Return of premium for Joint life	Survival benefit – NIL Death benefit- 105% of total premiums paid (on the death of the last survivor)	As long as the last survivor is alive	100% of total premiums paid (Less) Sum of early return of premium (On the death of last survivor)
Option 10: Life Annuity with Return of premium for single life	Survival benefit – NIL Death benefit- 105% of total premiums paid	As long as the annuity is alive	100% of total premiums paid
Option 11: Life Annuity with Return of premium for Joint life	Survival benefit – NIL Death benefit- 105% of total premiums paid (on the death of the last survivor)	As long as the last survivor is alive	100% of total premiums paid (Less) Sum of early return of premium (On the death of last survivor)

6.The grace period, Paid-up and Revival of LIC Jeevan Dhara – II Plan – Analysis

(Applicable for Regular premium policies)

Grace period

In LIC Jeevan Dhara – II policy, a grace period of 30 days will be allowed for payment of yearly half-yearly, or quarterly premiums and 15 days for monthly premiums from the date of the First Unpaid Premium.

Paid-up Value

If less than two full years’ premiums have been paid and any subsequent premium is not duly paid, all the benefits under the LIC Jeevan Dhara – ll policy shall cease after the expiry of the grace period from the date of the First Unpaid Premium, and nothing shall be payable.

If, after at least two full years’ premiums have been paid and any subsequent premium is not duly paid, the LIC Jeevan Dhara – ll policy shall not be wholly void but shall subsist as a Paid-up policy.

Revival

The lapsed LIC Jeevan Dhara – ll policy may be revived during the lifetime of the Annuitant(s) but within a period of 5 consecutive years from the date of the First Unpaid Premium.

7.What is the Free-Look Period of LIC Jeevan Dhara – II Plan?

If the LIC Jeevan Dhara – ll Policyholder is not satisfied with the “Terms and Conditions” of the policy, the LIC Jeevan Dhara – ll policy may be returned within 30 days from the date of receipt of the electronic or physical mode of the Policy Bond whichever is earlier.

8.How to Surrender LIC Jeevan Dhara – II Plan?

Under Regular Premium payment, the LIC Jeevan Dhara – ll policy can be surrendered by the Policyholder at any time during or after the Deferment Period, provided two full years’ premiums have been paid.

Under Single Premium payment, the LIC Jeevan Dhara – ll policy can be surrendered by the policyholder at any time on payment of Purchase Price.

9.What are the Advantages of LIC Jeevan Dhara – II Plan?

• LIC Jeevan Dhara – ll Top-up Annuity i.e. Option to increase the annuity by paying an additional premium at any time during the Deferment Period.
• LIC Jeevan Dhara – ll Liquidity Option i.e. option to receive a lump-sum amount in return for a reduction in annuity payments and other benefits.
• LIC Jeevan Dhara – ll Advanced Annuity Option in case of Joint Life Annuity Options with Return of Premium i.e. option to the surviving Annuitant to withdraw discounted cash value of annuity payable.
• The Annuitant(s) will have to choose either a lump sum or annuitization for the payment of the death benefit to the nominee(s).

10.What are the Disadvantages of the LIC Jeevan Dhara – II Plan?

• The loan option is available only for annuity plans with the return of premium options.
• After the deferment period, Surrender shall be allowed only under the Annuity Options with Return of Premiums.
• LIC Jeevan Dhara – ll Annuity is fully taxable.

11.Research Methodology of LIC Jeevan Dhara Plan – II

LIC Jeevan Dhara – II has two phases i.e., the Accumulation phase and the Distribution Phase. You pay a premium for a limited period and then start receiving the annuity. So, in order to decide whether this plan suits your retirement kitty, we need to analyze the plan in terms of returns. Let us work out a LIC Jeevan Dhara – ll benefit illustration to understand the cash flow pattern and estimate the returns.

Benefit Illustration – IRR(Internal Rate of Return i.e. Interest Rate) Analysis of LIC Jeevan Dhara – II Plan

A 45-year-old male intended to accumulate retirement corpus through LIC Jeevan Dhara – II. He invests ₹ 50,000 per annum for the next 15 years. After the deferment period i.e., on completion of premium payment, he is entitled to receive an annuity for life lifetime. He chooses annuity plan option 2: Life Annuity with return of premium for single life

Male	45 years
Premium paying term	15 years
Annualized premium	50,000
Deferment period	15 years
Annuity option	Option 2: Life Annuity with return of premium for single life

He receives an annuity of ₹ 86,740 every year till his lifetime. For illustrative purposes, let us assume a life expectancy of 85 years of age. On death, the purchase is returned.

Age	Year	Annualised premium / Maturity benefit
45	1	-50,000
46	2	-50,000
47	3	-50,000
48	4	-50,000
49	5	-50,000
50	6	-50,000
51	7	-50,000
52	8	-50,000
53	9	-50,000
54	10	-50,000
55	11	-50,000
56	12	-50,000
57	13	-50,000
58	14	-50,000
59	15	-50,000
60	16	86,740
61	17	86,740
62	18	86,740
63	19	86,740
64	20	86,740
65	21	86,740
66	22	86,740
67	23	86,740
68	24	86,740
69	25	86,740
70	26	86,740
71	27	86,740
72	28	86,740
73	29	86,740
74	30	86,740
75	31	86,740
76	32	86,740
77	33	86,740
78	34	86,740
79	35	86,740
80	36	86,740
81	37	86,740
82	38	86,740
83	39	86,740
84	40	86,740
85		7,50,000
	IRR	6.48%

The Internal Rate of Return (IRR) calculation for the given cash flow results in 6.48%. This is an average return. If you invest your money in any fixed return instruments, you earn around 6%-7% p.a.

In LIC Jeevan Dhara – II, you get a guaranteed annuity. Average return and fixed annuity might be the two reasons it seems lucrative to invest in this plan. However, when considering inflation, the annuity will not be sufficient in the later years.

The amount invested during the accumulation phase gets locked in the investment. The annuity is receivable during the distribution phase.

Both liquidity and return are not favorable to add LIC Jeevan Dhara to add it in your retirement kitty.

12.LIC Jeevan Dhara – II Plan vs Other Investment Products – Review

To have a better understanding, let us compare LIC Jeevan Dhara – ll with other investment products. Let us assume that you invest the same amount as seen in the previous illustration in an investment of your choice (accumulation phase). The resultant accumulated corpus can be utilized during the retirement period (distribution phase).

i)LIC Jeevan Dhara – II Plan Vs. PPF / ELSS (Accumulation phase) + 7% return instrument (Distribution phase)

For the accumulation phase, let us assume two scenarios. In the first 15 years, an annual premium of ₹ 50,000 is invested either in a PPF account (Debt) or ELSS fund (Equity).

Male	45 years
Premium paying term	15 years
Annualised premium	50,000
Accumulated corpus – PPF	₹ 13.56 Lakhs
Accumulated corpus – ELSS	₹ 19.63 Lakhs

The amount accumulated during the first phase is then invested in a 7% return instrument for annual withdrawal.

Age	Year	PPF	ELSS
45	1	-50,000	-50,000
46	2	-50,000	-50,000
47	3	-50,000	-50,000
48	4	-50,000	-50,000
49	5	-50,000	-50,000
50	6	-50,000	-50,000
51	7	-50,000	-50,000
52	8	-50,000	-50,000
53	9	-50,000	-50,000
54	10	-50,000	-50,000
55	11	-50,000	-50,000
56	12	-50,000	-50,000
57	13	-50,000	-50,000
58	14	-50,000	-50,000
59	15	-50,000	-50,000
60	16	86,740	86,740
61	17	86,740	86,740
62	18	86,740	86,740
63	19	86,740	86,740
64	20	86,740	86,740
65	21	86,740	86,740
66	22	86,740	86,740
67	23	86,740	86,740
68	24	86,740	86,740
69	25	86,740	86,740
70	26	86,740	86,740
71	27	86,740	86,740
72	28	86,740	86,740
73	29	86,740	86,740
74	30	86,740	86,740
75	31	86,740	86,740
76	32	86,740	86,740
77	33	86,740	86,740
78	34	86,740	86,740
79	35	86,740	86,740
80	36	86,740	86,740
81	37	86,740	86,740
82	38	86,740	86,740
83	39	86,740	86,740
84	40	86,740	86,740
85		14,89,720	47,88,665
	IRR	7.04%	8.66%

Under PPF the accumulated corpus is ₹ 13.56 Lakhs. Under the ELSS fund, the final maturity value is ₹ 20.87 Lakhs. After payment of capital gains tax, the post-tax maturity value is ₹ 19.63 Lakhs.

ELSS Tax Calculation
Maturity value after 15 years	20,87,664
Purchase price	7,50,000
Long-Term Capital Gains	13,37,664
Exemption limit	1,00,000
Taxable LTCG	12,37,664
Tax paid on LTCG	1,23,766
Maturity value after tax	19,63,898

The respective accumulated corpus is shifted to a 7% return instrument. This enables you to withdraw ₹ 86,740 similar to LIC Jeevan Dhara – II annuity. At the age of 85 years, the investment is fully withdrawn similar to the return of purchase price.

The IRR calculation for PPF investment along with annual withdrawal results in 7.04%. The IRR calculation for ELSS investment along with annual withdrawal results in 8.66%.

In these alternate investments, the yield is better. Also, you can enjoy liquidity. During the distribution phase, either you can utilize the corpus for any other goal or you can shift your investment in the rising interest rate scenario. Both these features are missing in LIC Jeevan Dhara – II.

ii)LIC Jeevan Dhara – II Plan vs ICICI Pru Saral Pension Plan

The ICICI Pru Saral Pension Plan is an immediate annuity plan with a single premium that is non-linked and non-participating. You receive an annuity that is guaranteed to last the entirety of your life. This strategy claims to offer a reliable source of revenue. Read the complete review of the ICICI Pru Saral Pension Plan.

iii)LIC Jeevan Dhara – II Plan vs HDFC Life Systematic Retirement Plan

The HDFC Life Systematic Retirement Plan is a non-participating, non-linked savings deferred annuity plan available to individuals or groups. This plan promises that you can enjoy the lifestyle of your choice while progressively increasing your retirement corpus and choosing the length of the deferment period. Read the complete review of the HDFC Life Systematic Retirement Plan.

13.LIC Jeevan Dhara – II Plan vs Other Investment Products – Review Conclusion

You can’t depend on the earnings you get from LIC Jeevan Dhara – II for a long-term investment, because they don’t take inflation into account. On the other hand, Pure Term Insurance + ELSS or PPF, as alternative investment options, offer better returns that beat inflation, while also being adjusted for risks and aligned with your financial goals.

14.Final Verdict on LIC Jeevan Dhara – II Plan– Good or Bad Investment Option?

LIC Jeevan Dhara – II is a long-term investment. Here, your funds are glued to the policy. It starts with investing the savings during your working years and ends with an annuity for your whole life. While analyzing the plan, we could see some restrictions.

• The annuity is fixed and constant throughout your lifetime.
• You are stuck with the investment for a lifetime.
• The returns are lower than the inflation rate.

Since it is a long-term investment, the returns should combat inflation. Otherwise, investments will lose their purchasing power. Beware of insurance agents who try to push you into this plan for their agent commission.

You should save your hard-earned money on a better-yielding product so that you can have a comfortable lifestyle during your retirement years. Inflation plays a major role.

Please don’t fall into the trap of amateur financial planning advice on social media platforms like Quora, Facebook, Twitter, etc. Consulting with a professional financial advisor can provide personalized guidance and support in navigating retirement planning complexities. Starting early and staying disciplined are key to building a robust retirement plan.