Do you know? LIC Jeevan Anand is one of the top-selling insurance plans among the LIC products. LIC Jeevan Anand was launched in Feb 2002. Later it was discontinued in Sep 2013. The plan benefits were revised & then it was launched as LIC New Jeevan Anand in Oct 2013.
Let us look into the features & benefits of LIC New Jeevan Anand.
Table of Contents:
Outline of LIC New Jeevan Anand:
LIC’s New Jeevan Anand Plan is a non-linked, participating, individual, Life Assurance plan. It is an Endowment cum Whole Life Insurance Plan which offers an attractive combination of both life protection and savings.
On survival at the end of the policy term, the policyholder receives a lumpsum amount but the life cover continues throughout the lifetime of the policyholder.
Features of LIC New Jeevan Anand:
- Even after the payment of the Maturity benefit at the end of the policy term, the life cover continues throughout the life of policyholder.
- The bonus declarations will enhance the maturity benefit & death benefit.
- LIC New Jeevan Anand has a loan facility to take care of liquidity needs.
- Additional riders will enhance the life cover.
- Rebate in premium for higher Sum Assured & for premium paying mode in annual & semi-annual mode.
Eligibility Criteria of LIC New Jeevan Anand:
|a) Minimum Basic Sum Assured||1,00,000|
|b) Maximum Basic Sum Assured||No Limit|
|(The Basic Sum Assured shall be in multiples of 5000)|
|c) Minimum Age at entry||18 years (completed)|
|d) Maximum Age at entry||50 years (nearer birthday)|
|e) Maximum Maturity Age||75 years (nearer birthday)|
|f) Minimum Policy Term||15 years|
|g) Maximum Policy Term||35 years|
|h) Payment modes||Yearly, Half-yearly, Quarterly, Monthly|
Benefits of LIC New Jeevan Anand:
Before the end of the policy term
Death benefit = Sum Assured on death + Simple reversionary bonus + Additional bonus if any.
In LIC New Jeevan Anand plan, The Sum Assured on death will be higher than that of
125% of the Basic Sum Assured or
7 times of annualised premium or
105% of total premiums paid by the policyholder
After the end of the policy term
Basic Sum Assured is payable.
At the end of the policy term, the policyholder will receive the “Sum Assured on Maturity” on the Date of Survival along with the Simple Reversionary Bonuses and Final Additional Bonus. Sum Assured on Maturity (Basic Sum Assured) + Simple reversionary bonus + Additional bonus if any.
Participation in profits:
The policy shall be entitled to receive Simple Reversionary Bonuses declared during the policy term provided the policy is in force. A final Additional Bonus may also be declared in the year when the policy results in a claim by death or due for the maturity benefit provided the policy is in force. Final Additional Bonus will not be paid under paid-up policies.
Additional benefits of LIC New Jeevan Anand:
- LIC’s Accidental Death and Disability Benefit Rider (UIN: 512B209V02)
- LIC’s Accident Benefit Rider (UIN:512B203V03)
- LIC’s New Term Assurance Rider (UIN: 512B210V01)
- LIC’s New Critical Illness Benefit Rider (UIN: 512A212V01)
Option to take death benefit in instalments:
Option to collect the death benefit under an in-force and paid-up insurance in instalments over the preferred term of 5 or 10 or 15 years as opposed to a lumpsum payment.
Settlement Option for Maturity Benefit:
Option to receive Maturity Benefit over a set period of 5 or 10 or 15 years in instalments as opposed to a lump sum under an active and paid-up policy.
Policyholder can exercise this option for payment of net claim amount in instalments at least 3 months before the due date of maturity claim.
The policyholder can avail loan in the LIC New Jeevan Anand policy after completely paying the two premium terms.• For in-force policies – up to 90% of Surrender value
- For paid-up policies – the policyholder will get up to 80% of the Surrender value
Grace Period, Revival, Paid-up Policy
The policyholder has a grace period of 30 days for yearly, half-yearly, and quarterly modes. It will be 15 days for the monthly mode.
If the policyholder will not pay the premium within the grace period, then the policy will lapse. It can be revived within 5 years.
If less than two years’ premiums have been paid – any subsequent premium be not duly paid, all the benefits under the policy shall cease after the expiry of the grace period from the date of the first unpaid premium and nothing shall be payable.
The insurance won’t be completely invalid if at least two full years’ worth of premiums has been paid; instead, it will continue as a paid-up policy if any further payments are not paid on time.
How to cancel/Surrender LIC New Jeevan Anand Plan?
Free look period
15 days from the date of policy purchase is called the free look period. During this time, if the policyholder is not satisfied with the terms and conditions of the policy, then the policyholder can cancel the policy during this period.
This free look period can be extended up to 30 days if the policy is purchased through online or telemarketing modes.
The policyholder can surrender the LIC New Jeevan Anand Policy anytime after completely paying the two premium terms. After surrendering the policy, the policyholder will receive the higher of the following
- Guaranteed Surrender Value or
- Special Surrender Value
Guaranteed Surrender value = Total premiums paid (minus additional premiums, taxes, and premiums for riders, if opted for) multiplied by the Guaranteed Surrender Value factors applicable to total premiums paid.
Advantages of LIC New Jeevan Anand:
- Dual benefit of endowment policy & whole life policy.
- Simple reversionary bonus & Additional bonus enhance the maturity benefit.
- Loan option is available.
- Option to receive the death benefit & maturity benefit in instalments
- Tax benefit as per sec 80 C & Sec 10 (10D).
- Premium paying terms & frequency can be selected as per convenience.
- Rider options are available.
Disadvantages of LIC New Jeevan Anand:
- The benefits are not guaranteed. The bonus declaration varies for each year.
- The lock-in period is 2 years for the loan & surrendering the policy.
- The maturity benefit at the end of the policy term will not be sufficient to meet your life goals.
Research Methodology on LIC New Jeevan Anand:
Now, we have seen the outline of the LIC New Jeevan Anand Plan. But, these details are not enough for us to decide whether we should buy this plan or not.
So, now, let’s analyze the IRR of LIC New Jeevan Anand by using the LIC New Jeevan Anand online calculator to see whether we get to benefit from this plan or not.
In this analysis, first, we are going to calculate the IRR of LIC New Jeevan Anand for the worst-case scenario and the best-case scenario.
Then, we are going to use the same value on the other investments.
Later, we are going to compare the LIC New Jeevan Anand with other investments to see which gives us a better return.
This research methodology can help us to decide whether we should buy this plan or not.
Benefit Illustration analysis of LIC New Jeevan Anand:
Let us understand the working of the plan with an illustration. The benefits of the policy are based on the bonus declaration. In this illustration, let’s take the assumed Investment Rate of Return as 4% in the worst-case scenario, and 8% in the best-case scenario. They are not the upper or lower limits. It is just an assumption.
|Basic Sum assured||20,00,000|
|Life Expectancy||85 years|
|At 4% p.a.||At 8% p.a.|
|Age||Year||Annualised premium / Maturity benefit||Death benefit||Annualised premium / Maturity benefit||Death benefit|
The maturity benefit is payable at the end of the policy term & Death benefit is payable at 85 years as we have assumed a life expectancy of 85 years.
The IRR for bonus declaration throughout the policy @ 4 % would be 2.60% & for 8% the IRR would be 4.49%. The returns are far below the bank FD rates. They are not inflation-beating returns. Moreover, the maturity benefit payable at the end of the policy term will not suffice to meet any of the goals.
Comparison of LIC New Jeevan Anand with other products
Jeevan Anand policy is an insurance cum investment product. Instead of this policy, we can have a separate term insurance policy for life cover & a wealth accumulation plan to meet the goals. Based on the risk appetite the investment channel can be chosen.
LIC New Jeevan Anand Vs. PPF Vs. ELSS
Let us assume a similar cash flow as in the benefit illustration. Each year a premium of Rs. 10,200 is paid for a pure term policy for a sum assured Rs. 25 lakhs for a tenure of 20 years. For easy comparison Sum assured & policy terms are assumed similar to the above illustration. Here the sum assured is low. But in reality, taking a pure term insurance policy with adequate cover is important.
|Total cash outflow||1,12,384|
|Balance amount to be invested in PPF / ELSS||1,02,184|
|Term Insurance + PPF||Term insurance + ELSS|
|Age||Year||Term Insurance premium + PPF||Death benefit||Term Insurance premium + ELSS||Death benefit|
As there is a maturity benefit in the illustration, we assumed a similar cash inflow at the end of the policy term of 20 years. The accumulated corpus through the investments in PPF / ELSS in the 20 years is withdrawn partially (Rs. 25 lakhs) as a maturity benefit.
After such withdrawal, the balance amount is assumed to continue with the same investment vehicle just for compounding till the life expectancy of 85 years.
The IRR for PPF is 6.75% & the ELSS option is 11.49%. In the earlier benefit illustration, the IRR is in the range of 2.60% – 4.49%. So, in order to get better returns, the investor should end up with term insurance & other investment product based on the risk appetite & time horizon.
Final Verdict on LIC New Jeevan Anand:
LIC New Jeevan Anand promises to provide financial protection to your family as well as serves as a risk-free vehicle to invest your savings. It claims to inculcate the discipline of regular savings.
Since it is a participating endowment policy, the profit declaration plays a major role here. There is no guarantee that your hard-earned savings fetch you a decent return on investment under the new Jeevan Anand policy.
The market is flooded with different investment products. One must weigh the suitability of the product based on risk appetite, and time frame. Choose an investment product by keeping in mind the asset allocation as well.
Beforehand have adequate life insurance cover. The life cover should not be mixed with the investment plan.