LIC New Jeevan Sathi Limited Premium Plan: Good or Bad? A Detailed Review
Should guaranteed benefits be the only factor when choosing an investment?
Are guaranteed returns enough to make an investment product a suitable choice?
What should investors consider beyond guaranteed benefits when choosing an investment?
This article evaluates the features, benefits, and limitations of the LIC New Jeevan Sathi – Limited Premium Plan to help you determine whether it is suitable for your financial needs.
1. What is the LIC New Jeevan Sathi – Limited Premium?
2. What are the features of the LIC New Jeevan Sathi – Limited Premium?
3. Who is eligible for the LIC New Jeevan Sathi – Limited Premium?
4. What are the benefits of the LIC New Jeevan Sathi – Limited Premium?
5. Grace Period, Discontinuance and Revival of LIC New Jeevan Sathi – Limited Premium
6. Free Look Period for the LIC New Jeevan Sathi – Limited Premium
7. Surrendering the LIC New Jeevan Sathi – Limited Premium
8. What are the advantages of the LIC New Jeevan Sathi – Limited Premium?
9. What are the disadvantages of the LIC New Jeevan Sathi – Limited Premium?
10. Research Methodology of LIC New Jeevan Sathi – Limited Premium
Benefit Illustration – IRR Analysis of LIC New Jeevan Sathi – Limited Premium
11. LIC New Jeevan Sathi – Limited Premium Vs. Other Investment
LIC New Jeevan Sathi – Limited Premium Vs. Pure-Term + PPF/Equity Mutual Fund
12. Final Verdict on LIC New Jeevan Sathi – Limited Premium
LIC New Jeevan Sathi – Limited Premium is a Non-Par, Non-Linked, Life, Individual, Savings plan.
This is a Joint Life Limited Premium Endowment plan with Guaranteed Addition.
This plan offers a combination of saving and protection.
| Minimum Age at entry (for both lives) | 18 years (Completed) (for both Option I and Option II) |
| Maximum Age at Entry (for both lives) | Option I: 45/50 years (Nearer Birthday)Option II: 35/40 years (Nearer Birthday) |
| Policy Term | 10, 15, 20 and 25 years for both Options I & II |
| Minimum Age at Maturity | 28 years (completed) under both Options I and II |
| Maximum Age at Maturity | Option I: 75 years (Nearer Birthday)Option II: 60 years (Nearer Birthday) |
| Premium Payment Term | 5, 10 and 15 years |
| Minimum Basic Sum Assured | ₹ 3,00,000 |
| Maximum Basic Sum Assured | No limits. However, the maximum Basic Sum Assured allowed to each individual will be subject to an underwriting decision as per the Board-Approved Underwriting Policy |
| Basic Sum Assured multiple | ₹ 10,000 |
Two options for “Sum Assured on Death” are available under the product.
The Primary Life Assured has to choose one of the below-mentioned options at the proposal stage itself, subject to the eligibility conditions
Option I
Higher of
Option II
On first death during the Policy Term:
Death Benefit payable on first death during the LIC New Jeevan Sathi Limited Premium Plan Policy Term after the date of commencement of risk but before the date of Maturity shall be equal to “Sum Assured on Death”, and the policy shall continue on the life of the surviving Life Assured.
On second death during the Policy Term:
Death Benefit payable on second death during the Policy Term after the date of commencement of risk but before the date of Maturity shall be equal to “Sum Assured on Death” along with accrued Guaranteed Additions and the policy shall terminate thereafter.
On survival of at least one of the lives assured to the stipulated Date of Maturity, “Sum Assured on Maturity” along with accrued Guaranteed Additions, shall be payable; where “Sum Assured on Maturity” is equal to the Basic Sum Assured.
Under an in-force policy (where all due premiums have been paid), the Guaranteed Additions shall accrue annually at the rate of 7.00 % of Total Tabular Annual Premium Paid in respect of premium paid during the LIC New Jeevan Sathi Limited Premium Plan Policy Term at the end of each policy year during the Policy Term.
Grace Period
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 First Unpaid Premium.
Discontinuance
If less than one full year’s premium(s) has been paid in respect of this policy and any subsequent premium be not duly paid, all the benefits under this policy shall cease after the expiry of the grace period from the date of First Unpaid Premium, and nothing shall be payable.
If, after at least one full year’s premium(s) has been paid and any subsequent premiums be not duly paid, on completion of first policy year the LIC New Jeevan Sathi Limited Premium Plan policy shall not be wholly void, but shall subsist as a paid-up policy till the survival of one of the lives or till the end of the Policy Term, whichever is earlier.
Revival
A lapsed policy can be revived during the lifetime of both the lives assured, but within a period of 5 consecutive years from the date of First Unpaid Premium but before the end of the policy term.
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 LIC New Jeevan Sathi Limited Premium Plan policy can be surrendered after completion of first policy year, provided at least one full year’s premium has been paid.
However, the policy shall acquire Guaranteed Surrender Value on payment of at least two full year premiums and Special Surrender Value after completion of the first policy year, provided one full year’s premium(s) has been paid.
On surrender of an in-force or Paid-up policy, the Corporation shall pay the Surrender Value higher of:
Guaranteed Surrender Value (GSV) and surrender value of any accrued Guaranteed Additions; or
Special Surrender Value (SSV).
The LIC New Jeevan Sathi – Limited Premium Plan offers a guaranteed maturity benefit, payable either as a lump sum or in instalments.
However, guaranteed benefits alone should not determine whether the plan is a suitable investment.
The actual return generated by the policy is equally important.
Let’s calculate the Internal Rate of Return (IRR) using the details provided in the policy brochure.
For example, a 35-year-old male pays an annual premium of ₹1,31,750 under Plan Option II for a 10-year Premium Paying Term and a 20-year Policy Term, with a Basic Sum Assured of ₹10 lakh.
The death benefit is ₹13.83 lakh on the first death and ₹29.04 lakh on the second death. At maturity, he receives ₹25.21 lakh, resulting in an IRR of only 4.23% as per the LIC New Jeevan Sathi Limited Premium Plan maturity calculator.
| Age of both Primary and Secondary Life Insured | 35 years |
| Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 1,31,750 |
| Age | Year | Annualised premium / Maturity benefit | Death benefit Payable on First Death | Death benefit Payable on Second Death |
| 35 | 1 | -1,31,750 | 13,83,375 | 13,93,190 |
| 36 | 2 | -1,31,750 | 13,83,375 | 14,12,821 |
| 37 | 3 | -1,31,750 | 13,83,375 | 14,42,267 |
| 38 | 4 | -1,31,750 | 13,83,375 | 14,81,529 |
| 39 | 5 | -1,31,750 | 13,83,375 | 15,30,606 |
| 40 | 6 | -1,31,750 | 13,83,375 | 15,89,498 |
| 41 | 7 | -1,31,750 | 13,83,375 | 16,58,206 |
| 42 | 8 | -1,31,750 | 13,83,375 | 17,36,729 |
| 43 | 9 | -1,31,750 | 13,83,375 | 18,25,067 |
| 44 | 10 | -1,31,750 | 13,83,375 | 19,23,221 |
| 45 | 11 | 0 | 13,83,375 | 20,21,374 |
| 46 | 12 | 0 | 13,83,375 | 21,19,528 |
| 47 | 13 | 0 | 13,83,375 | 22,17,682 |
| 48 | 14 | 0 | 13,83,375 | 23,15,836 |
| 49 | 15 | 0 | 13,83,375 | 24,13,989 |
| 50 | 16 | 0 | 13,83,375 | 25,12,143 |
| 51 | 17 | 0 | 13,83,375 | 26,10,297 |
| 52 | 18 | 0 | 13,83,375 | 27,08,451 |
| 53 | 19 | 0 | 13,83,375 | 28,06,604 |
| 54 | 20 | 0 | 13,83,375 | 29,04,758 |
| 55 | 25,21,383 | |||
| IRR | 4.23% |
This return is modest and may not keep pace with inflation over the long term, reducing the policy’s ability to create real wealth.
Moreover, even after completing the premium payments, the money remains locked in for another 10 years.
The life cover is also relatively low and may not provide adequate financial protection for the family.
Overall, the combination of low returns, limited liquidity, and inadequate life cover makes the LIC New Jeevan Sathi – Limited Premium Plan an unattractive choice for both insurance and investment.
Traditional insurance-cum-savings plans often deliver lower returns than investing separately.
For life insurance, a pure-term insurance policy is more cost-effective and can provide substantially higher coverage.
Separating insurance and investment allows you to achieve better returns, greater flexibility, and adequate protection. Let’s understand this through a comparative example.
Instead of combining insurance and investment, consider pure-term insurance.
For a 20-year term, coverage of ₹14 lakh for the primary life and ₹29 lakh for the secondary life costs approximately ₹26,200 in total (₹10,500 + ₹15,700).
This is significantly lower than the ₹1.31 lakh annual premium under the LIC plan, leaving around ₹1.05 lakh available for investment.
| Pure Term Life Insurance Policy | |
| Basic Sum Assured | ₹ 10,00,000 |
| Policy Term | 20 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 26,200 |
| Investment | ₹ 1,05,550 |
The investment choice can then be aligned with your risk profile. Equity investments may suit investors with higher risk tolerance, while debt instruments may be more appropriate for conservative investors.
For this comparison, we consider PPF as the debt option and Equity Mutual Funds as the equity option.
| Term Insurance + PPF | Term insurance + Equity Mutual Fund | ||||
| Age | Year | Term Insurance premium + PPF | Term Insurance premium + Equity Mutual Fund | Death benefit Payable on First Death | Death benefit Payable on Second Death |
| 35 | 1 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 36 | 2 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 37 | 3 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 38 | 4 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 39 | 5 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 40 | 6 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 41 | 7 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 42 | 8 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 43 | 9 | -1,31,750 | -1,31,750 | 14,00,000 | 29,00,000 |
| 44 | 10 | -1,29,250 | -1,31,750 | 14,00,000 | 29,00,000 |
| 45 | 11 | -500 | 0 | 14,00,000 | 29,00,000 |
| 46 | 12 | -500 | 0 | 14,00,000 | 29,00,000 |
| 47 | 13 | -500 | 0 | 14,00,000 | 29,00,000 |
| 48 | 14 | -500 | 0 | 14,00,000 | 29,00,000 |
| 49 | 15 | -500 | 0 | 14,00,000 | 29,00,000 |
| 50 | 16 | 0 | 0 | 14,00,000 | 29,00,000 |
| 51 | 17 | 0 | 0 | 14,00,000 | 29,00,000 |
| 52 | 18 | 0 | 0 | 14,00,000 | 29,00,000 |
| 53 | 19 | 0 | 0 | 14,00,000 | 29,00,000 |
| 54 | 20 | 0 | 0 | 14,00,000 | 29,00,000 |
| 55 | 31,14,983 | 57,85,371 | |||
| IRR | 5.63% | 9.76% |
Since PPF requires a minimum annual contribution of ₹500 and has a 15-year tenure, the investment is adjusted to meet its applicable rules while matching the 10-year premium-paying period.
The resulting maturity value is ₹31.14 lakh, with an IRR of 5.63%.
The Equity Mutual Fund strategy generates a post-tax maturity value of ₹57.85 lakh, compared with a pre-tax value of ₹64.43 lakh.
The combined strategy of term insurance and Equity Mutual Funds delivers a post-tax IRR of 9.76%.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 20 years | 64,43,210 |
| Purchase price | 10,55,500 |
| Long-Term Capital Gains | 53,87,710 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 52,62,710 |
| Tax paid on LTCG | 6,57,839 |
| Maturity value after tax | 57,85,371 |
This comparison highlights the advantage of keeping insurance and investments separate.
It can provide better inflation-adjusted growth, greater liquidity, and more flexibility, while ensuring that your insurance coverage is not compromised by using a traditional savings plan.
The LIC New Jeevan Sathi – Limited Premium Plan combines life insurance and savings, with life cover extending to the spouse.
However, the life cover may be inadequate to meet a family’s financial protection needs, while the guaranteed returns remain modest.
As a result, the plan falls short on both insurance and investment objectives.
The key limitations include low returns, limited liquidity due to the long lock-in period, and an inadequate Sum Assured.
These drawbacks make the LIC New Jeevan Sathi – Limited Premium Plan less suitable as a comprehensive solution for either financial protection or wealth creation and it also has a high agent commission..
Traditional insurance-cum-savings plans often combine insurance and investment into a single product, but this can compromise both objectives.
A more effective approach is to opt for pure-term insurance for adequate life cover and invest separately based on your risk appetite, investment horizon, and financial goals.
A well-structured financial plan can help you make better decisions and stay on track towards your long-term goals.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
Consulting a Certified Financial Planner can help you choose the right combination of insurance and investments based on your individual needs.
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