LIC Jeevan Sugam Insurance Plan – Review
Last week India’s largest insurance company, LIC has launched a single premium insurance plan, Jeevan Sugam Insurance Plan. In this article, we would discuss about the key features of this LIC Jeevan Sugam insurance plan, Benefits, risks and to whom this insurance plan is best suitable for.
LIC Jeevan Sugam Insurance Plan
LIC Jeevan Sugam is a non linked single premium insurance plan. This insurance plan is close ended and is available for a limited time only.
Key features of LIC Jeevan Sugam insurance plan
Jeevan Sugam insurance plan is a single premium insurance plan where the risk cover is there up to 10 times the single premium paid. Maturity amount equals to maturity sum assured along with loyalty additions (if any).
Eligibility, terms and conditions:
- Minimum age entry: 8 years
- Maximum age entry: 45 years
- Death sum assured: 10 x single premium (< 5 years from policy date) and 10 x single premium + loyalty additions (if any) after 5 years from policy date
- Minimum maturity sum assured: Rs 60,000
- Maximum maturity sum assured: No limit
- Policy term: 10 years
- Premium: Single premium
Benefits of LIC Jeevan Sugam Insurance Plan
On death within 5 years from the date of commencement of policy: Sum assured i.e. 10 times the single premium (net of service tax) excluding any extra premium charged would be payable
On death after 5 years from the date of commencement of policy: Sum assured i.e. 10 times the single premium (net of service tax) excluding any extra premium charged + loyalty additions (if any) would be payable
Maturity Benefit: Maturity sum assured along with loyalty additions (if any) would be payable on maturity of 10 years.
Loyalty additions would be purely based on LIC’s claim experience.
Income tax benefit: Life Insurance premiums paid up to Rs. 1,00,000 are allowed as a deduction from the taxable income each year under section 80C of income tax act and the maturity amounts are tax free under section 10(10) D subject to fulfillment of terms and conditions.
Yes, the incentive amounts would be paid if the maturity amount exceeds Rs 150,000. The incentive is computed on maturity amount. If the maturity sum assured chosen is Rs 4 lakhs, then the incentive would be 4.5% on Rs 4 Lakhs = Rs 18,000. The total maturity amount would be Rs 418,000 + loyalty additions (if any).
Maturity amount Incentive
151,000 to Rs 399,000 3.5%
Rs 400,000+ 4.5%
Loan facility is available in this insurance plan up to 42% of the Surrender Value in the 1st policy year and up to 60% of the Surrender Value from the 2nd policy year onwards as on the date of sanction of loan. Surrender Value for 1st year is 70% of single premium paid and thereafter it is 90% of single premium.
Premiums would be computed based on the sum assured + age of the insurer.
Final thoughts, should we buy this LIC Jeevan Sugam policy?
Assuming that a youngster of 30 years has taken this policy for a maturity amount of Rs 100,000, then the amount of single premium would be Rs 56,200. If we compute the IRR (Investment rate of return) keeping away the loyalty additions, then it works out to be Rs 5.92%. Similar way, if we compute for 40 years insured person, for Rs 100,000 maturity amount the single premium works out to be Rs 62,935 and IRR comes to 5.28%.
This policy would be best suitable for youngsters who want insurance risk coverage + income tax benefit. If you are already invested in other insurance policies and you have sufficient investments to cover section 80C exemptions, this plan may not benefit you. If you are looking purely from investment perspective, there are better investment options like PPF, NSC etc., which gives higher returns than the returns provided by LIC Jeevan Sugam.
Readers, I invite your valuable suggestions and feedback on this article.
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LIC Jeevan Sugam Insurance Plan