LIC Jeevan Shiromani Insurance Plan No 847 – Should you invest?
LIC is launching its new money back plan, LIC Jeevan Shiromani Insurance Plan No. 847 on 19th December, 2017. LIC Jeevan Shiromani is a non-linked, with profits, limited premium payment money back insurance plan. There are some unique features in this LIC insurance plan compared to its traditional money back insurance plans. What are the features of LIC Jeevan Shiromani Insurance Plan No. 847? How much money, one would get on pre-defined intervals from LIC Jeevan Shiromani Insurance Plan? Should you invest in LIC Jeevan Shiromani Insurance Plan No. 847?
Features of LIC Jeevan Shiromani Insurance Plan No. 847
This money back plan from LIC comes with some exciting features.
1) This is non-linked insurance plan and with profits.
2) This insurance plan is limited premium payment plan. However the risk coverage would be there for the entire policy term.
3) This money back plan would become paid-up insurance plan immediately after completion of 1 year. In all other LIC plans, the plan becomes paid-up only after 3 years.
4) Guaranteed additions of Rs 50 for every Rs 1,000 sum assured for first 5 years and Rs 55 for every Rs 1,000 sum assured from 6th year onwards.
5) Loyalty additions after 6 years onwards.
6) In-built Critical Illness Coverage available in this plan.
7) One can surrender this insurance plan after 1 year.
8) Loans available on this insurance plan after 1 year.
9) Income Tax Benefits available u/s 80C of income tax act.
Who is eligible to take LIC Jeevan Shiromani Insurance Plan No. 847?
Here is the eligibility criterion of this insurance plan.
1) Minimum age of entry is 18 years.
2) Maximum age of entry is 55 years. However the maximum age of maturity should be 69 years. Hence maximum age of entry would also depend on tenure of the plan.
3) Minimum Sum Assured is Rs 1 Crore. Means this is for High Networth Individuals (HNIs) only.
4) Maximum Sum Assured – No limit
5) Policy available for tenure of 14 years, 16 years, 18 years and 20 years.
6) Premium Payment Term is 4 years less than the policy term. Means if you are opting for 20 years plan, you need to pay premiums only for 16 years, however risk coverage would be there for full term of 20 years.
7) Date of commencement of risk is immediate from policy date.
What is Sum Assured on Death in this Insurance Plan?
Sum Assured on Death is highest of the following:
a) 10 times of your annualized premiums
b) 125% of basic sum assured
c) 105% of all premiums paid till the date of death.
Benefits available under LIC Jeevan Shiromani Insurance Plan No. 847
There are several benefits available under LIC Jeevan Shiromani Insurance Plan No. 847.
1) Death Benefits
a) If death occurs within 5 years from the policy date, Sum Assured on Death + Guaranteed additions of Rs 50 for every Rs 1,000 sum assured would be paid to the nominee.
b) If death occurs after 5 years from the policy date, Sum Assured on Death + Guaranteed additions of Rs 50 for every Rs 1,000 sum assured for first 5 years + Guaranteed additions of Rs 55 for every Rs 1,000 sum assured from 6th year would be paid to the nominee.
2) Survival Benefits
Survival benefits would be paid as follows:
a) For 14 years policy – 30% of basic sum assured would be paid on 10th and 12th year of the policy.
b) For 16 years policy – 35% of basic sum assured would be paid on 12th and 14th year of the policy.
c) For 18 years policy – 40% of basic sum assured would be paid on 14th and 16th year of the policy.
d) For 20 years policy – 45% of basic sum assured would be paid on 16th and 18th year of the policy.
If you observe, the higher the policy term, the higher the basic sum assured %age paid to you as money back.
3) Maturity Benefits
Whatever paid in survival benefits would get deducted from sum assured and balance would be paid on maturity.
a) For 14 years policy – Balance of 40% of basic sum assured + Guaranteed Additions + Loyalty Addition (if any) would be paid.
b) For 16 years policy – Balance of 30% of basic sum assured + Guaranteed Additions + Loyalty Addition (if any) would be paid.
c) For 18 years policy – Balance of 20% of basic sum assured + Guaranteed Additions + Loyalty Addition (if any) would be paid.
d) For 20 years policy – Balance of 10% of basic sum assured + Guaranteed Additions + Loyalty Addition (if any) would be paid.
3) Critical Illness Benefits
This plan come with in-built critical illness coverage where if diagnosed for 15 specified critical illness, nominee would get benefit under this plan. You can refer next section for more info on this coverage.
What are the Critical illness Benefits available in LIC Jeevan Shiromani Money back Plan?
Critical illness benefits are available which are in-built in this plan. Below are the 15 critical illness that are covered as part of the plan.
1) Cancers of specified severity
2) Open chest CABG
3) Myocardial infarction
4) Kidney failure which requires regular dialysis
5) Major organ / bone marrow transplant
6) Heart Stroke resulting in permanent symptoms
7) Permanent paralysis of limbs
8) Multiple sclerosis with persisting symptoms
9) Aortic Surgery
11) Third degree burns
12) Open heart replacement / surgery for heart valves
13) Benign Brain Tumor
14) Primary pulmonary hypertension
15) Alzheimer’s disease
Benefits under Critical Illness Coverage
If diagnosed with any of the critical illness indicated above, there is 30 days period is given to understand the severity of the critical illness. If survived beyond 30 days, insured would get 10% of Basic Sum Assured. If the insured is not survived within 30 days of diagnosing the critical illness, no benefit is payable under this critical illness coverage. There are several other terms and conditions attached to this coverage.
What is Premium Payment Term under LIC Jeevan Shiromani Insurance Plan No. 847?
1) For a 14 year policy, one needs to pay premium for 10 years only.
2) For a 16 year policy, one needs to pay premium for 12 years only.
3) For an 18 year policy, one needs to pay premium for 14 years only.
4) For a 20 year policy, one needs to pay premium for 16 years only.
What are Optional Riders available in LIC Jeevan Shiromani Plan?
There are 3 optional riders in this plan:
1) Accidental Death and disability benefit rider
2) Accidental Death Benefit Rider
3) New Term Insurance Rider
Are there any Premium Rebates available in this plan?
Yes, below are the premium rebates available in this plan.
1) If the premium is paid half yearly, 1% of tabular premium rebate available in this plan. If the premium is paid yearly, 2% of tabular premium rebate available in this plan.
2) If the basic sum assured considered is between Rs 2 Crores to Rs 4.95 Crores, 0.03 of the premium is given as high basic sum assured rebate. If the sum assured is over Rs 5 Crores, 0.05 of the premium is available as high sum assured rebated.
What are the Premiums in this Insurance Plan?
Here is the sample premium charts of Sum assured of Rs 1 Crore for 30 years male. However let us wait for complete detailed chart from LIC.
1) 14 Years Policy – Rs 11.37 Lakhs per annum
2) 16 Years Policy – Rs 9.57 Lakhs per annum
3) 18 Years Policy – Rs 8.26 Lakhs per annum
4) 20 Years Policy – Rs 7.36 Lakhs per annum
LIC Jeevan Shiromani Insurance Plan No. 847 explained with an example
Mr. John, aged 30 years has taken this insurance plan for Rs 1 Crore Sum Assured and for 20 years tenure. The premium payable is approx. Rs 7.3 Lakhs per annum.
1) Mr.John unfortunately dies after 4 years. His nominee would get Sum assured + Guaranteed Additions i.e. Rs 1 Crore + Rs 20 Lakhs = Rs 1.2 Crores.
2) Mr.John unfortunately dies after 10 years. His nominee would get Sum assured + Guaranteed Additions i.e. Rs 1 Crore + Rs 25 Lakhs (GA for first 5 years) + Rs 27 Lakhs (GA after 5 years)= Rs 1.52 Crores.
3) Mr.John survives till the end of the policy. He would get 45% basic sum assured on 16th year and 18 year each + on maturity 10% of basic sum assured and Guaranteed Additions and loyalty additions would be paid.
Means, Mr. John would get Rs 45 Lakhs on 16th year, Rs 45 lakhs on 18th year and on maturity Rs 1.4 Crores / Rs 1.5 Crores (10% of basic sum assured is Rs 10 Lakhs and Guaranteed additions for 20 years and Loyalty addition of Rs 200 per Rs 1,000 sum assured is estimated).
Should you invest in LIC Jeevan Shiromani Insurance Plan No. 847?
Let us see the Pros and Cons in this insurance plan before we conclude.
Pros: This insurance plan comes with guaranteed additions of 5% for first 5 years and 5.5% for the rest of the term. Loyalty Additions payable on maturity which is approx. Rs 200+ for every Rs 1,000 Sum assured. This insurance plan would become paid-up plan immediately after completion of 1 year (against the regular LIC policies which would become paid up after 3 years). This insurance plan comes with in-built critical illness coverage.
Negative points: This plan is not suitable for regular investors as the sum assured starts from Rs 1 Crore which is for High Networth Individuals (HNIs). Critical illness coverage is the most confusing factor in this plan. Low Returns from LIC plans.
Conclusion: Some of the unique features of the insurance plan are good. However one should ask themselves what they are expecting from this insurance plan. LIC insurance plans would provide anywhere between 5% to 6% annualized returns (considering 5.5% guaranteed additions in this plan). Is this your objective? If you don’t believe in equity or mutual funds or stock markets, go ahead and consider this insurance plan. However if you are expecting highest returns than just 6%, there are several high return investment plans like Mutual Funds and Stocks. If you still want to go for low risk options, you can invest in PPF and Bank FD’s which would still offer higher returns.
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LIC New Jeevan Shiromani Insurance Plan No 847