LIC Navjeevan Insurance Plan No 853 – Should you opt?
LIC Navjeevan Insurance Plan No 853 – Should you opt?
LIC has launched a new plan, LIC Navjeevan Insurance Plan No. 853 few days back. LIC Navjeevan is a non-linked, participating with profit, endowment insurance plan. LIC’s recent Micro Insurance Plan was not that attractive as the sum assured was very low. What are the features of LIC Navjeevan Insurance Plan No. 853? Who is eligible to take LIC Navjeevan Insurance Plan No. 853? How are the Premiums in LIC Navjeevan Insurance Plan? Should you invest in the LIC Navjeevan Insurance Plan No. 853?
What are Endowment Plans?
This LIC’s new plan is an endowment plan. Let us first understand what is Endowment plan is all about.
An endowment plan is basically a life insurance policy which covers the life of the insured, helps the policyholder save regularly over a specific period of time so that he/she is able to get a lump sum amount on the policy maturity in case he/she survives the policy term. This maturity amount can be used to meet various financial needs such as funding one’s retirement, children’s education and/or marriage or buying a house, etc. If you are confused about the difference between Term insurance plan Vs Endowment plan, you can see this video.
Features of LIC Navjeevan Insurance Plan No. 853
Here are the features of the LIC Navjeevan Plan.
1) This is non-linked and participating insurance plan.
2) Any individual can take up this plan who is in 18 to 65 years of age.
3) This insurance plan offers protection + Savings.
4) The tenure of the insurance plan is between 10 to 18 years.
5) This plan is available both offline and online.
6) Loyalty additions after 5 years onwards provided all insurance premiums are paid.
7) There is a 1 optional rider available in this plan.
8) Income Tax Benefits available u/s 80C of income tax act.
9) You can purchase this plan either online or offline. There are discount to premiums if you buy them online.
10) This plan unique no. is UIN: 512N33V01.
Who is eligible to take LIC Navjeevan Insurance Plan No. 853?
Here is the eligibility criterion of this insurance plan.
1) Minimum age of entry is 90 days for single premium and Limited Premium Option-1. It is 45 years for limited premium option 2.
2) Maximum age of entry is 44 years for a single premium. It is 60 years if you select limited premium option-1 and 45 years if you selection limited premium option-2
3) Maximum age of maturity should be 80 years for limited premium option-2.
3) Minimum Sum Assured is Rs 100,000.
4) Maximum Sum Assured – No limit
5) Policy available for tenure of 10 years to 18 year term.
6) One can pay a single premium / lump sum or pay premium up to 5 year period.
7) Date of commencement of risk is immediate from policy date.
What are various premium payment terms available?
If you are paying a lump sum or single premium, there are no further payments to be done. If you are opting for limited premium payment terms, then you need to pay for 5 years time frame. However, there is a twist on this term.
Entry of <= 45 years of age – If opting for limited premium option, the sum assured on death is 10 times of the annualized premium.
Entry of > 45 years of age – If opting for limited premium option, the sum assured on death is 7 times of the annualized premium.
Not sure why LIC comes up with such confusion features.
What is the commencement of Risk in this plan?
If the insured age is less than 8 years, then the commencement of risk will start either one day before the completion of 2 years from the date of commencement of policy or one day before the policy anniversary coinciding immediately following the completion of 8 years of age whichever is earlier.
What is the Sum Assured on Death in this LIC Navjeevan Insurance Plan?
1) For Single Premium Policies, higher of the below will be payable
- a) Basic Sum Assured
- b) 10 times of Single Premium
2) For Limited Period Premium Payment Policies higher of the below will be payable.
- a) Basic Sum Assured
- b) 10 times of Annual Premium (If Option 1 has opted) OR 7 times of Annual Premium (If Option 2 has opted)
What are various benefits available in the Navjeevan Insurance Plan from LIC?
Below are the benefits available under LIC Navjeevan Insurance Plan No. 853.
1) Sum Assured on Death is paid based on following criteria:
a) On First 5 years of the policy
i) If it is before the commencement of risk – All premiums paid would be refunded without any interest
ii) If it is after commencement of risk – Sum assured on death is payable
b) After 5 years of the policy period, but before maturity – Sum assured on death along with loyalty benefit (if any) is payable.
2) Maturity Benefits
If the life assured is survived till maturity and all premiums are paid, then, “Sum Assured on Maturity” + Loyalty Additions (if any) would be paid to the to the life assured. Sum Assured on Maturity is equal to the Basic Sum Assured.
3) Optional Riders available in this plan
There is only one optional rider available which is “LIC’s Accidental Death & disability benefit rider”
Are there any Premium Rebates available in this LIC Navjeevan Insurance Plan?
Yes, below are the premium rebates available in this plan for online plan.
1) If it is single premium, 2% rebate on premium available.
2) If it is limited premium option for 5 years, 5% of the annualized premium is available.
How are the Premiums in LIC Navjeevan Insurance Plan?
Here are the premium charts indicated by LIC for every Rs 1,000 sum assured.
Example-1 – If a 30 years person is taking 18 year plan for Rs 10 Lakhs with single premium option, he/she need to pay Rs 401,002 (Excluding taxes) as single premium.
Example-2 – If a 30 years person is taking 18 year plan for Rs 10 Lakhs with 5 years premium payment option, he/she need to pay Rs 87663 (Excluding taxes) per annum for 5 years.
How much loan one can get under this insurance plan?
LIC offers a loan facility against this plan, however, with terms and conditions
Under Single Premium, one can avail the loan after 3 months of taking the policy. The maximum loan available is 80% of the Surrender Value. However, under the limited premium payment option, after completion of 2 years of tenure, you can avail the loan up to 80% of surrender value (for in force policies) or 70% of surrender value (for paid-up policies).
What is the surrender value of the LIC Navjeevan Plan?
You can surrender the LIC policy at any point of time if you paid a single premium. However, for limited premium payment option, you can surrender it after 2 years of completion.
LIC Navjeevan Insurance Plan No. 853 explained with an example
Example-1 – Mr. Syed, aged 30 has taken 18 year plan for Rs 10 Lakhs with single premium option, he need to pay Rs 401,002 (Excluding taxes) as single premium. Here is how the benefits look like.
Example-2 – Mr. Mahesh, aged 30 has taken 18 year plan for Rs 10 Lakhs with 5 years premium payment option, he need to pay Rs 87,663 (Excluding taxes) per annum for 5 years. Here is how the benefits look like.
Is your LIC Insurance Agent pushing you for this plan to take?
If your insurance agent is recommending for you to take this plan, then you should ask what they really get out of it.
1) They would get 14% commission for 1st year premium and 5% commission on premium thereon for the rest of 4 years if you opt for 5 year premium payment period.
2) They would get 2% commission on premium if you opt for single premium payment option.
Should you invest in the LIC Navjeevan Insurance Plan No. 853?
Let us see the Pros and Cons in this insurance plan before we conclude.
Pros: This insurance plan is a protection + savings plan. This comes with 1 optional benefit rider, which are useful for life insured, however comes with additional premiums.
Negative points: Sum assured on death computation is so much complicated with a single premium, and limited premium payment option-1 and 2 for < 45 years and > 45 years age. There are no inbuilt riders and 1 rider is optional. Means, you need to pay additional premiums if you add such rider. Such plans come with low returns from LIC plans. One can expect anywhere between 4% to 8% returns per annum and nothing more than that. LIC keep floating such plans every year, especially in Jan and Feb to attract salaried individuals who would think of saving tax by investing in life insurance schemes. This year, LIC is too late in the game to attract such investors with such plans.
You can download LIC Navjeevan details here.
Conclusion Summary: This is an endowment plan. One should ask themselves what they are expecting from this insurance plan. It does not have any inbuilt riders. LIC insurance plans would provide anywhere between 4% to 8% returns (considering loyalty additions to this plan). Is this what you are expecting? Why don’t you consider good mutual fund schemes for long term investment? If you don’t believe in equity or mutual funds or stock markets, you can at least consider a term insurance plan that comes with much lower premiums, but higher sum assured (only risk coverage is available). If you still want to go for some investment options that are low risk, you can consider the term insurance plan and invest the balance in PPF and Bank FD’s which would still offer higher returns.
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LIC Navjeevan Insurance Plan No 853