LIC Dhan Varsha Plan No 866 – Should you Invest or Avoid?
LIC has launched Dhan Varsha Plan, a single premium insurance policy now. This insurance plan is single premium individual savings plan. LIC says it would pay up to Rs 75 for every Rs 1,000 sum assured which is 7.5%. Investors would get tempted with such fancy words. What are the key features in LIC Dhanvarsha Plan 866? Who is eligible to take this plan? Should you invest in LIC Dhan Varsha Plan No 866 or avoid?
LIC Dhan Varsha 866 Plan Details
Here are the key features and plan details of LIC Dhan Varsha Plan 866.
This is non linked, non participating, individual, savings and single premium life insurance plan which is a combination of protection and savings.
This plan provides life protection in case of unfortunate death of the life insured.
It also provides guaranteed lump sum on the date of maturity for the surviving of the life assured.
This plan is available for sale up to 31-Mar-2023 only and it would be closed after that.
This plan comes with 2 options.
This plan can be purchased online or offline through agents or by visiting branch office.
Any individual who is in the age group of 3 years to 60 years can consider this plan with appropriate options.
Policy tenure is 10 years and 15 years.
Minimum basic sum assured is Rs 1.5 Lacs.
LIC Dhan Varsha Plan – What is the eligibility criteria?
What is the date of commencement of risk?
In case the life insured is above 8 years, date of commencement of risk would be immediate.
In case the life insured is below 8 years, date of commencement of risk would be over 2 years of taking the plan or after attaining 8 years of age whichever is earlier. As an example, if the policy is taken for 7 years old child, the date of commencement of risk would be within 1 year i.e. after attaining 8 years of age.
What are various options in this Plan?
Benefits in LIC Dhan Varsha
A) Death Benefit
In case of unfortunate death of the life insured, the insurance company would pay “Sum Assured on Death” to the nominee. Sum assured on death would be:
- Option-1: “Sum Assured on Death” shall be 1.25 times of the tabular premium for the chosen basic sum assured.
- Option-2: “Sum Assured on Death” shall be 10 times of Tabular Premium for the chosen Basic Sum Assured
B) Maturity Benefit
On Life Assured surviving the stipulated Date of Maturity, “Basic Sum Assured” along with accrued Guaranteed Additions shall be payable.
C) Guaranteed Additions
Guaranteed Additions would accrue at the end of each policy year. The rates of Guaranteed Additions are given below:
Various Options in LIC Dhan Varsha Policy
There are 3 options available:
1) Rider Options:
Following riders are available in this plan.
- LIC’s Accidental Death and Disability Benefit Rider
- LIC’s New Term Assurance Rider2
2) Settlement Option for maturity benefit
On surviving on life assured, one would have an option to choose the maturity benefit to receive in installments for the period of 5 years instead of a lump sum. Interest rate would be paid based last 5 years semi-annual G-Sec rate minus 2%.
3) Option to take the death benefit in installments:
In case of the death of the life insured, the nominee would have an option to choose the death benefit to receive in installments for the period of 5 years instead of a lump sum. Interest rate would be paid based last 5 years semi-annual G-Sec rate minus 2%.
LIC Dhan Varsha Premium calculator
Dhan Varsha LIC Plan premium calculator is given below with sample premium.
LIC Dhan Varsha Calculator of Returns
The returns would depend on the premium, policy term and option chosen. As per the simple table created by Basunivesh, SEBI registered investment advisor, LIC Dhan Varsha returns calculator shows 4.7% to 6% returns.
LIC Dhan Varsha – Positive Factors
Here are the major positive factors in this plan.
- This is the simple life insurance protection and savings plan without too much T&C’s.
- There is guaranteed addition up to Rs 75 for every Rs 1,000 sum assured.
- This plan is available both in online or offline.
- If you purchase this policy online, you would get rebate of 2% of the tabular premium.
- Loan facility available for 50% to 60% on the single premium paid.
LIC Dhan Varsha – Negative Points
Here are some negative or hidden factors in this plan.
- In case of death happens before commencement of risk or in case of death of a minor, only premiums would be returned.
- Though one can avail loan on the single premium paid, the interest would be 3% higher than 10 year G-Sec rate. If loan taken till 31-Mar-23 the interest would be 9.5%.
- LIC death benefit or maturity benefit can be received in installments for 5 years, the actual interest rate payable is 2% lower than 5 Year G-Sec. Current 5 years G-Sec yield is around 7.3%. Means LIC would pay 2% lower than this. Even if you invest in a simple FD, you would get more money.
- This LIC plan offers rider benefits, however, these would come with additional premiums.
- Guaranteed surrender value is 75% till 3 years of taking policy and 90% after 3 years. If you made mistake by taking this plan and regret later-on, you need to loose money to this extent.
- In case the life insured commits suicide within 12 months, only 80% of the total premiums paid would be returned to the nominee/family members.
Should you invest in LIC Dhan Varsha Plan?
Sum websites are publishing this policy details as “LIC Dhan Varsha Plan: Single premium of Rs 10 lakh turns into Rs 1 crore”. Don’t get into the trap of such websites. Though the title says this, the actual content says the death benefit is Rs 1 Crore.
LIC Dhanvarsha Plan 866 is simple to understand. It is life protection, savings and single premium plan. It provides guaranteed additions at the end of the term plan.
On the other hand, guaranteed additions are not added every year, but at the end of the policy term. Means such guaranteed additions would not provide compound returns, but given simple returns. No point in taking death benefit and maturity benefit in installments with 2% lower than 5 year G-Sec yield. In case you feel you did a mistake in taking this plan, the surrender value is 75% for first 3 years and 90% after 3 years. Like I keep indicating earlier, the returns from such LIC plans would range between 4.5% to 6% which are low.
If you are a big fan of LIC and want to compromise with such low returns, you can go ahead with such plans. If you are a low risk taker and feel such returns are too low, you can consider a simple Term Insurance Plan and invest balance in a simple FD that can fetch you high returns with a flexibility to withdraw. If you can take some risk, considering some of the Mutual Funds with Highest SIP returns could be a better choice.
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