LIC Jeevan Azad (Plan 868) – Features, Positive and Negative Factors

LIC has launched Jeevan Azad Plan No 868 few days back. Generally LIC keeps launching insurance plans during Dec to March period to attract individuals who are looking for last minute tax savings. LIC Jeevan Azad is a non linked savings plan which offers savings + protection. What are the key features of LIC Jeevan Azad Plan? Should you opt LIC Jeevan Azad Plan or avoid?

Also Read: LIC New Pension Plus 867 – Should you opt it?

LIC Jeevan Azad Plan – Key Features

This plan was launched on 19th January, 2023.

LIC’s Jeevan Azad is a Non-Linked, Non-Participating, Individual, Savings Life Insurance plan. This is a Limited Premium Endowment plan under which the Premium Payment Term (PPT) is equal to Policy Term minus 8 years.

It provides a guaranteed base sum-assure amount on the date of maturity for the surviving life assured.

Policy term is between 15 to 20 years.

The policy offers a settlement option where the maturity benefits can be received in installments.

The policy also offers death benefits to receive in installments.

Premiums can be paid regularly either monthly, quarterly, half yearly or yearly.

This plan is available both in online mode and offline mode. In offline mode, you need to approach agent / LIC branch to purchase this policy.

LIC Jeevan Azad Plan 868 - Features, Positive Factors and Negative Factors

Eligibility Criteria – LIC Jeevan Azad Plan

Here are the eligibility criteria to take this plan.

Min age of entry 90 days
Max age of entry 50 years
Min age at maturity 18 years
Max age at maturity 70 years
Policy Term 15 to 20 years
Premium Paying Term (PPT) Policy Term minus 8 years
Min Sum Assured 2 Lakhs
Max Sum Assured 5 Lakhs

Benefits in LIC Jeevan Azad Plan

#1 – Death Benefit

Under this plan, the death benefit is payable on the death of the life insured during the policy term after the date of commencement of risk but before the date of maturity. This would be “Sum Assured on Death” where “Sum Assured on Death” is higher of

  • Basic Sum Assured or
  • 7 times of Annualized Premium

Death Benefit shall not be less than 105% of “Total Premiums Paid” till the date of death.

In case the life assured is minor, whose age at entry is below 8 years, on death before the commencement of risk, the death benefit shall be a refund of premium paid (excluding taxes), without interest.

#2 – Maturity Benefit

On maturity, on survival of life assured, “Sum Assured on Maturity” which is equal to ‘Basic Sum Assured’ is payable to the life assured. The policy ceases after that.

Premiums in LIC Jeevan Azad Plan

Below are the sample premiums payable for Rs 2 Lakhs sum assured.

As an example if a 30 year individual takes 20 year policy, they need to pay Rs 9,849 premium for 12 years (20 year policy term minus 8 years). These premiums are exclusive of taxes.

LIC Jeevan Azad Plan 868 - Premium Calculator

Returns in LIC Jeevan Azad Plan

Let us take an illustration from the LIC Jeevan Azad brochure for a 30 year individual for 18 year policy term for 2 Lakhs sum assured. They need to pay the premium only for 10 years (policy term of 18 years minus 8 years = premium payment term). On maturity the life assured would get Rs 2 Lacs. The XIRR returns are at 4.06%, and if we consider the GST paid on insurance premiums (which is anyways paid by policy holder), the returns are at 3.86%.

LIC Jeevan Azad Plan 868 - Illustration- Example

LIC Jeevan Azad Plan 868 - Illustration- Returns calculator

Why to invest in LIC Jeevan Azad Plan?

Here are some positive factors to invest in this plan.

  • LIC Jeevan Azad is a simple, non linked, non participating, savings and protection plan.
  • LIC is considered as a trusted brand for life insurance for many decades.
  • One can consider 3 optional riders available in this plan which can enhance the protection of life assured. However, this comes with additional premiums.
  • One can opt for yearly premium and get a 2% discount or opt for half yearly premium and get 1% discount on tabular premium.
  • One can get up to 2% high sum assured rebate if they go for Rs 5 Lakhs sum assured.

Why NOT to invest in LIC Jeevan Azad Plan?

Here are major negative factors in this plan.

  • LIC plans come with low returns. This plan provides around 4% returns along with life insurance protection.
  • The max sum assured available in this plan is Rs 5 Lakhs. Generally, experts advise to take a life insurance for 10x to 20x of their annual expenses / annual income. Considering this, the max sum assured is very low and does not cater to current needs.
  • This plan provides a settlement option (paying in installments) of death benefit or maturity amount. The interest paid is 4.8% (as per the brochure) for the period May-22 to Apr-23. Such interest is considered as low. One can avoid such option.

Also Read: 5 mutual funds with highest SIP returns in last 20 years

Should you opt for LIC Jeevan Azad Plan?

LIC Jeevan Azad is a non linked, non participating, savings and protection plan. LIC is a trusted brand for many decades. This endowment plan is simple to understand. One can consider riders to enhance the protection, however it comes with additional premium.

On the other hand, LIC plans provide low returns. This plan provides around 4% returns (beyond life risk protection) which are very low. Considering the current inflation rate of 6%, if you invest in such plans, you would be getting negative returns after adjusting inflation.

Instead of investing in such plans, one can go for simple term plan and invest their money in an investment option as per their choice that can generate better returns.

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Suresh KP

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