LIC’s Jeevan Sugam Plan is a Single Premium non-Participating Endowment Plan (without Bonus facility). This is a close ended plan and available for sale only for 45 days from 25th February 2013.
Sailent Features of LIC’s Jeevan Sugam Plan
- Death Sum Assured (in Rs.) 10 X Single Premium
- Maturity Sum Assured (in Rs.) – 60,000 – No Limit
- Policy Term (in years) – 10
- Premium Payment Term – Single
- Entry Age of Life Insured (in years) 8 – 45
- Single Premium (in Rs.) – 32,058 – No Limit
1- Loyalty Additions
The Loyalty Addition will be payable under this plan, as follows – on death after completion of five policy years, on surrender during the last policy year and on maturity, at such rate and on such terms as may be declared by the Corporation.
2- Loan Loan facility available under this plan.
1- Loan facility is available is upto 42% of the Surrender Value in the 1st policy year and upto 60% of the Surrender Value from the 2nd policy year onwards as on the date of sanction of loan.
2- Loan will be available on this policy from day 1 .
3- The interest rate will be changed @ 10.45% compounded half yearly.
4- Also back dated interest is allowed with the financial year on payment of interest @ 10%. In addition to the above, no foreclosure action will be taken under this plan even if there is a default in payment of loan interest.
3- Maturity Benefit
On survival till Policy Maturity, the Maturity Sum Assured + Loyalty Additions would be paid to the policyholder as Maturity Benefit and the policy would terminate.
On death the nominee would get –
On death during first five policy years
Basic Sum assured (i.e. 10 times the single premium excluding any extra premium charged) shall be payable.
On death after completion of five policy years
Basic Sum assured (i.e. 10 times the single premium excluding any extra premium charged) along with loyalty addition, if any, shall be payable.
4- 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.
Maturity Proceeds are tax free under section 10(10)D
5- Surrender Benefit
There are guaranteed surrender benefits in this plan –
In 1st policy year = 70% of Single Premium.
IInd policy year onwards = 90% of Single Premium.
1- Short Policy Term of 10 Years.
2- Riders – There are no additional riders in this plan.
The Bottom Line : Avoid
As you were aware that returns are low in Endowment Plans. Still, if you compare it with the Bank’s Fixed Deposit, where the safety is similar to LIC, the return of this plan is less. LIC’s Jeevan Sugam Plan beats only on the tax benefits of 10(10)D. We would recommend LIC’s Jeevan Sugam, only for low risk investors. If you wanted to buy this plan, buy it for young proposer.