LIC Jeevan Vaibhav is a single premium payment plan which offers a guaranteed maturity amount plus Loyalty additions (if any) at the time of maturity. The insurance cover would be 5 times of the premium amount.
Basic Features of LIC Jeevan Vaibhav
1- Person between age group of 8 – 65 years can apply for this plan.
2- Minimum Sum Insured is Rs 2,00,000/- and no limit for maximum sum assured.
3- There’s no cap on maximum premium payment.
4- Policy term is 10 years, but this policy can be surrendered after 1 year.
Rebate
Large Sum Assured Rebate on tabular premium per thousand Sum Assured is as under –
Sum Assured |
Rebate (Rs.) |
Up to Rs.3,90,000 |
Nil |
Rs.4,00,000 to Rs.5,90,000 |
2.00 |
Rs.6,00,000 and above |
3.00 |
Loyalty Addition
As per previous LIC experience, the corporation has declared a loyalty addition Rs 50 to Rs 100 per Rs 1,000 sum assured for policies with similar term as LIC Jeevan Vaibhav, so expect similar Loyalty Addition under this plan.
Return
The major feature of this policy is that it offers almost double the single premium at maturity which depends on the age at the entry and premium paid at the time of purchasing the policy plus. The guaranteed returns from the plan will vary depending on the insured age.
(a) The effective return is higher at younger age and goes on diminishing as the age goes up (good policy for younger guys). The return will range between 10.34 per cent to 8.25 per cent.
(b) Also, if you purchase a sum assured of Rs 4,00,000 or more your return may go up to the range 10.42 per cent – 8.32 per cent.
(c) Similarly, it will go up to range of 10.47 per cent – to 8.35 per cent if you purchase beyond Rs 5,90,000.
Tax benefits under LIC Jeevan Vaibhav
1- To avail deduction under section 80C, your premium should be within 10% of Sum Assured. So if you opt for Rs.10,00,000 Sum Assured then your premium should be within Rs.1,00,000 which is not possible from this policy. So you have to go for small Sum Insured.
2- Also Section 10(10) D of the Income Tax Act will not be applicable for the same reason (80C above) and your net earnings will be taxable at the applicable rate.
3- However, the death benefit under any plan is always tax-free under Section 10(10D).
Bottom Line
1- This plan is giving you returns between the range 10.42 per cent – 8.25 per cent and less tax rebate under sec 80C and 10(10)D makes it least popular.
2- Currently when Bank FDs are giving 9.5-9.75% tax free returns and 80C rebate is also available, I don’t feel LIC Jeevan Vaibhav is a good plan.
3- The term is also fixed for 10 years. You buy it now and after 10 years, again you will have to buy another insurance plan to cover yourself, at that time it will cost you a fortune.
4- If you still want to buy it, then buy only for young member of the family, so that the return would be good.
You can calculate your premium and return with this LIC Jeevan Vaibhav Calculator.