LIC’s New Jeevan Nidhi Plan : Review

LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan (Deferred Annuity Plan) which also provides death cover during the accumulation phase and offers annuity on survival to the date of vesting. It has two phase – Accumulation Phase and Vesting Phase. In accumulation – the premium goes into the retirement corpus and in vesting the same retirement corpus will be used to buy annuity.

Salient Features of New Jeevan Nidhi Plan

Minimum Basic Sum Assured	– Rs.1,00,000 under Regular Premium policies – Rs.1,50,000 under Single Premium policies
Maximum Basic Sum Assured	No Limit (The Sum Assured shall be in multiples of Rs.5000/-)
Minimum Entry Age	20 years
Maximum Entry Age	60 years
Policy Term	5 to 35 years
Minimum Vesting Age	55 years
Maximum Vesting Age	65 years

Benefits

1- Death Benefit

In case of death of the Life Insured before the vesting date, the nominee receives Sum Insured + Guaranteed Additions + Participation in Profits + Final Additional Bonus.

2- Maturity Benefit

At the maturity of the policy, the insured will have three option
1- To withdraw 33.3% of the retirement corpus (tax free) and buy annuity from the remaining 66.6%
2- Or take annuity from the entire retirement corpus
3- Or Buy single premium Deferred Annuity Plan

Positive Points

1- Rebate for High Sum Insured
For Regular Premium

1, 00,000 to 2, 95,000	Nil
3, 00,000 and above	2%o S.A.

For Single Premium

1, 00,000 to 2, 95,000	Nil
3, 00,000 and above *	5%o S.A.

2- Guaranteed Additions
The policy provides for Guaranteed Additions @ Rs.50/- per thousand Sum assured for each completed year, for the first five years.

3- Participation in profits
The policy shall participate in profits of the LIC from the 6th year onwards and shall be entitled to receive Simple Reversionary bonuses declared, provided the policy is in full force.
Note – Final Additional Bonus may also be declared in addition.

4- Tax Rebate – Under section 80C and 10(10D)
5- No maximum Sum Assured Limit
6- Optional higher cover through Accidental Death Benefit rider

Negative Points

1- No loan facility available under this plan.
2- The annuity shall only be purchased from Life Insurance Corporation of India.

The Bottom Line : Avoid

First, as the plan is a conventional with profits pension plan, so the return on the investment will be very less. Second, you have only one option to buy annuity that to from LIC. So we recommend avoid this plan and invest in ULIPs and MFs to create long term retirement corpus.