Review of LIC Jeevan Shagun Policy

Review of LIC Jeevan Shagun Policy

On 1st Sept, 2014 LIC has launced LIC Jeevan Shagun Policy for 90 days. Many of my friends and investors has inquired about this whether should they buy it or not. Today we will discuss about its features in detail for review. It is non linked, single premium, money back insurance plan with profit.

Features of LIC Jeevan Shagun Money Back Plan:

·         The minimum entry age is 18 and the maximum entry age is 45 for this plan

·   It is single premium policy. It means you have to pay premium only in starting. The policy tenure is 12 year.

·       It offer sum assured 10 times of single premium which you pay in start. It will be paid only in the case of death. The minimum sum assured is Rs 60,000 in this plan and for maximum there is no limit.

·         Loan facility also available in this plan. Loan amount is linked to surrender value. From 2^nd to 3^rd year of policy the eligible loan amount would be 50% of surrender value. From 4^th to 6^th year the loan amount would be 60% of surrender value. For 7^th to 9^th year it would be 70% of surrender value and from 10^th to 12^th year it would be 90% of the surrender value

Death Benefit:

In case death happen within 5 year from the beginning of policy your nominee will get paid basic sum assured means 10 time of your single premium and if it happen after 5 year then nominee will get basic sum assured with loyality addition.

Survival Benefit:

On survival of life insured, the insured will get 15% of the maturity sum assured at the end of 10th year, 20% of maturity sum assured at the end of 11^th policy year and 65% of maturity sum assured will get at the end of 12^th year of policy.

Surrender Value:

If you not satisfied with your policy, you have option to surrender it. If you surrender within 1 year from date of policy then you will get 75% of single premium and if you surrender policy after 1 year from the date of policy then you will get 90% of the single premium.

An example for understanding:

If a 40 year age person take Rs 1 lakh maturity sum assured, he/she need to pay Rs 59,500 ((1,00,000 / 1,000)*595) as single premium for 12 year policy cover. In case of death he/she will get 10 times of single premium, It means in this case 5.95 lakh.

In case of survival the payout he/she will get at the end of 10^th year is Rs15,000 (15% of maturity sum assured). At the end of 11^th year you will get Rs 20,000 (20% of maturity sum assured) and at the end of 12^th year Rs 65,000 (65% of maturity sum assured) and loyalty addition or bonus if any.

Should you go for this plan?

I have many times mentioned in my blog. Generally LIC policies provide returns between 5% to 7%. Low risk appetite investors who want to stay away from high risk and high return products stocks, mutual funds, etc. can opt for such policies. One should consider term insurance plans for risk coverage purpose and balance, invest in bank FD schemes or mutual funds and stocks according to their risk appetite which can provide better returns.

If you want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

New Guidelines from IRDA for index link and health insurance

New guidelines from IRDA for life insurance and general insurance product

In last few days, The Insurance Regulatory and Development Authority (IRDA) has issued some important guideline to life insurer and non life insurer. According to new guidelines for traditional product, non-linked variable insurance products (index-linked products) to be treated at par with unit-linked products (Ulips). The insurers have been given time till June 30 2013 and September 30, 2013 to re-file their group and individual products respectively.

Guideline for Commissions:

The cap for first year commissions has been put at 15% for the first year for a 5 year term, 30% for 10 years and 35% for 12 years or more. The insurer in industry less than 10 year this cap would be 40%. In the case of polices are procured by direct marketing, there would be no commission allowed. According to new guideline the shareholders will get at 10% of the surplus and the policyholders would be entitled to 90% share of the surplus.

Guideline for surrender value:

The minimum guaranteed surrender value would be 30% of the total premiums paid less any survival benefits paid, if policy is surrendered in the second and third year. If surrendered in the fourth year, it would be 70% of the total premiums paid less any survival benefits already paid. If surrendered during the fifth to the seventh policy year, it would be 90% of total premiums paid, less any survival benefits already paid.

Guideline for death benefit:

According to new guidelines for death benefit Irda said the minimum death benefit at highest of 125% of the single premium or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death, for single premium products. For other products, it will be highest of 10 times the annualised premium or 105% of all premiums paid on date on death, or minimum guaranteed sum assured on maturity or any absolute amount to be paid on death.

Norms for pension product:

For pension products, it said that upon surrender of pension products, one-third can be commuted and balance can be received only as annuity upon superannuation with the same insurer. The same option is available upon vesting with additional option of extension of deferment period if aged less than 55 on vesting.

New norms for health insurance:

IRDA has allowed to general insurance companies to launch 3 year health insurance policies. Now insurer cannot refuse the renewal without any sufficient reason. Longer period health insurance is good for customer as till 3 year renewal done automatic and also get the cheaper premium than current they are paying.

If you have any other query related investment and financial planning feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com