LIC has launched 4 new plans in 2016. In this post I have tried to list down the important features, details and my recommendations on all LIC New Plans that are launched in 2016-17.
From January 2016 to December 2016, LIC has launched three Endowment plans and one Money-back plan. Out of the three Endowment plans, one is a Limited Premium Payment Endowment scheme. The new plans are namely; LIC Bima Diamond Plan, LIC Jeevan Pragati, LIC Jeevan Shikhar & Jeevan Labh
Before discussing more on these plans, let us understand what are Endowment & Money-back plans.
What is an Endowment plan? – It is a combination of insurance and investment. The insured will get a lump sum along with bonuses (if any) on policy maturity (or) on death event.
What are Money-back policies? – They provides life coverage during the term of the policy and the maturity benefits are paid in installments by way of Survival Benefits (money-back payments).
What are Limited Premium Payment Insurance Plans? – A limited premium payment plan is a plan where you pay the premium for a shorter span of time and enjoy the benefits of an insurance cover for a long time.
LIC New Plans list – Launched in 2016 – Snapshot
I have listed down the important features of LIC of India’s new plans that are launched in 2016 along with my recommendations (whether to ignore a plan or to buy).
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- Latest LIC policy : LIC Bima Diamond Plan
- Bima Diamond plan was launched in September, 2016 and is available for purchase till 31st August, 2017.
- This is a non-linked, traditional Money Back policy. Survival benefit is payable at an interval of every 4th year.
- It is a limited premium payment plan.
- Maximum Basic Sum Assured that is offered under this policy is Rs 5 Lakh only. So, this is surely not enough if you are looking for high life insurance cover.
- There are no simple and annual bonuses under Bima Diamond Plan. Loyalty Additions (if any) alone are paid on policy maturity.
- This plan can offer you returns of around 4% to 5% only.
- If you are planning to buy this plan, advisable to ignore it. This plan neither offers you high life cover nor gives you decent investment returns.
- If you have already invested in this policy, you may let it lapse.
- For complete details on this plan, kindly read : LIC Bima Diamond Plan – Review & Returns Calculation.
- LIC Jeevan Pragati
- This plan is available for purchase from February, 2016.
- It is a non-linked, with-profits and savings cum protection plan.
- The main feature of Jeevan Pragathi plan is the ‘sum assured on death’ (part of death benefit) automatically increases after every five years during the term of the policy.
- The Death Benefit under this plan is ‘Sum Assured on Death + Vested Simple Reversionary Bonuses + Final additional bonus’, if any, shall be payable to the nominee.
- On survival to the end of the policy term, the maturity benefit which is ‘Sum Assured on Maturity + Simple Reversionary Bonuses + Final Additional bonus (FAB)’ if any, shall be payable to the policy.
- Final Additional Bonus is not payable on PAID-UP policies.
- If you are planning to buy this plan, you may ignore it.
- The expected returns on this plan can be around 7%. But do remember that the returns are highly dependent on the bonus rates that LIC declares every year. (Read : ‘LIC’s latest Bonus rates 2016-17‘)
- For complete details on this plan, kindly read : Review of LIC Jeevan Pragati plan with an illustration.
- LIC Jeevan Shikhar Plan
- This is an endowment plan. It’s a participating, non-linked, with profit, savings cum protection plan.
- This was available for purchase till March 2016 only.
- Its a singe premium plan wherein the proposer can choose the Maturity Sum Assured (MSA).
- On policy maturity, the Maturity Sum Assured along with Loyalty Addition (if any) shall be payable.
- The expected returns from this plan are around 6%.
- In case, you have already bought this plan, you can consider surrendering it. The policy can be surrendered at any time during the policy year. The Guaranteed Surrender Value allowable shall be as under:
- First year (after 3 months) : 70% of the Single premium paid.
- Thereafter : 90% of the Single premium paid.
- For complete details on this plan, kindly read : Jeevan Shikhar plan – Review & Calculation.
- LIC’s Jeevan Labh Plan
- Jeevan Labh is a Limited Premium, non-linked, with profit Endowment Plan
- The death benefit under this plan is : Sum Assured + Bonus + Final Additional Bonus (if any).
- The maturity benefit under this plan is : Sum Assured + Bonus + Final Additional Bonus (if any).
- The expected returns can be in the range of 5 to 7% depending on the premium payment term.
- If you are planning to buy, you can ignore it.
- If you have already invested in this plan, you may let it lapse. (Read : ‘How to get rid-off unwanted life insurance policy?‘)
- The detailed review on this plan is available @ LIC Jeevan Labh Plan – Review, illustration & Returns Calculation.
My standard suggestions :
- Returns : Are you investing in these kind of plans for maturity returns? – The traditional life insurance plans can offer returns in the range of 4 to 7%. Personally, I believe that this is a very low return on investment, considering the fact that one has to remain invested for 10+ years. So, unless you are content with low returns, these kind of conventional insurance plans may not be for you. (Read : ‘Traditional life insurance plan – a terrible investment option?‘)
- Life insurance cover : Are you investing in these kind of plans for insurance cover? – The main point to note here is, ‘quantum of life cover’. These kind of plans are very costly to get high sum assured. So, if your requirement is to get adequate life cover, affordable Term insurance plans are the right choice.
- Tax Saving : Are you investing in these kind of plans for tax saving under section 80c? – if that’s the case, even a long term Small Savings Scheme like PPF (Public Provident Fund) can be a better choice than traditional life insurance plan. (Read: ‘PPF + Term plan Vs Traditional life insurance plan‘). You can also look into ELSS tax saving mutual funds for long-term goals.
Generally, December to March is the peak season for the life insurance companies in India. Most of the life insurance plans are offered as ‘tax-saving cum investment’ schemes. So, kindly be aware of the pros & cons of the financial products before you buy.
(Featured Image courtesy of bplanet at FreeDigitalPhotos.net) (Post published on : 7-December-2017)