LIC’s Jeevan Shagun (Plan no 826) – Review & Returns Calculation

LIC’s Jeevan Shagun (Plan no 826) plan will be launched on 1^st September,2014. This is a close ended plan. Plan is open for sale for a period of 90 days only.

It is a single premium, non-market linked, with-profit,money-back type product. The single premium is calculated based on the Maturity Sum Assured (MSA) chosen by then proposer.

Eligibility conditions for this plan:

• Minimum Entry Age – 8 years
• Maximum Entry age – 45 years
• Mode of Premium payment – Single premium
• Minimum Maturity Sum Assured – Rs 60,000/-
• Maximum Maturity Sum Assured – No Limit
• Policy Term – 12 years

Benefits of LIC’s Jeevan Shagun plan:

Below are the benefits of this plan ;

• Survival Benefit – Moneyback installments will be paid at specific intervals. At the end of 10^th policy year, 15% of the Maturity Sum Assured (MSA). And at the end of 11^th policy year, 20% of the MSA will be paid as survival benefits.
• Death Benefit – If the policyholder dies before the first five policy years then 10 times of the single premium paid (excluding taxes) will be paid as a death benefit. If death occurs after the completion of five policy years then Basic Sum Assured of 10 times of the premium along with Loyalty Addition (if any) will be payable.
• Maturity Benefit – On the life assured surviving to the end of policy term, 65% of MSA along with Loyalty Addition (if any) shall be payable as maturity benefit.
• Loyalty Addition – LIC pays loyalty addition on death or surrender of the policy, provided the policy has run for atleast 5 policy years. Loyalty addition is also paid on policy maturity date.
• Guaranteed Surrender Value – If policyholder surrenders the policy during the first year then 70% of the single premium (excluding taxes) will be provided as surrender value. After the first year, 90% of the single premium paid (excluding taxes/survival benefits) can be paid as Surrender Value.

How does Jeevan Shagun plan work?

(You may click on the image to enlarge it)

Returns Calculation with few premium quotations :

You may use the below online calculator to find out the expected returns.

(If you are unable to view the below calculator then try again after refreshing your browser)

Important points to ponder upon :

•  The above returns are dependent on how much amount LIC will pay as Loyalty Additions (LA) in future. I have assumed LA as Rs 300 per Rs 1000 SA.
• Kindly remember that LA is not applicable for the first five policy years.
• Based on the above calculations, the investment returns are OK for this plan. If you are an youngster ( Age group 20years to 30 years) and can afford to take investment risks then this plan may not be suitable . During this age, you need to take risk to get higher returns. This plan may not give the returns that are over and above the inflation.
• The returns from this plan are better than bank Fixed Deposit returns. The returns from Fixed deposits are taxable.  If you are a risk averse investor and seriously looking for a safe bet, then this plan looks attractive.
• If you are an investor who can not afford to take interest rate risk then this plan may be suitable.
• Remember that insurance is not an investment product. Buy a term insurance plan to cover the life risk.

Always, map your financial goals with time-frame and risk profile. If the product features/benefits match your requirements then only consider these type of plans.