A short review on LIC Jeevan Saral

Many readers requested me for the review on LIC’s Jeevan Saral.

I check Web for the reserve on Jeevan Saral and establish there are plenty of web pages dedicated to this policy.

So let me put only the significant aspect of this policy and my views on it.

Jeevan Saral is an Endowment plan with diversity. It comes with many good features similar to No surrender charge, Partial withdrawal facility like ULIP, premium selection by policy holder etc.

1) You select the premium.
Usually we first decides on the Sum assured and based on this we come to identify net premium amount but in Jeevan Saral you choose the premium first based on this maturity sum assured gets determined.
You can select monthly premium as low as Rs. 250.

2) High risk cover.
Normal endowment policy only pays Sum assured + bonus, but here once you decide on top of the monthly premium an amount equal to 250 times monthly premium(called as Death benefit S.A) + premium paid (excluding first year and rider premiums) + loyalty addition is paid.

This makes continues increase in the risk cover as the term progresses.

For example: On Monthly premium of Rs. 250/- Death benefit SA is 250 * 250 = 62,500 + Total Premium paid as mentioned above + LA.
On maturity you will get Maturity Sum Assured + Loyalty Additions.
Loyalty addition will be declared by LIC from 10th year onwards.

3) Flexible surrender terms
• 80% of the maturity S.A.
• more than 4 but less than 5 years premiums paid : 90% of maturity S.A.
• 5 year + : 100% of maturity S.A.
Now this is the place where agent misleads the clients.
Although 100% MSA is payable after 5 years but actually you end up loosing your money if you withdraw money in the initial year. Here is the example.

Age: 35 years. Term: 25 years.
Premium: Rs. 4704/- Per Annum.
Year Total Premium paid MSA LA Profit(Loss)
5 23520 18660 0 (4860)
6 28224 23180 0 (5044)
9 42336 37892 0 (4444)
10 47040 43360 18000 14320
So at no point of time you get your money back if you surrender before 10th year (or partially withdraw the money).
LA figure is not guaranteed and it would be based on profit of LIC.

4) Partial Withdrawal.
This is one of the good parts of Jeevan Saral.
In the first year you can set a high annual premium and at the later stage you can reduce the premium by withdrawing a part of policy.
A segment of the policy can be surrendered and money can be received from LIC, if premiums, have been paid for a minimum of 3 years, subject to the following conditions:

• The basic annual premium and all other benefits will be concentrated to the extent of partial surrender.
• Any no. of times, partial surrender is allowed.
• There should be a gap of minimum of one year between two successive partial surrenders.
• Minimum annual premium that can be surrender at a time is Rs.1, 200/- p.a. and should be in multiples of Rs.600/- p.a. thereafter.
• The reduced basic annual premium after surrender shouldn’t be less than Rs.3,000/- p.a. for age upto 49 years and Rs.4,800/- p.a. for age 50 and above.
• The accident benefit, term rider benefit and additional premium payable will also be reduced proportionately.

For example: If you’re current Annual premium is Rs. 12,000 and you want to reduce it to Rs. 6000 by partial withdrawal after 8 years.

An amount equal to MSA for an annual premium of Rs. 6000 is paid to you.

In my view LIC Policy is good for those who want risk cover with low premium and flexibility to reduce premium at the later stage. However on the return front policy doesn’t looks good. LA is not guaranteed and it is paid only after 10th policy year. Early Surrender and partial withdrawal features are misleading.

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