LIC's Dhan Sanchay Plan is a non-linked, participating, individual endowment plan offered by the Life Insurance Corporation of India (LIC). The plan is designed to provide life coverage along with the benefit of savings to the policyholder. In this article, we will explain the various features and benefits of the plan in detail.
Plan Benefits:
a. Death Benefit: In case of the unfortunate death of the policyholder during the policy term, the nominee will receive the Sum Assured along with any accrued bonuses.
b. Survival Benefit: The plan offers survival benefits in the form of guaranteed payouts every three years during the policy term. The amount of the payouts is a percentage of the Sum Assured as per the table below:
|
Policy
Term |
Percentage
of Sum Assured |
|
16 years |
15% |
|
20 years |
20% |
|
24 years |
25% |
c. Maturity Benefit: On survival till the end of the policy term, the policyholder will receive the Sum Assured along with any accrued bonuses.
Plan Eligibility:
a. Minimum age at entry: 30 days (completed)
b. Maximum age at entry: 60 years (nearest birthday)
c. Policy term: 16, 20 or 24 years
d. Premium payment term: Regular Pay (equal to policy term)
e. Minimum Sum Assured: Rs. 1,00,000
f. Maximum Sum Assured: No limit
Premium Payment Options:
a. Yearly
b. Half-yearly
c. Quarterly
d. Monthly (through ECS only)
Bonus:
The plan participates in the profits of LIC and earns bonuses which are added to the policy every year. The bonuses can be of two types: Simple Reversionary Bonus and Terminal Bonus.
a. Simple Reversionary Bonus: This is a bonus declared every year and is calculated as a percentage of the Sum Assured. The bonus once added to the policy becomes guaranteed.
b. Terminal Bonus: This is a one-time bonus declared at the time of policy maturity or death claim. The bonus is based on the overall performance of LIC's participating business and is not guaranteed.
Surrender Value:
The policy can be surrendered anytime during the policy term provided at least three years' premiums have been paid. The surrender value will be higher than the Guaranteed Surrender Value or the Special Surrender Value.
a. Guaranteed Surrender Value: This is a percentage of the total premiums paid, depending on the policy term and premium payment term. The percentage is as follows:
|
Policy
Term |
Premium
Payment Term |
Guaranteed
Surrender Value |
|
16 years |
16 years |
30% of
premiums paid |
|
20 years |
20 years |
35% of
premiums paid |
|
24 years |
24 years |
40% of
premiums paid |
b. Special Surrender Value: This is a value calculated based on the overall performance of LIC's participating business and is subject to change from time to time.
Loan:
The policyholder can avail of a loan against the policy provided at least three years' premiums have been paid. The maximum loan amount will be 90% of the Surrender Value.
Grace Period:
A grace period of 30 days is allowed for payment of premium in case of yearly, half-yearly, and quarterly premium payment modes. For the monthly premium payment mode, the grace period is 15 days.
Revival:
The policy can be revived within two years from the date of the first unpaid premium by paying all the outstanding premiums along with interest.
Tax Benefits:
The premiums paid towards the policy are eligible for tax benefits under Section 80C of the Income Tax Act, 1961, up to a maximum limit of Rs. 1.5 lakh. The benefits received under the plan are also tax-free under Section 10(10D) of the Income Tax Act.
Plan Exclusions:
Suicide Exclusion: If the policyholder commits suicide within 12 months from the date of commencement of the policy or revival, the nominee or the legal heir will be entitled to 80% of the premiums paid, provided the policy is in force.
Other Exclusions:
The plan has no other exclusions except for the suicide exclusion mentioned above.
Explain Via Simple Example:
LIC's Dhan Sanchay Plan is a non-linked, participating, endowment plan that provides a lump sum payment on maturity along with bonuses. Let's understand the plan with the help of an example:
Mr. Sharma, a 35-year-old, non-smoker, wants to invest in a life insurance plan that provides financial security for his family and also helps him save for his future needs. He chooses LIC's Dhan Sanchay Plan and decides to pay a premium of Rs. 50,000 annually for a policy term of 20 years.
Scenario 1: In case of Mr. Sharma's unfortunate demise during the policy term, his nominee will receive the sum assured of Rs. 10 lakhs along with accrued bonuses till the date of death.
Scenario 2: If Mr. Sharma survives till the end of the policy term, he will receive the maturity benefit, which includes the sum assured of Rs. 10 lakhs plus the accrued reversionary bonuses and terminal bonus (if any). Assuming that the bonus rate is 5%, the total maturity benefit would be:
- Sum assured: Rs. 10 lakhs
- Reversionary bonus: Rs. 10 lakhs x 5% x 20 years = Rs. 10 lakhs
- Terminal bonus: Rs. 1 lakh (assumed)
- Total maturity benefit: Rs. 21 lakhs
Thus, in both scenarios, the plan provides financial protection to Mr. Sharma's family and also helps him accumulate savings for his future needs.
Conclusion:
LIC's Dhan Sanchay Plan is a good option for those who are looking for a savings plan with the added benefit of life coverage. The plan offers guaranteed payouts every three years during the policy term, along with a lump sum payment on maturity or death. The policyholder also earns bonuses on the plan, which can be either Simple Reversionary Bonus or Terminal Bonus. The policy can be surrendered or a loan can be availed against it after the completion of three years' premium payments. The premiums paid towards the policy are eligible for tax benefits, making it a tax-efficient investment option. However, it is important to understand the plan's features, eligibility, and benefits before investing in it, to ensure that it meets your financial goals and needs.
FAQ
Q. What is LIC's Dhan Sanchay Plan - 865?
A. LIC's Dhan Sanchay Plan - 865 is a non-linked, participating, endowment plan that offers guaranteed additions along with bonuses.
Q. What is the minimum and maximum entry age for this plan?
A. The minimum entry age for this plan is 30 days and the maximum entry age is 45 years.
Q. What is the policy term of this plan?
A. The policy term for this plan ranges from 15 years to 25 years.
Q. What are the premium payment modes available for this plan?
A. The premium payment modes available for this plan are monthly, quarterly, half-yearly, and yearly.
Q. What are the benefits offered under this plan?
A. The benefits offered under this plan are:
- a) Guaranteed additions - This plan offers guaranteed additions at the end of each policy year, which increases every year.
- b) Maturity benefit - On survival till the end of the policy term, the insured will receive the sum assured along with bonuses and guaranteed additions.
- c) Death benefit - In case of the unfortunate death of the insured during the policy term, the nominee will receive the sum assured along with bonuses and guaranteed additions.
Q. What is the minimum and maximum sum assured under this plan?
A. The minimum sum assured under this plan is Rs. 1 lakh and there is no maximum limit.
Q. Can the policyholder take a loan against this policy?
A. Yes, the policyholder can take a loan against this policy after the completion of three policy years.
Q. Is there a surrender value available under this plan?
A. Yes, the policyholder can surrender the policy after the completion of three policy years and receive the surrender value as per the policy terms.
Q. What is the grace period for premium payment under this plan?
A. The grace period for premium payment is 30 days for all premium payment modes.
Q. What is the free look period under this plan?
A. The free look period under this plan is 15 days from the date of receipt of the policy document. If the policyholder is not satisfied with the terms and conditions of the policy, he/she can return the policy and get a refund.
