LIC's Jeevan Shiromani Plan (Plan 947) is a life insurance policy that provides a combination of protection and savings. It is a non-linked, with-profits, limited premium payment policy that offers a high level of life insurance coverage and guaranteed returns.
Features of Jeevan Shiromani Plan:
- High Sum Assured: This plan offers a high sum assured, starting from Rs. 1 Crore, to provide adequate protection to the policyholder's family.
- Limited Premium Payment: The policyholder has to pay premiums for a limited period of either 14, 16, or 18 years, depending on the policy term selected.
- Guaranteed Additions: This plan provides guaranteed additions at the rate of Rs. 50 per thousand sum assured for the first five policy years, which increases to Rs. 55 per thousand sum assured from the 6th policy year onwards.
- Maturity Benefit: On completion of the policy term, the policyholder will receive the sum assured, along with vested simple reversionary bonuses and final additional bonus (if any).
- Death Benefit: In case of the policyholder's death during the policy term, the nominee will receive the sum assured, along with vested simple reversionary bonuses and final additional bonus (if any).
- Optional Riders: The policyholder can enhance the coverage of the policy by opting for riders such as Accidental Death and Disability Benefit Rider, Critical Illness Benefit Rider, and New Term Assurance Rider.
Benefits of Jeevan Shiromani Plan:
- Guaranteed Returns: This plan provides guaranteed additions, which offer a certain return on the premium paid by the policyholder.
- Tax Benefits: The premium paid towards this plan is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. The benefits received from the policy, such as the maturity benefit or death benefit, are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
- High Sum Assured: The policy offers a high sum assured, which ensures adequate financial protection for the policyholder's family in case of any unfortunate event.
- Optional Riders: The policyholder can opt for riders to enhance the coverage of the policy and tailor it to their specific needs.
- Bonus: This plan provides simple reversionary bonuses and final additional bonus (if any) on maturity or death, which enhances the returns of the policy.
LIC's Jeevan Shiromani Plan (Plan 947) is a policy that provides financial protection to the policyholder's family in case of any unfortunate event. In addition to the basic features and benefits, there are some other important aspects that one should consider before investing in this policy.
Eligibility:
The policy is available to individuals between the ages of 18 and 55 years, subject to certain conditions. The minimum sum assured is Rs. 1 Crore, and there is no upper limit on the sum assured. The policy term can be 14, 16, 18, 20 years, and the premium payment term is limited to 14, 16, or 18 years, depending on the policy term selected.
Premium Payment:
The policyholder has to pay premiums for a limited period, either 14, 16, or 18 years, depending on the policy term selected. The premium payment can be made annually, half-yearly, quarterly, or monthly.
Guaranteed Additions:
The policy provides guaranteed additions at the rate of Rs. 50 per thousand sum assured for the first five policy years, which increases to Rs. 55 per thousand sum assured from the 6th policy year onwards. The guaranteed additions are payable on maturity or death.
Bonuses:
The policy provides simple reversionary bonuses, which are declared every year by LIC, and a final additional bonus, which is paid on maturity or death, whichever is earlier. The bonus depends on the performance of the participating fund of LIC and is not guaranteed.
Surrender Value:
The policy has a surrender value, which is payable if the policyholder surrenders the policy before maturity. The surrender value depends on the policy term and the premium payment term.
Optional Riders:
The policyholder can opt for riders to enhance the coverage of the policy. The available riders are Accidental Death and Disability Benefit Rider, Critical Illness Benefit Rider, and New Term Assurance Rider.
Tax Benefits:
The premium paid towards this plan is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. The benefits received from the policy, such as the maturity benefit or death benefit, are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
Additional points to consider regarding LIC's Jeevan Shiromani Plan:
Loan facility:
The policyholder can avail of a loan against the policy after it acquires a surrender value. The maximum loan amount is 90% of the surrender value, and the interest charged on the loan is 9% per annum, payable half-yearly.
Free Look Period:
The policy comes with a 15-day free look period from the date of receipt of the policy document. During this period, the policyholder can review the policy terms and conditions and return the policy if they are not satisfied.
Premium Payment Mode:
The policyholder can choose to pay the premium either annually, half-yearly, quarterly or monthly. However, if the policyholder opts for a monthly premium payment mode, an additional 3% of the annual premium is charged as service tax.
Revival:
If the policy lapses due to non-payment of premiums, the policy can be revived within two years from the date of the first unpaid premium. The policyholder has to pay all the unpaid premiums along with interest and fulfill certain conditions to revive the policy.
Grace Period:
A grace period of 30 days is allowed for payment of premium. If the premium is not paid within the grace period, the policy lapses.
Exclusions:
The policy does not cover death due to suicide within 12 months from the date of policy commencement or revival. In such cases, the nominee will be entitled to a refund of 80% of the premiums paid.
Explain With A Simple Example
Let's say, Mr. Kumar, who is 35 years old, wants to invest in a life insurance policy that provides a high level of protection to his family and guaranteed returns. He opts for LIC's Jeevan Shiromani Plan and selects a sum assured of Rs. 1 Crore for a policy term of 20 years and a premium payment term of 18 years.
As per the policy terms, Mr. Kumar has to pay an annual premium of Rs. 5,67,140 for 18 years, and the policy will provide guaranteed additions at the rate of Rs. 50 per thousand sum assured for the first five policy years, which increases to Rs. 55 per thousand sum assured from the 6th policy year onwards. The policy also provides simple reversionary bonuses, which are declared every year by LIC, and a final additional bonus, which is paid on maturity or death, whichever is earlier.
If Mr. Kumar survives the policy term, he will receive the sum assured of Rs. 1 Crore plus the accumulated bonuses and guaranteed additions. Let's assume that the simple reversionary bonus for the policy year is Rs. 50 per thousand sum assured, and the final additional bonus is Rs. 10 per thousand sum assured. Therefore, the accumulated bonuses and guaranteed additions for the policy term will be:
Guaranteed Additions = (5 x 50 x 1000000) + (15 x 55 x 1000000) = Rs. 4,25,00,000
Simple Reversionary Bonuses = (20 x 50 x 1000000) = Rs. 10,00,000
Final Additional Bonus = (10 x 10 x 1000000) = Rs. 1,00,000
Total Maturity Benefit = Sum Assured + Guaranteed Additions + Simple Reversionary Bonuses + Final Additional Bonus = Rs. 5,36,00,000
In case of Mr. Kumar's unfortunate demise during the policy term, his family will receive the sum assured of Rs. 1 Crore plus the accumulated bonuses and guaranteed additions until the date of death.
Therefore, Mr. Kumar can be assured that his family will receive a high level of financial protection in case of his unfortunate demise or at the end of the policy term, along with guaranteed returns.
Conclusion:
LIC's Jeevan Shiromani Plan is a comprehensive life insurance policy that provides a high level of protection and guaranteed returns. With a high sum assured and optional riders, the policy can be customized to suit the policyholder's specific needs. The guaranteed additions and bonuses further enhance the returns of the policy, making it an attractive investment option. Moreover, the tax benefits make it a tax-efficient investment option. Hence, it can be an ideal choice for individuals looking for a comprehensive life insurance policy with savings and investment benefits.
FAQ
Q: What is the minimum and maximum age to avail of LIC's Jeevan Shiromani Plan?
A: The minimum age to avail of this plan is 18 years, and the maximum age is 55 years.
Q: What is the policy term for Jeevan Shiromani Plan?
A: The policy term ranges from 14 years to 20 years.
Q: What is the premium payment term for Jeevan Shiromani Plan?
A: The premium payment term is 4 years lesser than the policy term.
Q: What is the minimum and maximum sum assured for Jeevan Shiromani Plan?
A: The minimum sum assured is Rs. 1 Crore, and the maximum sum assured has no limit.
Q: Does the policy provide tax benefits?
A: Yes, the policy provides tax benefits under section 80C of the Income Tax Act, 1961, for premium payments made and under section 10(10D) for maturity and death benefits received.
Q: Is there a surrender value for Jeevan Shiromani Plan?
A: Yes, the policy acquires a surrender value after the payment of the first year's premium.
Q: Can the policyholder avail of a loan against the policy?
A: Yes, the policyholder can avail of a loan against the policy after it acquires a surrender value.
Q: Can the policy be revived if it lapses due to non-payment of premiums?
A: Yes, the policy can be revived within two years from the date of the first unpaid premium, provided all unpaid premiums with interest are paid, and certain conditions are fulfilled.
Q: Does the policy cover death due to suicide?
A: No, the policy does not cover death due to suicide within 12 months from the date of policy commencement or revival. In such cases, the nominee will be entitled to a refund of 80% of the premiums paid.
Q: What is the free look period for Jeevan Shiromani Plan?
A: The policy comes with a 15-day free look period from the date of receipt of the policy document. During this period, the policyholder can review the policy terms and conditions and return the policy if they are not satisfied.
