LIC Jeevan Saral Review

by Manshu on November 23, 2011

in Insurance

Ranjan wrote about LIC’s Jeevan Saral last Sunday, and I thought this was an interesting product to look at and review here. The unique thing about LIC’s Jeevan Saral is that they allow you to set your own monthly premium and then they cover you for 250 times that amount.

This is a money back plan so that means you get the sum assured at maturity, and when you think of these two things together (250 times sum assured and money back) – it piques your interest.

250 times monthly premium sounds impressive so I went to the sample term insurance quotes page to see what the term plan numbers are like.

LIC’s term plan costs you Rs. 15,540 per year to insure Rs. 50 lacs, and Met Life’s cost only Rs. 5,800 for Rs. 50 lacs. So, that works out to about 3,861 times for LIC and 10,352 times for Met Life!

You can go to LIC’s premium calculator page and look for premiums on term plans yourself and I think you will see that they are over 3,000 times your monthly premiums.

Comparing LIC Jeevan Saral’s cover to pure term life insurance covers is not a fair comparison because you do get money back in this policy, but the 250 times number raised my curiosity and the first thing that occurred to me is to look at how many times term life policies insure you for monthly premiums. Now, that I have the 3,000 times number anchored in my mind, I won’t get this excited next time.

So, let’s compare this with some of the other plans we have looked at here - LIC Whole Life Limited Payment gets you a cover of Rs. 10 lacs for Rs. 26,000 per year, so that’s about 500 times premium. LIC Bima Bachat was a one time premium payment policy so I don’t think you can compare these two, but clearly 250 times monthly premium is not that big of a deal.

Now, let’s move to the returns of the Jeevan Saral policy, and this follows the theme of the other plans discussed here with some returns guaranteed  and some variable based on how much LIC themselves make. Based on their benefits I see the return to be in the 6% range considering the conservative and more reasonable assumptions given in the LIC benefits page.

This was an interesting policy to look at because of the unique 250 times aspect, but nothing  I discovered here changed my mind that you are better off with a term plan and with keeping investment and insurance separate.

What do you make of it?

Update: Rajesh Kwatra emailed with the following information that I wasn’t aware of. 

Somebody forget to mention one more interesting feature about this is that, during the untimely death of the policy holder he will get sum assured + loyalty additon and all the premium will be return to his/her nominee except first year ( Loyalty addition he will be given only if policy completed 10 years. This is the special feature available in this policy only.
I just forget to add one more important point that in this policy if anybody want to exit after 10 years he/she will be allowed to do that and in that case LIC will treat the policy that for the last completed year and policy  holder will get the premium of the all the year along with the Loyalty addition too,while on other policy LIC is treating it as a surrender.Because of this features this policy was awarded with Golden Peacok Awards for innovative Produst/Service Award-2009.
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{ 28 comments… read them below or add one }

Umesh November 28, 2011 at 4:32 pm

I shall be thankful if someone may clarify

1. That the premium paid for Jeevan Saral is chargeable to service tax like other health and life insurance premiums or not.

2. What are the loyality additions (i.e. Bonus) paid for the last 5 years by LIC.

Thanks

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drshetti November 30, 2011 at 2:38 pm

INSURENCE= TERM INSURANCE

any one who looks at insurance must insure only in TERM PLAN and no other plan of any ins company . term plans are not popular in india because you done get RETURNS !

what for we insure ourselves ?? to secure family future in our absence ! all insurance cos CHEAT crores of policy holder when they dont tell much about TERM INSURANCE products

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durga April 5, 2013 at 9:37 pm

Hi,
I completely agree with you.
The financial experts say as a basic rule we should never mix insurance with investment.
Insurance is for financially securing your family in your absence physically. So Term or Pure Venilla Insurance policy best serves this purpose.
In India this Term Insurance is not popular as we Indian’s mindset expects returns on money spent on paying insurance premiums.
Hence Insurance companies market their products to cash our pshycology.

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Manshu April 9, 2013 at 5:51 am

You are right, since customers are looking for these type of products, insurance companies are coming out with them, so customer awareness is very important.

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austere December 10, 2011 at 1:45 pm

Misposting, pls excuse.
Would you know about tax treatment of lumpsum under old Jeevan Dhara?

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Manshu December 11, 2011 at 5:20 am

No, I’m sorry I don’t know about that.

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Shan January 5, 2012 at 7:18 pm

Nice Review. But I just wanted a clarification on one of the statement. What exactly does “3861 times” or “10352 times” mean in the below statement?

“LIC’s term plan costs you Rs. 15,540 per year to insure Rs. 50 lacs, and Met Life’s cost only Rs. 5,800 for Rs. 50 lacs. So, that works out to about 3,861 times for LIC and 10,352 times for Met Life!”

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Shan January 5, 2012 at 7:28 pm

Nevermind, I got that you are referring to monthly premium [15540/12] * 3861 =~ 50 Lacs

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Manshu January 5, 2012 at 9:02 pm

Yeah that’s right.

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Nilesh PAtel January 10, 2012 at 9:23 am

Kindly let me know the sum assured after 20 years.

I pay Rs-5000/- per month

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jemeni kanta das February 18, 2012 at 5:20 pm

Hi, impressive inputs, considering the given market scenario, could you please share few policies of LIC where we can get better life cover as well as return on investment too.

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Sayantan Bhaumik March 12, 2012 at 11:21 am

Dear Sir,
Kindly let me know the sum assured if I pay Rs3000 as my monthly premium.

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Dilwar Thandar March 25, 2012 at 6:41 pm

I am Dilwar Thandar . I am a business man. I am from Kolkata I am 28

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Rajiv Kwatra April 26, 2012 at 2:37 pm

What will be the term (Maturity Period) for Jeevan Saral if a pilocy is taken at the age of 32 years

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Rajiv Kwatra April 26, 2012 at 2:39 pm

If i will pay Rs.4000/- per month to LIC against Jeevan Saral Policy and my date of birth is 22/03/1980 when will this be matured and at what age i will get how much amount ?

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m. srinivas mudiraj May 9, 2012 at 5:14 pm

Dear Sir,

Kindly let me know the sum assured for 10 years if I pay Rs.2000 as my monthly premium. My date of birth is 26.05.1974. If i am alive for ten years how much i will get & if i die before 10 years how much i get.

REPLY

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Manshu May 9, 2012 at 6:39 pm

You may just be better off by buying a term insurance and a mutual fund or just investing in a fixed deposit. It all depends on what you really want to do. Are you looking for a safe investment or looking for insurance at this point?

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R. N.Mishra September 8, 2013 at 12:55 pm

if I you Pay Rs.2000 monthly premium, Than Death S.A. is Rs. 500000/-. your Nominee will get Rs. 500000/ + (paid Prem. – 1st Year Prem.) if your death Before Mat. Clam.
You Will Get Mat6. Clam Amount Rs. 208620( Two Lakh Eight Thousand six hundred twenty ( As per Current Bonus Rate)

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Raghav March 5, 2013 at 8:14 pm

Hi Manshu,

This is my first post on Onemint and firstly I would like to thank for the service that you’re providing to educate people in making sound financials decisions.

I’ve read many of your post and very much impressed with the kind of information that you impart, which will not be communicated even by the product sellers (Of course to hide their polices/restrictions).

Reading your post on Jeevan saral, I believe that the final maturity amount that the person will get is the total premiums that he had paid + 6% (this is also based on LIC’s performance.) And I understand that this is not at all recommeneded for investment purpose looking at the above stats.

But one of my In-laws want to go with Jeevan saral for investment purpose for his son, who is 28 years old, as they have been told by one of his friends that if he invests 2000/month for 25 years term he will be getting around 27 lacks at maturity. (Please let me know if this can be possible??

Awaiting for your answer. I hope I can stop them by providing correct explanation on this.

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Manshu March 5, 2013 at 11:16 pm

Hi Raghav,

Thank you very much for your comment. I appreciate it.

What the agent is telling your friend is roughly a 10% rate of interest compounded quarterly for the next 25 years. If he were to open a RD in a bank with this amount and get an interest of 10% he would net this much money in 25 years.
You can use this calculator to see how this works out.

https://www.corpbanknet.com/Recurr_deposit_Calc.html

I think this is unrealistic and is definitely not something that LIC promises. I hope your friend understands this is just projected return and not guaranteed return.

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abhishek sharma March 5, 2013 at 11:26 pm

i have purchased this policy on 05-03-13 my date of birth is 26-o9 1977 will pay premium of 24000/ yearly , how much amount should get after 11 years

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Manshu March 5, 2013 at 11:34 pm

It can’t be said with certainty because it depends on the returns LIC themselves make.

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R. N.Mishra September 8, 2013 at 1:02 pm

You Will Get Mat. Clam Amount Rs. 245900/- ( Two Lakh fortyfive Thousand s nine hundred ( As per Current Bonus Rate)

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vcsahu April 4, 2013 at 5:41 pm

The other benefits of the plan is you can take loan at 9.5 % per year on the 70% of amount you deposited after 3 yrs. also you yearly will get amount on disability.

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BHOOPENDRA DWIVEDI July 5, 2013 at 5:05 pm

who are you

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SHAIKRAFFI December 23, 2013 at 6:22 pm

Hi.
I Am Interested Jeevan Saral Plan , Straight Question If I am Pay 3ooo for Month in this Plan After 25 years how much amount will be payable to me by hand.(dont include death like that…)

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Bhavesh January 18, 2014 at 11:58 am

You will receive around 72 Lakhs after 25 years

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Bhavesh January 18, 2014 at 11:41 am

I read a line in last paragraph saying that “During the untimely death of the policy holder he will get sum assured + loyalty additon and all the premium will be return to his/her nominee except first year”

Is it true that all the premium is returned ?

Reply

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