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 -Â 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 BachatÂ 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 Â 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 Â 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.Â
Somebody forget to mention one more interesting feature about this is that, during theÂ untimelyÂ death of the policy holder he will get sum assured +Â loyaltyÂ additon and all the premium will be return to his/her nominee except first year (Â Loyalty additionÂ he will be given only if policy completed 10 years. This is theÂ specialÂ 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 inÂ thatÂ case LIC will treat the policy that for the last completed year and policy Â holder will get theÂ premiumÂ of the all the year along with the Loyalty addition too,while on other policy LIC isÂ treatingÂ it as a surrender.Because of this features this policy was awarded with Golden Peacok Awards for innovative Produst/Service Award-2009.