Plan for Disabled – Jeevan Adhaar and Jeevan Vishwas

Jitendra P.S.Solanki is a CFP and the Founder of JS Financial Advisors, based at Delhi/NCR. A management graduate from IIT Roorkee, he has 10 years of experience in financial services and started his Financial Planning Practice after becoming a CFP in 2010.Along with services on Financial Planning for masses, he has recently started services for families with special children’s in association with professionals from the specific field. Link to page with about special needs financial planning. He blogs at Your Pocket Money.

Plan for Disabled- Jeevan Adhaar & Jeevan Vishwas

In an episode of Satyamev Jayate, the plight of disabled in India was highlighted. It showed how these people are neglected in providing even the basic amenities. Although there are stories where one has fought to regain a common man life in India, the situation is highly critical. At present in India, there are approximately 4-8% of total population disabled as per a world bank report in 2007.

Worldwide life insurance companies also works for the benefit of special needs. Companies like Met Life USA have dedicated advisors who specialize in advising such families. However, India has to go very far. Nevertheless, LIC made a good start in 1996 by launching Jeevan Adhar –a life insurance plan for disabled dependents. Later the company came out with Jeevan Vishwas for the benefits of families not able to take advantage from Jeevan Aadhar. With an objective to provide regular income for meeting the disabled needs, these plans are the only options in our country today.

Here is a brief review of these two products:

Features of the Policies

Type Jeevan Adhar-Whole life Jeevan Vishwas- Endowment Assurance
Who can take Any person between 22-65 years of age Any person between 20-65 years of age
SA Min-50000, Max- No limit Min-50000, Max-No limit
Premium paying term 10,15,20,25,30,35 or till the earlier death. Single premium option is also available The term of the policy or single premium.
Guaranteed Additions Rs 100 per thousand p.a. up to age 65 of life assured or death if earlier Rs 60 per thousand p.a. for term of policy or death if earlier
Variable Additions Terminal Additions are applicable if minimum 10 years premium have been paid. The rates depend on the future experience of the company On the life assured surviving the date of maturity, or on earlierdeath after five years, Loyalty addition, if any may be paid at such rates and on

such terms as may be declared by the Corporation

Benefits On death of life assured 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lumpsum and rest 80% is utilized to pay annuity for 15 years and life thereafter, based  on the age of handicapped dependent On maturity of policy 20% of NCO (SA+Guaranteed Bonus+Terminal Bonus if any) is paid as a lump-sum and rest 80% is utilized to pay annuity as per the chosen options, based  on the age of handicapped dependent
Supplementary/Extra Benefits These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits These are the optional benefits that can be added to the basic plan for extra protection/option.  An additional premium is required to be paid for these benefits
Surrender Value No SV Guaranteed or Special SV as applicable in endowment plans
To whom benefits Is payable The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent The benefit is payable to the nominee under the policy. The nominee can be either the handicapped dependent or any other person or trust. Proceeds from the policy has to be utilized  for the benefit of the handicapped dependent
Income tax benefit Under section 80DD of IT act Under section 80C of IT act
Is disability certificate required Yes-from govt. hospital Only  parents declaration is required
Special Provisions In the event of the handicapped dependent predeceasing the life assured the contract ceases and the life assured will have the option of keeping the policy for a reduced paid up or receive refund of premiums paid In the event of the handicapped dependent predeceasing the life assured the life assured will have the option to surrender the policy or keep it in force by regularly paying the premium and will have the option f taking the benefits in lump-sum or bifurcating it in 20-80 ratio as enumerated above

 

Why Two Policies?

Initially LIC launched Jeevan Adhar policy but the rules were very stringent. The criteria for disability was under rule 11A of income tax rules, which eventually didn’t catered to the needs of handicapped dependent whose degree of handicap was lower. To bridge this gap the company introduced Jeevan Vishwas where the guardian can provide benefits to their handicapped dependent whose degree of disability does not meet the criteria in Jeevan Adhar.

The Difference

There are many benefits introduced in Jeevan Vishwas in comparison to Jeevan Adhar. Firstly, it has a maturity value which assures the payment within a specified period. Secondly, annuity in Jeevan Vishwas has many options now. One can select on the basis of his/her dependent requirement. However, the guaranteed bonus in Jeevan Vishwas is much lower than Jeevan Adhar policy.

Returns

Jeevan Adhar has very high returns when you compare with any traditional plans. However, the age restriction of 65 years to receive guaranteed bonus lowers the return of the policy as you live beyond this term. In Jeevan Vishwas the bonus rates are higher than other traditional plans but lower than Jeevan Adhar.

Here is a snapshot of returns these two policies generate at different stages of life. (Based on Illustration as per LIC website)

Jeevan Aadhar

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4095 for Rs 1 lakh SA and paid for 15 years.

Age at Death Total Premium Paid (Rs) Guaranteed Additions (Rs) Variable Additions (Rs) IRR
45 40950 190000 0 27%
50 61425 240000 0 15.76%
55 61425 291000 1000 11.74%
65 61425 390000 33000 8.46%
75 61425 400000 140000 6.68%

 

Jeevan Vishwas

This is an illustration of a parent of age 35 years having a special child of age 5 years. The premium is Rs 4008 for Rs 1 lakh SA and paid for the term of policy or earlier death.

Ageat Death/Maturity Total Premium Paid (Rs) Guaranteed Additions (Rs) Variable Additions (Rs) IRR
45 40080 154000 0 23.64%
50 60120 184000 1000 13.12%
55 80160 214000 10000 9.02%
65 120240 280000 31000 5.58%

 

Disadvantages

There are two major drawbacks in these policies:

  1. Bonus till 65: Jeevan Adhar is a whole life policy and so there is no maturity. The proceeds go to the beneficiary only after the death of the policyholder. There is always a high probability that you may outlive the term of the bonus declaration.
  2. Annuity:  The benefit in both the policy is partly in lump-sum and majorly as annuity. In India the annuity rates has been very low and not inflation indexed. A fixed annuity is a deterrent to the beneficiary since the expenses grows every year. Thus, although annuity is paid for the life time the money received may fall short in the future.

Should Parents of Disabled Dependent Consider

The risk of dying too early is always there but not certain. However, families with disabled dependents look products which can give fixed income to meet the regular needs in their absence. The product suits in the requirement but cannot be entirely relied upon. Combined with a term insurance it can work for the objective since it guarantees a fixed income to the beneficiary.

17 thoughts on “Plan for Disabled – Jeevan Adhaar and Jeevan Vishwas”

  1. Please inform Is there any lic policies other than Jeevan viswas and Jeevan adhar. Because these policies are closed.

  2. Married girl age 19 years deaf and dump (speech and hearing disabled) 70% certificate from OFFICE of civil sergeon -cum – CMO educational qualification -matric working in a tiffen service center in the capacity of cooking and earning money wants Lic policy from Life insurance company of India for future saving approximate 3000.00 Qly . Kindly. Advice plan term sum assured

  3. Are these policies are working, because when I ask the authority of living they said the policyes are closed, please guide me

  4. Dear All,

    I want to invest in a fixed deposit to my beloved aunty who is physically handicapped. That she should be able receive a reasonable amount per month for her living. Pls advise the most effecient scheme to go on.

  5. My 27 yrs old daughter is having CP and right side paralysis effect since age of 4.
    Pl suggest best policy for insurence and Mediclaim.

  6. I am deaf (hearing impaired) age 26 years.. ( Graduate).. please mention the best Insurance Plan foe me… ( Handicapped Person)..

    PH NO: 9903022345

  7. My son is 5 year scuppering from cp, I want to know lic under any plan for handicap person income tax rebate under section 80 DD

  8. I am having Jeewan Aadhar Policy No 120800347 in the name of Proposer and Life assured Dr Praveen Kumar,Address : D-3, Vijay Nagar, Delhi-110009, Nominee -Neeraj Nagpal(Wife) Premium: 20259. I had paid premium from 1998 to 2007. What is the status of this policy, what can be done at this stage . Please advice.

  9. I HAVE DEPENDENT MOTHER BEDRIDDEN OF AGE 79(20.08.1936)
    WHAT POLICY WILL MEET MY REQUIREMENT IF I WANT TO GET
    80DD REBATE FROM TAX DEDUCTED FROM GROSS EMOLUMENT

  10. i want to know lic under any plan for handicap person income tax rebate under section 80 DD sassion 2015-16

  11. what is the death claim value if the dependent handycapped child dies & the proposer is still alive after maturity of jeevan aadhar policy?

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