Wednesday, 13 October 2010

LIC Jevean Saral Policy – Suitable Tax Saving Scheme as per New Direct Tax Code

An endowment Assurance plan which an insurer can choose the premium amount and the mode of premium payment. It gives Tax free return at the present tax rules and the financial protection throughout the term of the plan or till the death of the insurer. Premium can be payable monthly, quarterly, half yearly or annually either by salary deduction or through E.C.S as per the option chooses by the insurer.

This is a profit sharing plan and gets the shares of profit as loyalty addition which is payable with death benefit or with maturity benefit and may be payable from the 10th year onwards according to the experience of the Life Insurance Corporation of India.

Minimum and Maximum Age of Entry

Those who have completed 12 years can join with this scheme and the maximum age of entry is 60 years, but special term riders allowed only from the age of 18 years and the maximum age for special term riders is 50 years.

Payment of Premium

This is a Monty Recurring type Scheme just like Post office recurring deposit or any other recurring deposits. But you can opt for monthly (ECS), quarterly, half yearly or annual payment. If you opt for half yearly payment or yearly payment you will get a rebate of 2% and 1% respectively. The minimum premium for those who are in the age between 12 to 49 is Rs. 250 per month and those who are in the age between 50 to 60 is Rs. 400 per month. There is not maximum limit for premium amount. For accident benefit Re. 1 extra per 1000 sum assured. Term riders are optional and should pay additional for the same.

Term Rider Conditions

For term riders the minimum age of entry is 18 years and the maximum age of entry is 50 years and the minimum sum assured is Rs. 50000 and the multiples of Rs. 10000. There is no maximum limit of sum assured.

Other Features

The Jeevan Saral plan is suitable for Salaried Persons, for high Net worth Individuals, Person with uncertain income because LIC provides auto cover in case premium due remains unpaid for 1 year and for Person who need money for future contingencies like marriage/education of children etc.

The Sum Assured should be chosen by the individual for the purpose of determine the premium and the Sum Assured is payable on death. But the Sum assured is payable on maturity can be on the basis of age & policy term, Smooth return and Irrespective of age at entry & term death cover will be the same. However, Maturity SA will differ. The Jeevan Saral Policy got the Golden Peacock award for the excellence of the Scheme.


Maturity Benefits: Maturity benefit is Loyalty additions + Maturity Sum Assured, if any.

Loyalty addition: The Loyalty addition will be declared after the policy has been in full force for at least 10 years.

Partial Surrenders: After completion of 3 years or more from the DOC provided full premiums have been paid subject to conditions can be made any time.

4. Auto cover: The auto cover is if the subsequent premiums are not paid after the policy continues successfully for more than 3 years, the risk cover under the main plan will continue for 12 months from the date of first unpaid premium

Death Benefits: Loyalty Additions + 250 times the monthly basic premium (called Death Benefits SA) + Return of premiums paid (excluding 1st year premium & extra/rider premium) if any.

Surrender Value

The plan allows partial surrenders or full surrenders. The surrender value may be more than the guaranteed surrender value. You can surrender the policy after 3 years of the commencement of premium payment. The guaranteed surrender value is 30% of the premium paid excluding first years premium and all extra premiums and premiums for accident benefit and term riders.

Loan facility

You can take loan as per the conditions of LIC and can avail housing loan also

Income Tax Benefit

The Maturity value is fully exempted from Income tax as per section 10 of present Income Tax Rule in India. This policy is suitable as tax saving scheme (section 80C) as per the present income tax rule in India and also as per the proposed new tax code which may be implemented from 01st April, 2010.


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