LIC New Plan Jeevan Vaibhav - Proposal Details, Benefit Illustration and Tax Prospective


Country’s largest insurer Life Insurance Corporation of India (LIC) has launched a non unit-linked single premium product Jeevan Vaibhav with minimum premium of about 95,000 Rs/-.

LIC’s Jeevan Vaibhav is a close-ended single premium endowment assurance plan which offers guaranteed benefits on death and maturity along with Loyalty Addition, if any, payable on maturity or on death in the last policy year. The plan would be available for a limited period only up to a maximum of 120 days.

Policy Details - Jeevan Vaibhav


LIC Jeevan Vaibhav is a single premium, close-ended endowment plan with a fixed policy term of 10 years. The scheme offers to pay the sum assured, with loyalty additions if any, on maturity to the policy holder or as death benefit to the nominee, whichever is earlier. The minimum amount of sum assured that a policyholder can opt for is Rs 2 lakh. The scheme as such, provides for rebate on higher amounts of sum assured of Rs 4 lakh and above. This scheme is available only for a limited period

Benefits at a Glance:

  1. Single Premium Investment & Insurance Plan for a 10 years term.
  2. Guaranteed Maturity Amount after 10 years. 
  3. Loyalty Addition on Maturity. Tax Benefits under 80 CCE. 
  4. Liquidity during the term through Cash Value & Loan. 
  5. 100% safety of investments.

Additional Features

Jeevan Vaibhav is a single premium plan where premium payable is almost half the amount of the sum assured. When analysed over a 10-year period, the returns generated by the scheme during the entire work out to 7.7-8.0% per annum., after accounting for high sum assured rebates.

Proposal Details:
    a) Investment Term                                    10 Years
b)  Sum Assured                                        Rs.200000
c)  Premium                                               Rs.95640
d)  Service tax                                           Rs.2955
e)  Total Premium (c+d)                             Rs.98595
f) Premium eligible for Sec.80CCE            Rs.40000
g)  Income Tax Slab                                  30.90%
h)  Tax Saved on investment                      Rs.12360
i)  Nett Investment after Tax                  Rs.86235 Saving (e-h)
j)  Cost of Life Cover                          Rs.1747*
k)   Effective Investment (i-j)              Rs.84488

* This is the estimated cost of Term cover of Rs. 101405 for a period of 10 years. Hence effectively your investment towards the maturity benefit is premium minus this cost. 

Benefit Illustration:


Tax prospective:

If you look at this policy from tax prospective, it lacks the current Budget modifications. As per current provision to avail deduction under section 80C your premium should 10% of SA. This policy does not fit in this if you opt for Rs.1000000 SA then your premium should be within Rs.100000 which is not possible from this policy.
So if you are planning to purchase this policy from tax saving don’t purchase this plan.

Catch points:

(1) This plan is giving you returns between the range 6-7.5 % No Tax benefit under sec 80C.

(2) Currently when Bank FDs are giving 9.5-9.75% tax free returns and 80C rebate is also available, I don’t feel LIC Jeevan Vaibhav is a good plan.

(3) The term for this plan is also fixed for 10 years. If you buy this policy for risk cover you have to again buy another insurance plan after 10 years to cover yourself, at that time it will cost you a fortune.

(4) With current inflation index this product may not beat inflation.
(5) As you will be investing all money at single go for 10 years you may lose opportunity to invest in some better financial product may come during this time period.

Over all this policy don’t provide you enough risk cover, return and tax benefit. Think twice before purchasing this policy.

I hope I have empowered you with enough calculations, reasons to invest or reject LIC Jeevan Vaibhav. Now better take informed decision and that too for the betterment of your finances.

If you have any questions related to LIC Jeevan Vaibhav or any other life insurance policy – feel free to add it in comment section.

Contact:

R. Purnachander Rao
Phone: 7893007774, 9246907774
E-mail :  pcrservices.in@gmail.com
Website: www.simsindia.com, www.policysolutions.in
Hyderabad, India
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