Review of LIC’s new term plan Jeevan Kiran!

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The Life Insurance Corporation (LIC) recently launched its latest scheme Jeevan Kiran term plan. How does this plan compare to the existing ones, compare Let’s try to decode this term plan. We will look at both benefits and drawbacks of this term plan:

Premium Premium starts from as low as Rs 3,000. Although, premium will vary according to policyholder’s age, his smoking status, basic sum assured choosen and term plan’s tenure. The policyholder might even have to pay annual premium of as high as more than Rs 1 lakh in some circumstances.

The longer the tenure of the term plan, the lower will be the premium. Policyholder will get 10% rebate on premiums if he buys the policy online.

Features 1. Nominee gets the death benefits: If the policy holder dies before the maturity of the term plan, the nominee will gets the death benefits.

How death benefits will be calculated? a. The death benefits will be sum total of basic sum assured (which starts from a minimum of Rs 15 lakh).

b. Death benefits can even be 7 times of total premiums paid. c. Death benefits could also be 105% of total premiums paid.

Death benefits would be higher of the three options.

2. Policyholder gets the Maturity Benefits:

If policyholder survives the tenure of the term plan, he will get back total premium paid. Some interest will be added to the premiums paid, and the sum total will be given back to the policy holder on maturity of the plan. This amount is known as maturity benefits.

Two ways of paying regular premium: a. Semi annually b. Annually

Two types of premium payment options:

The term plan has two options for making premium payments: 1. Single premium payment 2. Regular premium payment

Regular premium payment option is much better because of the following factors:

1. More rider options are available under regular premium payment policy vis-à-vis single premium payment policy. Only a few rider options are anyway available under this term plan. First is LIC’s accidental death and disability benefit rider. And, second is LIC’s accident benefit rider. But, only if policyholder makes regular premium payment, then, only he is qualified to choose either of these two riders.

If the policyholder goes for single premium payment, then, he will have the option to select only one rider, which will be LIC’s accidental death and disability benefit rider. Plus, he will have to select this rider at policy’s inception. He will not be allowed to select this rider in between the tenure of the term plan.

2. Grace period is not available if premium is paid under single premium payment policy. It is only available if the policyholder has paid premiums by choosing the regular premium payment option.

3. Lapsed policy can only be revived if the policyholder had chosen to pay premiums under the regular premium payment policy. Option of revival of lapsed policy is unavailable under the single premium payment policy.

Advantages 1. Good thing about this policy is that the nominee gets the option to choose how he wants to receive death benefits. He can choose to get death benefits as a lump-sum amount or in installments. Even, the policyholder has the option of deciding either of the two ways the nominee would get the death benefits

2. Another outstanding feature of this plan is that the policyholder gets back the premiums paid in the form of maturity benefits if he survives throughout the tenure of the term plan.

3. There would be a 10% rebate on premiums if policy purchased online

Drawbacks 1. No loan can be availed against this term plan

2. Only a few rider options are available. First is LIC’s accidental death and disability benefit rider. And, second is LIC’s accident benefit rider. 3. Since, it is a non-participating plan, the policy holder will be devoid of any bonuses if so announced by LIC.