LIC Jeevan Nidhi is with bonus deferred annuity plan. This is a non unit-linked insurance pension plan. This plan is purchased to cover the risk of living too long and hence has multiple pension options to cover that risk. The corpus that is created to provide pension for old age is the Sum Assured + accrued Guaranteed Additions + simple Reversionary Bonus + Terminal Bonus. The age where pension is payable is called Vesting Age and the date when pension starts is called Vesting Date.
Thus, if the Life Insured survives the entire term, then he would get the option to withdraw 1/3rd of the entire corpus that has been accumulated tax free and start receiving pension from the remaining 2/3rd of it. He would also get multiple pension options to choose from.
However, if the Life Insured dies within the policy tenure, i.e. before the pension starts then his nominee would receive the Sum Assured + accrued Guaranteed Additions + simple Reversionary Bonus + Terminal Bonus, if any.
Key Features of LIC Jeevan Nidhi Plan
§ This plan is a deferred pension plan with bonus facility
§ The corpus for pension is (Sum Assured + accrued Guaranteed Additions + simple Reversionary Bonus + Terminal Bonus)
§ Death Benefit before Vesting Date is also (Sum Assured + accrued Guaranteed Additions + simple Reversionary Bonus + Terminal Bonus).
§ Death Benefit after the Vesting Date depends on the annuity option chosen.
§ Upon Vesting, there are 2 Vesting Options available to the life insured
o He may choose to withdraw 1/3rd of the corpus tax free and avail pension from the remaining 2/3rd of the corpus
o He may choose to avail pension from the entire corpus
§ There are 5 options for Pension- Annuity for Life- where pension is paid till the life assured is alive and nothing is payable on death, Annuity Guaranteed for Certain Periods- where pension is paid for 5/10/15 or 20 years as chosen whether the life assured is alive or not, Annuity with Return of Purchase Price on Death- pension is paid till the life assured is alive and the remaining amount of the corpus is paid to the nominee as death benefit , Increasing Annuity- pension is paid till the life assured is alive at an increasing rate of 3% p.a. and Joint Life Last Survivor Annuity- pension is paid till the life assured is alive. On the death of the life insured, 50% of the pension is payable to spouse as long as the spouse if alive.
§ Optional higher cover through Term Rider, Accidental Death and Disability Benefit rider and Critical Illness Rider and Premium Waiver Rider for Critical Illnesses.
§ This plan has Guaranteed Additions for the first 5 years
§ There is large sum assured rebate.
Benefits you get from LIC Jeevan Nidhi Plan
Death Benefit – In case of death of the Life Insured before the vesting date, the nominee receives
· Sum Assured plus
· accrued Guaranteed Additions plus
· simple Reversionary Bonus plus
· Terminal Bonus
In case of death of the Life Insured after the vesting date, it entirely depends upon pension option chosen.
Maturity Benefit – At the maturity of the policy, the insured will get some choices
· To choose whether to withdraw 1/3rd of the fund tax free and avail pension from the remaining or take pension from the entire corpus
· To choose the type of pension
o Annuity for Life- where pension is paid till the life assured is alive and nothing is payable on death
o Annuity Guaranteed for Certain Periods- where pension is paid for 5/10/15 or 20 years as chosen whether the life assured is alive or not
o Annuity with Return of Purchase Price on Death- pension is paid till the life assured is alive and the remaining amount of the corpus is paid to the nominee as death benefit
o Increasing Annuity- pension is paid till the life assured is alive at an increasing rate of 3% p.a.
o Joint Life Last Survivor Annuity- pension is paid till the life assured is alive. On the death of the life insured, 50% of the pension is payable to spouse as long as the spouse if alive.
Income Tax Benefit – Premiums paid under life insurance policy are exempted from tax under Section 80 C and 1/3rd of the maturity proceeds are exempted from tax under Section 10 (10A). Pension that is received is taxable.
Eligibility conditions and other restrictions in LIC Jeevan Nidhi Plan
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Minimum
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Maximum
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Sum Assured (in Rs.)
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50,000
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No Limit
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Policy Term (in years)
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5 for Regular Premium
6 for Single Premium
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35
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Premium Payment Term (in years)
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Entry Age of Policyholder (in years)
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18
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65
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Age at Vesting (in years)
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40
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75
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Premium (in Rs.)
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10,000 for Single
3000 for Regular
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No Limit
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Payment modes
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Single, Yearly, Half-yearly, Quarterly, Monthly and SSS
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Sample illustration of LIC Jeevan Nidhi Plan
The below illustration is for a healthy Male of 35 years (non-tobacco user) opting for a Annual Premium = Rs. 4121 and Policy Term = 25 years respectively.
Guaranteed Maturity Benefit = Rs 1,00,000 (Sum Assured) + Rs 5000 guaranteed addition in the first 5 years
Additional Features and Benefits of LIC Jeevan Nidhi Plan
Riders- There are 4 additional riders available:
· Accidental Death and Disability Benefit rider
· Term Assurance Rider
· Critical Illness Rider
· Premium Waiver Benefit Option can be opted for if Critical Illness Rider has been taken.
You stop paying the premium – If you stop paying the premiums after 3 policy years, the policy lapses and all benefits cease.
You want to surrender the policy – There is a Guaranteed Surrender Value after 3 policy years
Guaranteed Surrender Value = 30% of all premiums paid (90% for Single Premium) – 1st year’s premium
There is Special Surrender Value under this plan as well.
You want a loan against your policy – Loan facility is not available under this policy
Alternate pension plans from different insurance companies
1. Aegon Religare Pension Plan
2. Tata AIG Life Nirvana
3. ICICI Pru Forever Life
Other pension plans from Life Insurance Corporation of India
1. LIC Pension Plus - ULIP
2. LIC New Jeevan Suraksha 1
3. LIC New Jeevan Dhara 1
4. LIC Jeevan Akshay 6
