The Magic of Jeevan Saral

An insight into this unique plan of L.I.C. Golden Peacock Award winner in 2004

T.S.Rajan,Development Officer

Popular L.I.C. Plans

Endowment (with & without profits) Money back plans Whole Life Plans (with & without profits) Pension Plans (Immediate & Deferred Annuity) Joint Life Plan Term Assurance Plans..
T.S.Rajan,Development Officer

Variants & Hybrids

Jeevan Mitra - double/triple cover end.plan Jeevan Surabhi - variant of Moneyback Jeevan Anand - Hybrid of End. & W.Life Jeevan Rekha - Hybrid of W.Life & M-back Jeevan Shree - Variant of Lim.Pay.End.

T.S.Rajan,Development Officer

Typical Pattern of these plans

Premium Rates are defined per 1000 sum assured One has to decide on sum and term / Premium term. Accordingly the premium for his age is calculated. The contract is for a predetermined period with survival benefits (if any) defined on specified dates. (e.g. 75/20, 14/25, etc.)
T.S.Rajan,Development Officer

Typical Pattern of these plans (cont.)

In most typical plans, reversionary bonuses / G.A. and FAB/LA are added to the policy and provided alongwith sum assured on maturity. Surrendering early means losing money. But then that is the only way to liquidate cash. Otherwise raise loan against your policy.
T.S.Rajan,Development Officer

Unit Linked Policies

New trend in insurance selling Premium is used for providing risk cover and investment in mutual fund units. Growth comes through appreciation of NAVs. Hence quite dynamic in nature If markets are down NAVs can also have negative growth. Hence risk of losing money too.
T.S.Rajan,Development Officer

Unit Linked Policies (cont.)

To effectively grow the money, policyholder must closely watch the trends of the market and keep switching between funds Not many people have the expertise or the inclination to monitor their investments at frequent intervals.

T.S.Rajan,Development Officer

Jeevan Saral - a plan with a difference

Jeevan Saral is a unique plan which offers the best features of a conventional plan and a unit linked plan in one product itself

T.S.Rajan,Development Officer

How is it different?
Instead of starting with Sum Assured you start by deciding how much premium you want to invest Riskcover is same for all ages for a specific modal premium. i.e. For Rs.5000 p.a. the riskcovered for age 20 as well as age 45 is the same

T.S.Rajan,Development Officer

Eligibility Conditions
Minimum age at entry Maximum age at entry 12 years (completed) 60 years

Maximum age at maturity

Minimum term Maximum term Minimum premium for entry age 49 years or below Minimum premium for entry age 50 years or above All modes of payment except Single Premium & Monthly mode. Males & Females of all categories are eligible
T.S.Rajan,Development Officer

70 years
10 years 35 years Rs.250/- per month Rs.400/- per month
NMS/NMG allowed

All age proofs acceptable

Salient Features of Jeevan Saral

A lot of guarantee A smooth return over the term Flexibility of term A lot of liquidity A higher cover, particularly for lower terms and higher entry ages Group premium
T.S.Rajan,Development Officer

Salient Features of Jeevan Saral

Client has to decide
premium to be paid, and Mode only

He/she can choose any term No surrender penalty after 5 years With profits loyalty additions after 10 or more years
T.S.Rajan,Development Officer

Salient Features of Jeevan Saral

Death Benefit
250 times the monthly premium, plus return of premiums excluding extra/rider premium and first year premium, plus the Loyalty Additions, if any.

Maturity Benefit
Maturity Sum Assured, plus the Loyalty Additions, if any.
T.S.Rajan,Development Officer

Unique Feature
In case of death claim, in addition to the Sum Assured payable on death, All Premiums Paid, (excluding the first year premium, extra premiums and premiums for rider benefits), will be refunded. This is the first time that such a feature has been introduced. The result is a continuously increasing Risk Cover from the second year onwards. T.S.Rajan,Development Officer

Is Jeevan Saral a With Profit Plan ?

YES. But bonus will not be declared each year as under other plans. Loyalty Addition will be given after atleast 10 years of premium payments and duration. This Loyalty Addition is payable even when a policy is Surrendered or results into a death claim after 10 years.
T.S.Rajan,Development Officer

What is loyalty addition? How much will it be?

T.S.Rajan,Development Officer

Loyalty Addition
With profit Identical to bonus
165, 174, 179

Without profit Meager amount

111, 150

T.S.Rajan,Development Officer

Another Mega Benefit

There is a misconception that Loyalty addition is just a little sweetener and the main growth comes from bonus / G.A. But it will not be so in the case of Jeevan Saral. Actuarial analysis will show that the actual L.A. that can be paid will not be less than the total regular bonus payable on death claim, surrender or maturity. In fact the policy holder will stand to gain more due to this concept
T.S.Rajan,Development Officer

Another Mega Benefit (cont.)

Reversionary bonus is declared after assessment of surplus. On this surplus first a tax of 12.5% + 10% surcharge on tax and 3% educational cess, i.e. a total of 14.1% has to be paid. Thereafter 5% is the government share Then there is also a Solvency Margin provision to be made The remainder is then distributed as bonus to the policy holders T.S.Rajan,Development Officer

Another Mega Benefit (cont.)

Loyalty Additions and Final Addition Bonuses are not based on assessment of surplus. Hence there is NO TAX, NO GOVERNMENT SHARE AND NO SOLVENCY MARGIN PROVISION to be made. The result naturally is substantially higher benefit to the policy holder
T.S.Rajan,Development Officer

Paid-up and Surrenders

Available after 3 years No Surrender penalty after 5 years. For e.g. if a 20 year is being surrendered after 12 years, it will be treated as if the policy was originally taken for a term of 12 years, and the maturity value corresponding to term 12 will be paid. In this sense, Jeevan Saral can be called a Flexible Term plan.
T.S.Rajan,Development Officer

SURRENDER VALUE
PERIOD 3 TO 4 YEARS 4 TO 5 YEARS AFTER 5 YEARS MATURITY S.A. 80% 90% 100%

T.S.Rajan,Development Officer

WHAT IS B.M.S.A.?
Basic Maturity Sum Assured is the amount that the customer will get on the date of maturity for a contribution of Rs.100/- per month. Once B.M.S.A. is known, we can calculate the Maturity S.A. for any premium After arriving at M.S.A., Loyalty Additions are to be added in the same manner as Reversionary Bonus

T.S.Rajan,Development Officer

Another Unique Feature

Yes. Jeevan Saral boasts of another fantastic unique feature - Partial Surrender If you need money, you can partially surrender the policy The premium will correspondingly reduce and thereby the associated benefits too. This means that you can virtually break one policy into multiple policies This also means that you can use this policy as a flexible Money back Plan.
T.S.Rajan,Development Officer

Standard Terms of this Plan

For a chosen premium, the level of benefits payable at maturity (The Maturity Sum Assured) will be quoted excluding L.A. The Maturity Sum Assured has got the same Guarantee like Sum Assured under other policies of Govt. of India as per section 37 of the L.I.C. Act, 1956
T.S.Rajan,Development Officer

Rider Benefits
Accident benefit (optional) Term Assurance Rider (optional) Standard Term Assurance and AB rider Sums Assured limits apply The Term Assurance and AB rider Sums Assured will not exceed the Death Beneift Sum Assured

T.S.Rajan,Development Officer

Conditions for Partial Surrender

Atleast 3 years premiums are paid Minimum basic annual premium after withdrawal - 3000/where age at entry was 49 years or below and 4800/- where age at entry was 50 years or above Minimum basic annual premium for withdrawal - 1200/-

Withdrawal in multiples of - 600/- annual premium

Minimum waiting period between successive withdrawals 1year No loan should be o/s on the policy at the time of withdrawal

All future benefits and premiums under the policy will get reduced proportionately
T.S.Rajan,Development Officer

SARAL VS OTHER PLANS

YARDSTICKS TO ANALYSE A PLAN? . RISK COVER . MATURITY VALUE . PREMATURE WITHDRAWAL

T.S.Rajan,Development Officer

SARAL Vs TABLE 14
Age 30 14-17 Monthly : 1000
200000+153000 = 353000

Age 30 165-17 Monthly 1000

224750+190400 = 415150

1. MATURITY : SA+BONUS 1. MATURITY : MSA+LA

2. RISK COVER : (Ex 5 yrs) 2. RISK COVER : (Ex 5 yrs)

SA+BONUS 200000+45000 = 245000 DSA + RET. OF PREMIUM 250000+48000 = 298000

3. SURRENDER :

3. SURRENDER :

Surrender of a conventional Surrender after 5 years is policy will result into a loss treated as MATURITY ! at any point of timeT.S.Rajan,Development Officer

Agents Commission
Policy Term 15 years & above 10 to 14 years First Year 25% 20% 2nd & 3rd Thereafter Year 7.5% 7.5% 5% 5%

Bonus 40% of FY Commission commission

T.S.Rajan,Development Officer

T.S.Rajan,Development Officer