Effective from 18th March 2019, LIC is launching a new plan LIC’s Navjeevan Plan No.853. It is non linked, with profit, endowment plan. Let us see the features and review of this plan.
Why every year LIC will launch the single or limited premium plans from January to March?
If you check the history of LIC’s new plan launch period, you notice that every year LIC launches a new single premium or another type of plans especially during the months of January to March.
The reason is that, during this period around 99% of salaried running behind to search for tax saving investment options. Hence, to garner business from such salaried, every year LIC launch the new plan from January to March.
LIC’s Navjeevan Plan No.853 plan launch in the month of March is one such classic example (even though this time bit lately).
LIC’s Navjeevan Plan No.853 – Features and Eligibility
As I said above, LIC’s Navjeevan Plan No.853 is a non linked, with profit, endowment plan. Under this plan, the premium can be paid either as a lump sum (Single Premium) or as a Limited Premium payment option of 5 years.Along with above-mentioned features, below are the special features of this plan
# You can buy this plan both either online or offline.
# If you buy the plan online, then you will get 2% discount in case of Single Premium Payment. However, in case of Limited Premium Payment Option, the discount is 5% on the total premium you pay during 5 years period.
# If your age is less than 8 years, then the commencement of risk will start either one day before the completion of 2 years from the date of commencement of policy or one day before the policy anniversary coinciding immediately following the completion of 8 years of age whichever is earlier.
# This plan offers Accidental Rider and the rider like settlement option rider (both in case of maturity and death benefit).
# In case of limited premium payment option, you can pay it yearly, half-yearly, quarterly or monthly.
# You can avail the paid-up option if you continuously paid 2 years of premium.
# You can surrender the policy at any point of time if you paid a single premium. However, for limited premium payment option, you can surrender it after 2 years completion.
# You can avail the loan under this plan. Under Single Premium, you can avail the loan after 3 months. The maximum loan available is 80% of the Surrender Value. However, under the limited premium payment option, after completion of 2 years, you can avail the loan up to 80% of surrender value (for in force policies) or 70% of surrender value (for paid-up policies).
What are Option 1 and Option 2 in LIC’s Navjeevan Plan No.853?
In the above image, I mentioned, again and again, Option 1 and Option 2. Let me explain to you what these options are in detail.
This Option 1 and Option 2 is applicable only for Limited Premium Paying option but not if you invested as a lump sum. Hence, if you paid as a single premium, then the death sum assured is 10 times of your single premium.
However, if you opted for a limited premium payment, then you have the below options.
# If your age is below 45 years of age.
You will receive the 10 times of your annual premium as a death benefit.
# If your age is above 45 years of age.
In this case, you have two options to choose from.
Option 1-You can choose for 10 times of annualized premium as a death benefit.
Option 2-You can choose for 7 times of annualized premium as a death benefit.
Benefits under LIC’s Navjeevan Plan No.853
Now let us discuss about the benefits available under LIC’s NavJeevan Plan No.853.
A. Maturity Benefit under LIC’s Navjeevan Plan No.853
If the policyholder survives until the policy period, then he will receive the Basic Sum Assured +Loyality Addition.
B. Death Benefit under LIC’s NavJeevan Plan No.853
# If death occurs before the 5 years completion of the policyholder-If death occurs before the commencement of the life risk, then LIC will refund the premiums you paid. However, if death occurs after the commencement of the life risk, then-nominee will receive Sum Assured on Death as a death benefit.
# If death occurs after the 5 years completion of the policyholder-Sum Assured along with Loyalty Addition will be payable to the nominee.
Meaning of Sum Assured on death
# For Single Premium Policies-Higher of the below will be payable
- Basic Sum Assured
- 10 times of Single Premium
# For Limited Period Premium Payment Policies-Higher of the below will be payable.
- Basic Sum Assured
- 10 times of Annual Premium (If Option 1 has opted) OR 7 times of Annual Premium (If Option 2 has opted).
LIC’s Navjeevan Plan No.853 Return Calculation
Now let us consider an example to understand the return calculation. I have considered the Life Assured age as 45 Yrs, Sum Assured Rs.5,00,000 and chosen the Option 1. Now the results are as below.You notice that the returns hover around 5% to 6%. Now it is your turn to decide whether it is suitable for you or not.
LIC’s Navjeevan Plan No.853 – Should you invest?
# It is a typical financial year end product launch by LIC to garner the business from the employees who are looking for TAX SAVING options by hook or crook. Hence, no such surprise.
# When you look at features, LIC wisely made it a SINGLE premium and LIMITED period regular premium plan, where the premium payment option restricted to 5 years ONLY. The reason is to benefit these individuals who are in a desperate mode to save tax.
# LIC offering this plan in both ONLINE and offline mode. Hence, if someone really fan of this product, then I suggest going for an ONLINE mode where you will get around 2% discount on single premium and 5% discount on regular premium plan.
# When you check at above return calculation, you noticed that the returns are around 5% to 6%. Hence, do you feel it is worth to invest for such a long period and expecting around 5% to 6% returns?
# Many agents may say there is Life Insurance Coverage also. But to make them aware, nowadays even LIC itself offering term insurance at the damn cheap rate (forget about private players), then it is of no use to consider such Insurance+Investment product.
# I am stressing once again the basic funda of investment. Never combine your investment and insurance need. Also, never invest in a product just for the sake of TAX SAVING. The investment must help you to achieve your FINANCIAL GOALS but not the AGENTS FINANCIAL GOALS. Because for a single premium, the agent will earn 2% commission and for regular premium, a 1st-year commission is 14% (inclusive of first year 40% bonus commission) and subsequent years 5%.
Finally, beware of such products where such products neither suffice your Life Insurance needs (the ideal Life Insurance coverage should be around 15 to 20 times of your yearly income) nor it will give you a decent return (even fail to beat the returns of products like PPF).
Hence, there is nothing NAV (NEW) nor JEEVAN (LIFE) to have this product as your choice 🙂