The Hindu Business Line : LIC's Jeevan Nidhi

ADVANCES in the field of medicine has made lengthening life spans a reality. It also brings into focus the importance of financial planning in one's post-retirement years.

Pension plans have gained quite a bit in popularity lately. Recently, LIC added to its bouquet of pension products with the launch of Jeevan Nidhi. Let's examine the key features of this product.

How the plan works

The policyholder is required to pay premiums over the entire term of the plan. As a rule, the earlier one enters such plans, the larger would be the corpus available on retirement, as the effect of compounding kicks in.

This plan also involves a guaranteed addition of 5 per cent of the sum assured over the first five policy years (simple addition); subsequently, bonuses are a function of the corporation's investment performance.

On maturity, the policyholder can commute a third of the total corpus — which includes the sum assured, the guaranteed additions, the bonuses declared and a terminal bonus, if any — and buy an annuity with the remaining amount.

If the policyholder dies during the tenure of the plan, the beneficiary would receive the sum assured and the accrued guaranteed additions and bonuses. The beneficiary also has the option of buying an annuity with this amount.

Annuity options

There are five annuity options available. They are:

Annuity for life;

Annuity for a fixed time period of 5, 10, 15 or 20 years and for life thereafter;

Annuity for life with return of purchase price to the beneficiary;

Annuity for life increasing at 3 per cent per annum (simple addition); and

Annuity for life with provision of 50 per cent of annuity to the spouse of the annuitant after the latter's death.

Riders

One can choose from a set of three riders available.

They are the Accidental Death and Disability Benefit Rider, the Term Assurance Rider and the Critical Illness Rider.

Other features

The policy offers rebates depending on the mode of premium payment (yearly and half-yearly modes attract a rebate of 2 per cent and 1 per cent respectively) and also on the extent of the sum assured opted for.

The policy becomes paid up after three years' premiums have been paid.

The policy acquires a guaranteed surrender value after this duration. No loans can be taken against this plan.

(Readers are requested to compare products featured under this column with similar ones offered by other players.)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rane (Madras): Reject

JMC Projects: Reject

Tempo Traveller better choice for ambulance

Understanding the Ambani squabble

Reliance: The battle for the Kamadhenu

Equity investing — Returns can still be attractive

Kotak-30: Hold

Alliance Buy India Fund: Switch