The Hindu Business Line : LIC Jeevan Plus

After Life Insurance Corporation decided to close sales of its first unit-linked product, Bima Plus, it launched another product to plug the gap. Called Jeevan Plus, the product is a whole-life unit-linked plan.Here are some of the key features of this policy.

Plan details

Under the plan, the policyholder has the flexibility to choose the extent of life cover, the quantum of premium to be paid, and also the mode of premium payment (either regular or one-time). The premium paid will be used to buy units in one of four different funds, after appropriate deductions are made. The plan is designed in such a way that it matures when the policyholder attains the age of 100. Should the policyholder survive till maturity, he will receive the value of the value of the units in the account. In the event of the policyholder's death before maturity, the beneficiary will receive the basic sum assured and the value of the units.

Types of funds

The policyholder can choose one of four funds to invest his premium. The Bond Fund comes with the lowest risk, as it does not invest in equities at all; the Growth Fund is at the opposite end of the risk spectrum, as it invests up to 60 per cent in equities. The Secured Fund and the Balanced Fund fall in between, with varying risk profiles.

The policyholder can switch between funds, depending on his risk appetite. Up to four switches per year are allowed free of cost; subsequent switches attract a charge of Rs 100 per move.

The Bond Fund has a guaranteed return of 3 per cent, provided the policy is held to maturity with all premium payments being made on time and there is no switching between funds. There are no guarantees on the other funds.

Other features

Any additional liquidity at the policyholder's disposal can be brought into the plan in the form of a top-up. The minimum amount of such as top-up is Rs 1,000.The product is also equipped with an auto-cover feature under which the plan continues to remain in currency even if the policyholder skips a premium payment by cancelling units from his account towards mortality/critical illness charges. However, should the value of the account fall below that of the charges, the plan will terminate. Also, in case more than three years' premiums have been paid, a minimum balance of one year's annualised premium should be maintained in the account, failing which the plan would stand terminated.

Riders

An accident benefit rider and a critical illness rider can be attached to the main policy. Charges towards these riders will be through cancellation of units.

Loan facility

No loan can be taken against this plan.

Charges

As with unit-linked plans, a host of charges are associated with the product. They include a premium allocation charge, charges towards mortality and riders, an administrative and policy charge in the first two policy years, a service tax charge, a flat fee and a fund management charge (depending on the kind of fund chosen). It would be better to familiarise oneself with the charge structure to avoid a negative surprise at a later date.

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

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