ULIP Plans in LIC

Ulip plans of LIC of india:
ULIP stand for unit linked insurance plans. Thes plans are involved with the share market of india. The amount paid by the policy holder is invested in the share market for buying the units. Usually one unit denotes one share. Some 30% to 40% of the premuim paid by the policy holder is taken as administration charges and part of the rest of ghe premium is taken towards the life cover of the policy holde. The rest o the amount will be investes on buying the shares for the policy. The minimum lock in period for these kinds of policies will be a minimum of 3 years and a maximum of 5 years. The lock in period denotes the period for which the premium should be paid by the policy holder towards the insuranc company without fail. After the ck in period it is the choic of the policy holder to pay the premium. If he pays the premium units will be bought on his policy. The policy holder canalso surrender his policy after the lockin period.

The benefit or profit in these kinds o policy ourely depends uopon the NAV(NET ASSET VALUE). This value denotes the peice of a single share or unit on the current day. If the policy holder has dwcided to surrender his policy he should check the number of units in his account(this will be notified by lic periodically or it csn be enquired at an lic office) and the value of a single unit then multiply them together to find the current total value. some of the plans available in the lic on this basis are
Money plus
Market plus
Fortune plus
Child future plus

We will discuss more on these policies in the future coming posts

LIC Loyalty Additions

There are differences between bonus and loyalty additions. These two should not be confused with each other. In most of the cases the loyalty addition will be declared for the policy holder based on the period for which he has paid the premium amount even in the case of death. The policy holder should have paid the premium for a minimum specified period to become eligible for the loyalty addition. But this is not the situation with bonus calculation. However the mathematical calculations are same for both the bonus and loyalty additions. The most important point here is that the loyalty addition will be given to the policy holder based on the experience of the company with the policy holder. For some insurances both the bonus amount as well as the loyalty additions are given to the policy holder.
For example if a proposer takes a policy for an amount of rupees 500000 for 20 years and if the loyalty addition is given at a rate of rupees 40 per 1000 sum assured then the total loyalty addition he would get will be 20 x 500 x 40 = 400000. And the total amount along with the maturity amount will be 500000 + 400000 = 900000 /-. This is one of the examples of calculating loyalty addition.

 

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LIC Bonus amount

Bonus amount:

Bonus is a amount given to the policy holders apart from their maturity or death benefits. In india the highest bonus amount is given by the LIC of india. IRDA specifies the regulation for paying the bonus to the policy holders. 90% of the surplus amount got from the profit should be returned to the policy holders in the form of bonus. And the profit of an insurance company directly depends on the numbers. Since LIC of india is having more than 16 crore policy holders the amount of bonus given will be very high. Sometimes this may become more than the maturity sum assured. For example a person has taken a policy having maturity amount of rupees 500000 for a term of 20 years an if the bonus is calculated at an average of rupees 42 per thousand sum assured then the total bonus amount accrued for him at the end of 20 years would be 20 x 500 x 42 = 420000 which is just 80000 short from the maturity amount. And the total amount received by the policy holder will be 500000 + 420000 = 920000. That will be really great.

 

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LIC's JEEVAN CHHAYA Free presentation

Jeevan Chhaya

Proposer : Mr.X Age: 31 Years

Nominee : Mr. Y. Pranav Age: 2 Years.

Appointee : Mr. Z. Age: 36 Years.



Policy Amount: Rs.2,00,000/-



Policy Term: 18 yrs.



Premium Amounts:

Payment Mode Premium

Yearly Rs.12,197 /-

Half Yearly Rs.6,194 /-

Quarterly Rs.3,145 /-








Policy Features:

An excellent adult as well as children plan that can provide benefit for the whole family.



Maturity Benefits:

• 25% of the Policy Amount is given every year during the last 4 years of the maturity to the policyholder, if he is surviving.
• Policy loan and Housing loan can be taken during the premium paying term.

Death Benefits:

• The nominee can be your child and the appointee can be your spouse.
• In case of risk during the policy paying term the sum assured is given to the appointee and all the future premiums are waived off (no need to pay future premiums).
• The Premium Waiver Benefit is coming as a default in this policy.
• 25% of the Policy Amount is given every year during the last 4 years of the maturity to the nominee.

What is paid for 18 year?

Yearly Rs. 2,19,546/- 
Half Yearly Rs. 2,22,984/-
Quarterly Rs. 2,26,440/-

What’s your benefit:
SA – 2,00,000 +Bonus – 1,51,200 ( estimated @ Rs.42 per 1000 SA for 26 years.) = Rs.3,51,200.


T.B – Tax Benefits: The Net Taxable Annual income can be reduced to a great extent by subtracting the annual premium paid from the net taxable income.


In addition to this the policy holder will also be provided Double Accident Benefit.

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What is meant by a term insurance?

What is meant by a term insurance?


Term insurance is one of the purest form of insurance. This insurance is excellent oppurtunity for a person to save his family in an economical way. In this insurance there is no survival or maturity benefits. The claim amount is given to the nominee of the policy holder on his death. The major advantage of this insuance is that it gives a very high economical protection for a family at a very cheaper rate. A post has been made with an illustration of term insurance along with the benefits. This insurance is suitable for the buiseness people and economically worth people.

 

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LIC of india - Modes of insurance payment

There are 5 modes of premium payment methods in LIC of India. LIC of India provides rebates on the premium to be paid based on the mode of payment made by the policy holder. The highest rebate is given to the yearly mode.

Quarterly : The premium has to be paid every 3 months in a policy year. Usually there are no rebates given for this mode of premium payment.

Half yearly: The premium amount has to be paid every 6 months of the policy year. Usually rebates are given to this kind of payment. However the rebate percentage varies according to the policy.



Yearly: This the most welcomed mode of payment by LIC of India. The highest rebate is given to this mode of payment since it eases the managing and accounting processes of the company for the particular policy holder.



Monthly: The policy premium has t be paid every month of the policy year. A 5% percentage of the premium amount has to be paid extra for this mode of premium. This is not the recommended form of premium payment since it increases the overhead for both the policy holder as well as the insurance company.



Salary savings scheme(SSS):

In this mode of premium payment the policy premium will be deducted from the salary of the policy holder every month automatically. The difference between monthly mode and this mode is that the extra premium has not to be paid in this mode of premium. For selecting this mode of premium the organization in which the policy holder is working should support this practice.

 

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What is meant by a rider premium?

A rider premium is an extra amount paid by the proposer in order to enjoy some extra benefits in case of risk.  obviously the enjoyment is only for the nominee of the policy holder.

Example: Double accident benefit rider is a very popular rider that is almost given to all the proposers. The advantage of this rider is that it is very cheap in rate and covers a maximum risk.  when a proposer takes up this rider the nominee of the policy holder will get double the amount of the sum assured on the risk of the policy holder.

 

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Insurance domain in india:

Indian insurance market is a very wide and diversed market where various variety of clients are available. It is up to the insurance companies to find their niche and stand strong on that. There are many successful insurance companies in India. For a greater period od time it was LIC of India a government of India enterprise that dominated the market. Now also it has around 16 crore policy holders. But after the reign of globalization the Indian insurance market was opened to private companies from in and out of India. From then onwards the private insurance companies also strongly competing in the Indian market. As a result of the people of India are getting wide combination of plans. Among this LIC of India since it is government of India enterprise has plans to cover people of different levels of society. The main motto of this blog is to explain the various plans, formalities and benefits of the plans of LIC of India.

 

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LIC's Amulya Jeevan features benefits premiums with example

Amulya Jeevan

Proposer:  Mr. X

Age:  37 years

Nominee:  Mr. Y

Policy Amount: 25 lacs.

Key Policy Features:

                This is a pure term assurance plan using which a person can secure his/her family in an economical way.    The policy amount can be paid either as regular premiums (yearly and half yearly) or as a single premium.

Benefits:

Maturity Benefits:

                There is no maturity benefits in this policy.

Death Benefits:

                The Sum Assured will be given to the nominee on his/her  death during the policy paying term.

Terms and Premiums:

Term: 5 years

Single Premium:                               Rs. 27,450 /-

Regular Premiums:

Mode	Premium	Total Premium Paid
Hly Yearly	Rs. 3,379 /- Rs. 6,625 /-	3379 x 10 = Rs. 33,790 /- 6625 x 5 = Rs. 33,125 /-

Term: 10 years

Single Premium:                               Rs. 51,525 /-

Regular Premiums:

Mode	Premium	Total Premium Paid
Hly Yearly	Rs. 3,697 /- Rs. 7,250 /-	3697 x 20 = Rs. 73,940 /- 7250 x 10 = Rs.72,500 /-

Term: 15 years

Single Premium:                               Rs. 78,150 /-

Regular Premiums:

Mode	Premium	Total Premium Paid
Hly Yearly	Rs. 4,233  /- Rs. 8,300 /-	4233 x 30 = Rs.1,26,990 /- 8300 x 15 = Rs.1,24,500 /-

 

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LIC Jeevan Tarang features with example

Jeevan Tarang

Proposer:  Mr. X

Age: 37 years

Nominee: Mr. Y

Policy Amount : 5 Lacs.

Policy key features:

                This is one of the very novel plans of LIC.  This is a whole life plan which provides annual survival benefits at the rate of 5.5% of the Sum Assured (Policy Amount) for the life time after one year from the chosen accumulation period.  Therefore for 5 lacs an amount of Rs. 27,500/- will be returned every year.

                Policy can be paid as regular premiums under Yearly, Half yearly, Quarterly and Monthly.  This policy has a special feature so that the policy paying term can be reduced to 6 years.  Premium can also be paid as single premium .

Note:  Accident benefit cannot be availed under single premium.

Benefits:

Survival Benefits:

Bonus will be paid in one lumpsum and at the end of the policy term and after one year, 5.5% of the Sum Assured will be payable till the 100 years of the Life Assured.  This is the highlight of this plan that can make a person’s  retirement period safe and secured.

Maturity Benefits:

                Sum Assured along with Loyalty Addition, if any will be payable to the policy holder during his 100 years of age.

Death Benefits:

è Sum Assured +vested Bonus is payable in case of death of the Life Assured during policy term (accumulation period).

è Sum Assured + Loyalty Addition, if any, is payable if Life Assured dies any time after policy term.

Terms and Premiums:

Term: 10 years

Single Premium:               Rs. 3,71,750 /-

                Regular & 6 years P.P.T Premiums:

Regular Premiums			6 years PPT
Mode	Premiums	Total Premiums Paid	Premiums	Total Premiums Paid
Qly Hly Yly	Rs. 13,481/- Rs. 26,690/- Rs. 52,834/-	13,481 x 40 = Rs. 5,39,240/- 26,690 x 20 = Rs. 5,33,800/- 52,834 x 10 = Rs. 5,28,340/-	Rs. 19,706/- Rs. 39,017/- Rs. 77,241/-	19,706 x 24 = Rs. 4,72,944/- 39,017 x 12 = Rs. 4,68,204/- 77,241 x 6 = Rs. 4,63,446/-

Bonus:  At the end of the 10 years, approximately at the rate of Rs. 55/- per thousand S.A.

Rs. 2,75,000 /-

Term: 15 years

Single Premium:               Rs. 3,15,750 /-

                Regular & 6 years P.P.T Premiums:

Regular Premiums			6 years PPT
Mode	Premiums	Total Premiums Paid	Premiums	Total Premiums Paid
Qly Hly Yly	Rs. 8,769/- Rs. 17,359/- Rs. 34,361/-	8,769 x 60 = Rs. 5,26,140/- 17,359 x 30 = Rs. 5,20,770/- 34,361 x 15 = Rs. 5,15,415/-	Rs. 16,825/- Rs. 33,313/- Rs. 65,952/-	16,825 x 24 = Rs. 4,03,800/- 33,313 x 12 = Rs. 3,99,756/- 65,952 x 6 = Rs. 3,95,712/-

Bonus:  At the end of the 15 years, approximately at the rate of Rs. 55/- per thousand S.A.

Rs. 4,12,500 /-

Term: 20 years

Single Premium:               Rs. 2,67,750 /-

                                Regular & 6 years P.P.T Premiums:

Regular Premiums			6 years PPT
Mode	Premiums	Total Premiums Paid	Premiums	Total Premiums Paid
Qly Hly Yly	Rs. 6,281/- Rs. 12,434/- Rs. 24,610/-	6,281 x 80 = Rs. 5,02,480/- 12,434 x 40 = Rs. 4,97,360/- 24,610 x 20 = Rs. 4,92,200/-	Rs. 14,419/- Rs. 28,549/- Rs. 56,523/-	14,419 x 24 = Rs. 3,46,056/- 28,549 x 12 = Rs. 3,99,756/- 56,523 x 6 = Rs. 3,39,138/-

Bonus:  At the end of the 20 years, approximately at the rate of Rs. 55/- per thousand S.A.

Rs. 5,50,000 /-

 

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Endowment Policy/Plan of LIC Explanation with an example

Endowment Policy

Proposer: Mr. X

Age: 25

Policy Amount: 1 lac.

Policy duration: 15 years.

            One of the traditional and most popular plans of LIC for fulfilling all long/short term financial needs.

Benefits:

Maturiry Benefits:

            Sum Assured + Bonus will be given.  In addition, Final Additional Bonus is also given, if premium paid for 15 years or more.

Death Benefits:

            Sum Assured + Accrued Bonus is given to the nominee.  Final Additional Bonus is also given, if premium paid for 15 years or more.

What you pay
Years	Premium
	Yearly	Half-Yearly	Quarterly
1	6805	3455	1815
15	102075	103650	108900

What you get
	@	Sum
Sum Assured		100000
Bouns At the rate of *	42	63000
Final Additional Benefit. At the rate of *	250	25000
Total		188000

Along with this policy you will also be provided Double Accident Benifit

* - These rates are declared by the LIC and may vary.

 

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Terminologies in an insurance contract

There are some terminologies involved in an insurance contract that every person taking insurance should know about.  I have discussed some of the terminologies here and we can know about more as the blog grows.

Premium:

             This is the amount that should be paid to the insurance company by the policy holder to keep the contract in live.  According to the policy conditions if the policy is not being paid your policy may expire.

Policy Term:

             This denotes a period for which the premium has to be paid to keep the policy in live according to the policy conditions.

Maturity Sum Assures or SA:

             This is the amount that will be returned by the insurance company after the specified policy term.

Riders:

             This is a small additional amount that will be paid by the policy holder along with the premium for extra benefits.  For example if a policy holder wants his nominee to get double the SA if his death occurs due to accident then he should take the Double Accident Benefit rider that can be taken at a low cost.

 

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Insurance concept

What is an insurance actually? 
                   An insurance is a contract between the company and the proposer.  The insurance policy document consists of all the terms and conditions of the insurance contract in which the proposer mades his signature and accepts the insurance contract.  Mostly this contract is done for a particular period of time.  The breaking of the contract insists a different set of rules.

Major people involved in insurance contract

•         Insurance company - The company which gives the insurance.
•         Proposer - The person who proposes for a insurance policy.
•         Life Assured - The person whose life is going to be covered under the particular insurance contract.
•         Nominee - The person to whom the policy amount should be delivered on the death of the policy holder within the contract period.
•        Asignee - The policy can be assigned to someone else so that all the benefits of the policy is redirected to the asignee.  If a loan is taken on the policy the person who gives the loan becomes the asignee of the policy.

        Hereafter i will discuss a lot more about different plans in the insurance especially from Life Insurance Corporation of India which has more than 16 crore policy holders.

 

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Insurance Ratio

In India Life insurance or health insurance is not a mandatory contract unlike some of the developed nations.  Around 90% of the great indian population doesn't have an insurance policy.  But it is common to find people with more than one insurance policy and that too with heavy policy amount.  How this contradiction occurs?  This is just a reflection of the contradiction between the living and educational standards of the people of India. 

People of India are seeing the insurance plans not only as life cover plans but also as investment plans.  They are always questing for both.  It is this taste that made way to build lot and lot of different plans.  The plans are available to people in all the levels of the society. For example a premium can be even an amount of Rs. 250 to thousands or lacs depending on the policy amount.  There are some seasonal policies also which are called 'close ended' plans.  Those policies can be taken only between a particular period of time.

 

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