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Merits and Demerits of LIC Jeevan Vriddhi


Merits and Demerits of  LIC Jeevan Vriddhi
Early March 2012, LIC launched a new single premium traditional endowment plan. The plan effectively combines a guaranteed maturity amount along with a substantial life cover. Here is a quick look at all that the plan has in store.

LIC Jeevan Vriddhi- Plan Open for a Limited Period of 120 Days
LIC’s Jeevan Vridhi is a non participating limited period traditional endowment policy. It offers a guaranteed maturity amount along with loyalty additions if any at the time of maturity.


Key Features and Benefits of the Plan
The plan has all this and much more.

Guaranteed Benefits:

  • Guaranteed Benefits depend on age of policyholder from eight to 50 years; it reduces with age and is payable on maturity.
  • Single premium payment
  • Plan Term 10 years
  • Tax benefit under 80c with tax free maturity amount
  • Sum assured equals five times of single premium payment
  • Loan after first policy year-on-year
  • Minimum surrender value of 90%of single premium amount

Loyalty Additions:
Loyalty additions if any shall be payable along with the guaranteed benefits. Eligibility for loyalty addition would be considered during the last year of the policy. The rate and term are as may be declared by LIC.

Age at entry: 8 years to 50 years
Premium Minimum: Rs.30000/- and in multiples of Rs. 1000 thereafter.
Sum Assured: Rs.1,50,000/- to No max limit

Benefits for higher premiums
The plan offers a higher maturity benefit for higher premium policies. A 2% on a single premium of Rs 5 lakh to Rs 40.90 lakh and 3% for policy premiums of Rs 50 lakh and above are offered.

Returns on the Plan
This is the Guaranteed Maturity Amount under each age category for ever Rs. 1000 single premium (inclusive of a service tax of 1.54%) as provided by LIC.


As per LIC’s illustration for a healthy 35 year old individual, for a basic sum assured as Rs 5 Lakh, Rs 1 Lakh as premium is to be paid. At the end of 10 years the guaranteed return received is Rs 1.97 Lakh (Scenario 1) or Rs 2.21 lakh (scenario 2)
Jeevan Vriddhi is advantageous for those looking at tax saving through the plan. For those in the highest tax bracket and investing say Rs. 1, 00,000, an amount of Rs. 30,000 could be saved as tax benefit. Effectively, the investment amount could now be considered as Rs. 70,000. The returns thus as in scenario 2 works out to Rs. 2, 21,651, resulting in a net yield of 12%.

Merits of the Plan
Rate of return – The plan is ideal for risk averse investors. In today’s volatile times, the plan offers a fixed return of 5% to 7% return on investment (excluding mortality charges).
Rebates for higher single premium definitely prove to be attractive for high net worth individuals.

Demerits of the Plan

  • Riders – There are no additional riders available.
  • No fixed policy term. For those looking out for a long term plan, this may not be the ideal option.
  • Sum assured of 5 times of single premium may not be adequate.
  • Plan includes a service tax @10.3% which reduces the returns substantially.
  • The loyalty addition is not guaranteed and will depend on LIC's experience.
  • Tax free maturity benefits are as under tax laws. This may encounter changes in the future.

The plan is suitable for all groups of people, keen to save for child’s higher education or for financing other needs of self.

Read more about: lic insurance jeevan vriddhi
Story first published: Saturday, April 14, 2012, 10:23 [IST]
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