Life Insurance Corporation of India (LIC) has launched Jeevan Nischay, a new guaranteed, single-premium plan.
The Jeevan Nischay plan is a close-ended.
Jeevan Nischay has some similarity with the Jeevan Astha, introduced in 2009, which was claimed to have been a potential investment option when the global economy was in recession and when few showed interest in making market investments.
According to Life Insurance Corporation of India, Jeevan Nischay is a single-premium policy with guaranteed maturity benefits exclusively for existing policyholders of LIC. So, one has to have at least one existing LIC policy to make one eligible to buy Jeevan Nischay.
Jeevan Nischay, now open for subscription, is available until the end of March 2010.
According to the terms of the Jeevan Nischay policy, the maximum amount that one can invest will be linked to the extent of protection one has already bought. This means that a person with a term insurance of Rs 10 lakh is allowed to invest a maximum of Rs 1 lakh.
Jeevan Nischay is available to only those who are not subject to any additional charges for ill health, Life Insurance Corporation of India, the leading life insurer of India, said.
The plan covers only the mandatory 5 times of the premium amount for the first year of insurance. For subsequent years, the sum insured will be equivalent to the premium paid.
Since Jeevan Nischay offers only fundamental protection, it is similar to a bond, in which one pays only a one-time premium.
Jeevan Nischay will be available to anyone between the ages of 18 to 50. For a person who is 30 years old, an investment of Rs 1 lakh will mature into Rs 1.71 lakh after 10 years.
The policy terms are 5 years, 7 years, and 10 years.
According to investment experts, the main weakness of the Jeevan Nischay plan is that it is not as “simple and straightforward” as the highly successful Jeevan Astha that LIC launched in 2009. Since it offers only basic insurance cover, there is a lot of underwriting requirements for Jeevan Nischay. ‘High net worth individual’ investors may be put off by the underwriting requirements when the insurance cover provided is little.
The minimum amount can be invested in the Jeevan Nischay plan is Rs 10,000. But, if the premium amount is Rs 25,000 or more, the policyholder will get a higher maturity sum assured because of the incentives available.
Loans are available under Jeevan Nischay plan, and the rate of interest will be decided by the Life Insurance Corporation of India from time to time.
The policyholder of Jeevan Nischay is free to surrender the policy after one year of the policy’s commencement.
With the Jeevan Nischay, LIC aims at tapping the maturity plans that were offered under its previous investment plan named Bima Gold. At the time of its launch,
Bima Gold had achieved a sale of 1 crore policies.
According to the record of 2009, the Jeevan Astha plan fetched earnings worth Rs 10,000 crore with the status of guaranteed returns.