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LIC Jeevan Saathi Plan

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The LIC of India has come forward with an insurance plan to secure the life of the married couple by providing an endowment insurance policy that covers the life of both the partners and gives them financial security as well. The endowment plan allows the insurance holders to get the benefits of the life insurance policy and also get maturity benefits at the end of the policy term. The policy will cater to the needs of a couple who are looking for a joint insurance plan and a single policy to insure the life of both the partners. As people find it difficult to maintain separate life insurance plans, the insurer has provided a single policy to provide life cover to both the members.

The policy is a unit-linked plan that serves the purpose of both investment and life insurance. The premium amount paid by the insured is utilized in getting the life insurance cover as well the investment in the equity and debt instruments. The purpose of the policy is called principal life assured (PLA), and the other partner is called spouse life assured (SLA). The sum assured can be selected by the PLA to get the life insurance cover for both the partners, and the premium amount will depend upon the various factors like maturity benefits, age of the partners, occupation of the partners, and other relevant parameters.

The premium payment of the policy can be made in either single premium payment or regular premium payment, and the couple can select as per their convenience. In the event of the death of the principal life assured, the spouse or the other policy partner will get the death benefits, and the future premiums of the policy are waived off. The plan also allows for subsequent investments in the units by paying the top-up premium amounts in four investment funds. Please note that as it is a unit-linked plan, the risk of the investment is borne by the policyholders. The insurer invests a part of the premium amount in the equity and debt instruments, and the future value of the funds will depend upon the market situation. The amount invested can rise or fall as per the situation of the market at the time of maturity of the policy.

Eligibility Conditions for LIC Jeevan Saathi Plan

Minimum Age at entry  

18 years

Maximum Age at entry

 55 years

Maximum Maturity Age

70 years

Policy Term  

Regular premium: 10, 15 to 20 years

Single premium: 10 to 20 years

Minimum Premium  

Regular premium

Rs. 10,000 per annum for policy term 15 to 20 years

Rs. 15,000 per annum for policy term 10 years

Regular premium ( monthly (ECS) payment)

Rs. 10,000 per annum for policy term 15 to 20 years

Rs. 15,000 per annum for policy term 10 years

Single premium payment: Rs. 40,000

Minimum Sum Assured   

Regular Premium payment: 5 times the annualized premium for each of principal and spouse life assured

Single-Premium: 1.25 times the single premium for each of principal and spouse life assured

 Maximum Sum assured  

Including both Principal Life Assured and Spouse Life assured

 

Regular Premium:  

If both the PLA and SPA are up to 40 years at the time of entry, the sum assured is 30 times the annualized premium.

If anyone of the PLA and SPA is up is 41 years, and above at the time of entry, the sum assured is 20 times the annualized premium.

Single-Premium:     

If both the PLA and SPA are up to 40 years at the time of entry, the sum assured is 5 times the single premium amount.

If anyone of the PLA and SPA is up is 41 years and above at the time of entry, the sum assured is 2.5 times the Single premium amount.

Subject to the minimum sum assured condition, the sum assured for the spouse shall be less than or equal to the Principal Assured.

If The minimum Sum Assured is not in the multiples of Rs. 5,000, rounding off will be done to the next multiple of Rs. 5,000.

Key Features of LIC Jeevan Saathi Plus

The following are the key features offered by LIC Jeevan Saathi Plus insurance policy:

Type of Plan

Endowment plan with maturity benefits for married couples

Premium Payment options

Can be done in yearly, half-yearly, quarterly and monthly mode (only through the ECS mode)

Top – Up / Additional Premium

The insured has the flexibility to pay the top-up premium to the insurer in the multiples of Rs. 5000

Partial Withdrawals

Can be done either In the form of a fixed amount or a fixed number of units allotted to the insurance holder

Switching between fund types

The policy allows the insured to get 4 switches within the given policy year, which can be done free of cost.

After the utilization of the free switches, subsequent switches are paid at Rs. 100 per switch

Increase of Risk Covers

Not allowed in the policy

Decrease of Risk Covers

Allowed once a year but once risk cover is reduced, it cannot be increased or restored

Option to continue the cover after revival period

Must be done at least 1 month prior to the completion of the revival period

Cooling off period

15 days

Reinstatement

Once surrendered, the policy cannot be reinstated

Revival

A lapsed policy can be revived during a 2-year period starting from the date of the first unpaid premium or before the policy matures, depending on whichever is earlier

Settlement Option

Cannot exceed 5 years

Benefits of LIC Jeevan Saathi Plan

The policy provides several benefits to the insured, some of which are mentioned below:

Premium Top-up

The principal sum assured has the flexibility to increase the premium amount in the multiples of 1,000 throughout the term of the policy. There is no need to increase the sum assured while increasing the premium amount. Please note that top-up can opt only when the premium payments have been made. The limit on the top-up premiums is 25% of the total amount of the regular premiums. After the death of the principal sum assured, the top-up premiums are not allowed.

Partial Withdrawal

The principal sum assured has the right to encash the units of the insurance policy after the completion of 3 years from the date of the start of the policy. Please note that partial withdrawal can be in the form of either a fixed amount or the fixed number of units as required by the policyholder. The following conditions must be justified to be eligible for partial withdrawals.

  • For a regular premium payment policy, the policyholder must have paid the premium amount for 3 years. Also, the withdrawal will be allowed if the policyholder has a fund balance of a minimum of 2 annualized premiums in the fund account
  • For a single premium payment policy, the policyholder should have a minimum balance of Rs. 5,000 in the fund account or 10% of the single premium amount is maintained in the account. Depending upon whichever is higher, the withdrawal will be allowed
  • For the policyholders who have opted for top-up policy premiums, the withdrawal will be allowed only after the allocation for the top-up premium amount has been done by the insurer
  • There would be no restriction of 3 years if the policyholder, either the principal assured or spouse assured dies. The withdrawal can be made by the living member of the policy, and the insurer is bound to process the withdrawal
  • If the principal policyholder dies during the turn of the policy, the spouse can get the partial withdrawal process upon satisfactorily clearing the conditions stated by the insurer

Switching of Funds

The insurer provides the flexibility to the policyholder to switch between the funds to get maximum benefits of the investment. The insured can do as many switches as possible. The first four switches are free of cost, and there is nothing charged by the insurer. The fifth and the subsequent switch will bear a charge of Rs. 100 on the insured. The switching of funds is allowed by the SLA after the death of the principal.

Risk Cover

The insurer does not allow for an increase in the risk cover associated with the policy. The decrease in the risk cover is allowed only once in a year subject to the payment of all the premiums. The risk cover once reduced cannot be increased or reinstated by the policyholder.

Death Benefit Transfer to Policyholder Fund

The survival of the policy has the option to transfer the sum assured (death benefits) to the fund account of the policyholder. The option is available only at the time of the intimation of the death of the policyholder. The funds in the account can be withdrawn either fully or partially anytime by the survivor without the restriction of the 3 years waiting period.

Cover after the Revival Period

The insurer provides the option to the policyholder to continue the life cover even after the revival of the policy without having to pay any premiums. The option is subject to the availability only if the premiums for at least three years have been paid and the insured sends an intimation to continue the cover one month before the completion of the revival period. The cover continues till the time the fund in the policyholder reaches the value of 1 annualized premium.

Discontinuing the Premiums

Not paying the premium within the grace period will lead to policy lapse, and this applies to all the premium payment methods of monthly, half-yearly, quarterly, and annually. The policy can be revived within 2 years from the date of the non-payment of the premium.

In case the premiums for the first three years of the policy have been paid, and then the policy lapses, the policyholder will still enjoy the premium waiver benefit cover and the life cover. The charges for the policy revival like mortality charges and additional charges are charged from the policyholder’s fund value by utilizing the units in the account.

Payment of Death Benefits

The following are the conditions where LIC pays out the death benefits:

Death of the Principal assured while the spouse assured is alive

In the event of the death of the PLA, the sum assured of the policy will be payable to the spouse of the policy and the future premium payments are waived off by the insurer.

Death of principal assured after the demise spouse assured

The death of the spouse followed by the principal will lead to the payment of the sum assured as applicable and the future premiums are waived off after terminating the policy.

Death of spouse when the principal assured is alive

The sum assured as applicable by the policy terms will be payable to the principal assured.

Death of spouse assured after the demise of principal assured

The death of the spouse followed by the principal will lead to the payment of the sum assured as applicable and the future premiums are waived off after terminating the policy.

Death of principal assured and spouse assured

The sum assured as applicable by the policy for both the SLA & PLA and the fund value of the policyholder account equivalent to the future premiums will be paid to the insured. Further, the policy will be terminated.

  • Upon maturity – The funds in the policyholder’s account will be payable by the insurer
  • Upon Surrender - The amount paid will be the policyholder’s fund value. The surrender value will only be paid after completing 3 policy years of the policy. Please note that the policy once surrendered, cannot be reinstated by the policyholder.
  • Partial Withdrawal - The partial withdrawal is allowed only after the completion of 3 years of the policy

Policy Settlement

When the policy comes to maturity, the policyholder, the PLA, or SLA, if the PLA is not alive, will receive the settlement amount from the insurer after exercising the settlement option. The amount will be received in the form of installments over 5 years, and only the fund management charge is deductible from the settlement amount. The life cover will subside once the policy matures, and the settlement amount payable to the insured will depend upon the net asset value of the funds at the time of opting for the settlement option. As the amount is invested in the equity and debt funds, the value of the investment may rise or fall as per the market position.

Risks Associated with LIC Jeevan Saathi Plan

There are some risks associated with the plan, and the policyholder must read all the terms and conditions in detail to prevent any misunderstanding leading to the loss of the invested amount:

  • LIC Jeevan Saathi plan is a policy that couples both insurance cover and investment and the part of the premium paid by the policyholder is used to purchase the units in the funds. The units perform as per the market situation and the invested value might rise or fall leading to the increase or decrease of the invested value
  • The premium invested in the policy is subjected to market risks and the net asset value (NAV) can go up and down based on the fund performance and the factors associated with the market capital conditions. The investor is responsible for his/her own decision about the investment and switching of funds
  • Life insurance corporation is only the insurance provider and the LIC Jeevan Saathi plan is merely an insurance policy which is based on the units linked with the capital market and does not talk about the quality of the contract and the future aspects associated with it

Cooling-off Period

The LIC of India offers its customers a period to review the policy terms and conditions and the benefits associated with it. If the applicant after buying the policy is not happy with the service or the terms and conditions then he/she can return the policy within 15 days. The amount invested by the insured will be returned as per the following conditions:

  • Units in the policyholder’s account
  • Unallocated premium amount
  • Deduction of the policy administration charge fee
  • Charges as per Rs. 0.20 per thousand of the sum assured of principal and spouse assured
  • The cost of the medical tests and examinations conducted before the policy will also be deducted from the refundable amount

Loan Facility

The insurance policy does not offer any loan facility on the policy.

Riders Available with LIC Jeevan Saathi Plan

Policy riders are the insurance plans which are offered by the insurer along with the basic life insurance plan. The purpose of a rider is to provide maximum coverage to the insured and enhance the financial security of the policy. Every rider has a separate premium to be paid along with the life insurance premium and the sum assured of the rider will be provided other than the death benefits of the insurance cover. Riders available with the LIC Jeevan Saathi policy are:

Accident Death Benefit Rider

The rider provides assistance at the time of death of the insured in an accident. The SLA in such a case will get the sum assured from the rider as well as the life insurance policy. The premium of the rider is Rs. 2 per thousand of the sum assured.

There is a built-in rider with the policy known as premium waiver rider, which helps the insured in the event of the principal assured. The future premiums of the plan are waived off and the policy continues with the survivor of the policy.

Exclusions of the LIC Jeevan Saathi Plan

The death of the principal assured caused by suicide within the first year of the start of the policy will not get any claim benefits filed by the spouse assured. Only the funds’ value in the policyholder account will be considered. Similarly, the suicide of the spouse assured within one year of the policy, will not get any claim benefits.

Tax Benefits of the Policy

The premium paid towards the LIC Jeevan Saathi plan can be deducted from the taxable income and one can reduce the tax liability as well. The tax benefit is provided under section 80c of the income tax act, 1961. The maximum tax deduction from the income can be Rs. 1,50,000.

Claim Process of LIC Jeevan Saathi Plan

The following steps are to be followed to make a death claim with the LIC of India:

  • Intimating the life insurance corporation about the death of the policyholder is the first step in making a claim. The information to the insurer can be provided by reaching out to the local office of the insurer or by using the helpline number mentioned on the web portal
  • The claim intimation form can be collected from the local office or by downloading from the web portal. The details to be mentioned in the form must be thoroughly checked and confirmed to avoid any discrepancies in the claim process
  • Confirming the documents required by the insurer to process the claim is important and must be checked

Documents Required to File a Death Claim with LIC of India

In case of death of the principal assured or the spouse assured, the intimation has to be sent to the policyholder to get the claim process started. The documents required by the insurer for claim processing are listed below. One should also check with the insurer to get hassle-free claim settlement

  • Death certificate in the name of the deceased
  • Proof of age of the deceased, if not submitted at the time of the purchasing the policy
  • Policy document stating the policy number
  • If the insured was admitted to the hospital at the time of death then a statement from the hospital authorities  is required
  • Certificate of a medical attendant of the deceased stating the cause of the death
  • Cremation or burial certificate is also required from the authority present the time of the last rights
  • Employer certificate, if the deceased was employed in an organization
  • In the case of plane crash leading to the death of any of the policyholder, the certificate or confirmation letter from the airport authorities is required
  • In the case of shipping accident leading to the death of any of the policyholder, the certificate or confirmation letter from the shipping authorities is required
  • If any or both of the assured’s die in a road accident, the first information report, Panchanama has to be submitted along with the documents

How to Buy LIC Jeevan Saathi Plan?

The policy for the married couple can be purchased from the local office of the LIC of India by submitting the relevant documents and by paying the premium amount.

Steps leading to buying a LIC Jeevan Saathi Plan are listed below:

  • Confirming the details of the policy, the sum assured, tenure, premium payment frequency, and other relevant information should be discussed with the insurance provider before making a decision to buy the policy
  • Make a list of the documents required for purchasing the policy from the life insurance corporation of India
  • Confirmation about the premium amount from the insurer and paying in the mode as suggested
  • The insurance policy will start from the date of the receipt of the payment
  • The policy copy is mailed to the registered address of the insured provided at the time buying the policy

Documents Required to Purchase LIC Jeevan Saathi Plan

Following documents are required to purchase the policy:

  • The personal details of the principal and spouse assured like the name, present and permanent address, contact number, the email address should be mentioned in the proposal form  
  • Permanent address proof of both the applicants like Aadhar card, voter id card, driving license or passport
  • Identity proof of both the principal assured and spouse assured applicant like PAN card, passport, Aadhar card, driving license, ration card, attested bank statement or passbook
  • Photographs of the applicants
  • Copies of the government identity card of the nominee
  • Age of proof of both the applicants of the plan
  • Occupational details of the applicants
  • The proposal form will ask for the funds in which the applicants want the premium amount to be invested

Once all the forms and the details are submitted to the insurer and the validation has been, the policy will start.

Things to Check before buying the LIC Jeevan Saathi Plan

The plan’s focus is to provide both life insurance and investment plans to the married couple and to ensure financial security at the time of death of the insured. Before buying the policy, some important parameters must be checked.

Risk Assessment

A unit-linked insurance plan invests the premium amount paid by the insured in the capital market and there are multiple factors that influence the movement of the market. While making an informed decision to purchase the policy, applicants should check the risk assessment and should decide if they need a basic life insurance plan or a unit-linked insurance policy. If the risk capacity of the applicant is high then investing in a unit-linked plan will fulfil the purpose of the policyholder.

Funds for Investment

The insurer will provide a choice of funds in which the amount will be invested and it depends upon the selection of the applicant which ones to choose from. While making a decision it is important to check the high-risk funds which fluctuate more with the market movement and may result in lower payment at the end of the policy term. Discussing with the insurer regarding the funds and the risks is crucial for investment purposes.

Switching Funds

The policy gives the choice to switch between the funds and this can be done free of cost, four times in a year. While switching, one can opt for the funds with low risk and higher returns depending upon the risk capacity of the policyholder.

FAQs

  • Q1. What types of fund options are available under a unit-linked insurance plan?

    A1.   

    General Description

    Nature of Investments

    Risk Category

    Equity Funds

    Invested in company stocks with the aim of capital appreciation

    Medium to High

    Fixed Interest and Bond Funds

    Invested in government securities, corporate bonds,  and other fixed-income instruments

    Medium

    Cash Funds or money market

    funds

    Invested in safe investment options like bank deposits, and money market instruments

    Low

    Balanced Funds

    Combining equity investment with fixed interest instruments

    Medium

  • Q2. What are the charges applicable to unit-linked insurance plans?

    A2. Some of the charges in unit-linked insurance plans are listed below:

    Premium Allocation Charge: The charges are levied while allocating the units to the insured.

    Mortality Charge: The charges are levied to include insurance coverage in the plan.

    Fund Management Fees: The fee is charged by fund houses for the management of the funds

    Administration Fee: The fee is charged for the administration of the funds and is deducted by the cancellation of the units.

    Surrender Charges: Charges deducted from the units while surrendering the policy

    Fund Switching Charge: The fee charged by the funds while making a switch in the funds

  • Q3. Are there guaranteed returns in the unit-linked plan?

    A3. A unit-linked insurance plan invests the premium amount in the funds, which are based on the performance of the capital markets. The risk is associated with the plan and has to be borne by the insurance buyer. The invested amount will gain or fall depending upon the fund performance.

  • Q4. What should an applicant check before buying the unit-linked insurance plan?

    A4. The following parameters should be discussed with the insurer before making a decision to buy the policy:

    • All the charges deductible under the policy at the time of purchasing and making a switch in the funds
    • Payment on premature surrender of the policy
    • Features and benefits of the policy
    • Limitations and exclusions of the policy
    • Policy lapse and its consequences
    • Other disclosures
  • Q5. How much premium will be used for purchasing the units?

    A5. The premium share in the investment depends on the products and the insurance provider. It is important to discuss the investment amount with the insurance provider.

  • Q6. What is a set net asset value of a fund?

    A6. The value of each unit of the fund on any given day is known as net asset value. The NAV keeps on fluctuating depending upon the market conditions.

Written By: Paisawiki - Updated: 12 April 2021