benefit illusion in jivan nidhi

8/3/2019 Benefit Illusion in Jivan Nidhi

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BENEFIT ILLUSION IN JIVAN NIDHI

Insurance Regulatory & Development Authority (IRDA) requires all life insurance companiesoperating in India to provide official illustrations to their customers. The illustrations are based

on the investment rates of return set by the Life Insurance Council (constituted under Section

64C(a) of the Insurance Act 1938) and is not intended to reflect the actual investment returnsachieved or may be achieved in future by Life Insurance Corporation of India (LICI).

For the year 2004-05 the two rates of investment return declared by the Life Insurance Councilare 6% and 10% per annum.

Product summary:

This is a with-profits pension plan which provides for death cover during the deferment period

and on survival to the date of vesting, the maturity proceeds are compulsorily to be used for

purchase of annuity.

Premiums:

Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deduction, asopted by you, throughout the term of the policy or till earlier death. Alternatively, the premium

may be paid in one lump sum (single premium).

Tax Benefits:Tax relief under Section 80CCC(1) is available on premiums paid under this policy.

Guaranteed Additions during the first five years:

The policy provides for the Guaranteed Additions at the rate of Rs.50/- per thousand Sum

Assured during first five years of the policy. The Guaranteed Additions are payable along withthe basic Sum Assured on vesting or on earlier death.

Bonuses after the first 5 years:

This is a with-profit plan and participates in the profits of the Corporations life insurancebusiness after 5 years. It gets a share of the profits in the form of bonuses. Simple Reversionary

Bonuses are declared per thousand Sum Assured annually at the end of each financial year.

Once declared, they form part of the guaranteed benefits of the plan. A Final (Additional) Bonus

may also be payable provided a policy has run for certain minimum period.

Death Benefit:

The Sum Assured along with accrued guaranteed additions and vested simple reversionary

bonuses and Final (Additional) Bonus, if any, is payable in a lump sum on death of the lifeassured during the deferment period of the policy.

Benefit on vesting:

On the date of vesting you can encash up to a maximum of 1/3rd of the amount consisting of the

Sum Assured along with accrued guaranteed additions, vested simple reversionary bonuses andFinal (Additional) Bonus, if any as a tax-free lump sum. The balance amount shall be


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compulsorily converted into an annuity at the option and the rates applicable at the time of

vesting of the annuity.

Supplementary/Extra Benefits:These are the optional benefits that can be added to your basic plan for extra protection/option.

An additional premium is required to be paid for these benefits.

Surrender Value:

Buying a life insurance contract is a long-term commitment. However, surrender value is

available on the plan on earlier termination of the contract.

Guaranteed Surrender Value:

The policy may be surrendered for cash after the policy is kept in force by payment of premiumsfor at least three years. The guaranteed surrender value available under this plan for all modes,

except the single premium mode, will be equal to 30% of the total amount of premiums paid

excluding the first years premium and the extra premiums. In case of single premium mode, The

guaranteed surrender value will be 90% of the premium paid excluding all extra premiums.

Corporations policy on surrenders:

In practice, the Corporation will pay a Special Surrender Value which is either equal to or more

than the Guaranteed Surrender Value. The benefit payable on surrender reflects the discountedvalue of the reduced claim amount that would be payable on death or at maturity. This value will

depend on the duration for which premiums have been paid and the policy duration at the date of

surrender. In some circumstances, especially in case of early termination of the policy, thesurrender value payable may be less than the total premium paid.

The Corporation reviews the surrender value payable under its plans from time to time

depending on the economic environment, experience and other factors.

Note: The above is the product summary giving the key features of the plan. This is for

illustrative purpose only. This does not represent a contract and for details please refer to your

policy document. Further, the tax benefits are as per present Tax Laws.

Benefit Illustration:

Statutory Warning

Some benefits are guaranteed and some benefits are variable with returns based on the future

performance of your insurer carrying on life insurance business. If your policy offers

guaranteed returns then these will be clearly marked guaranteed in the illustration table onthis page. If your policy offers variable returns then the illustrations on this page will show two

different rates of assumed future investment returns. These assumed rates of return are not

guaranteed and they are not upper or lower limits of what you might get back as the value ofyour policy is dependent on a number of factors including future investment performance.

Illustration 1:

Age at entry: 35 years


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Policy Term: 25 years

Premium paying term: 25 years

Sum Assured (Rs.): 100000Yearly Premium (Rs.): 4121

Illustration

2:

Age at entry:

35 years

Policy Term:25 years

Sum Assured

(Rs.): 100000Single

Premium

(Rs.): 53750

End

ofyear

Totalpremiums

paid tillend of

year

Benefit payable on death / Amount available on survival up tothe date of vesting for purchase of annuity

GuaranteedVariable Total

Scenario 1 Scenario 2 Scenario 1 Scenario 2

1 4,121 1,00,000 0 0 100000 100000

2 8,242 1,05,000 0 0 105000 105000

3 12,363 1,10,000 0 0 110000 110000

4 16,484 1,15,000 0 0 115000 115000

5 20,605 1,20,000 0 0 120000 120000

6 24,726 1,25,000 2300 7300 127300 132300

7 28,847 1,25,000 4600 14600 129600 139600

8 32,968 1,25,000 6900 21900 131900 146900

9 37,089 1,25,000 9200 29200 134200 154200

10 41,210 1,25,000 11500 36500 136500 136500

15 61,815 1,25,000 23000 73000 148000 198000

20 82,420 1,25,000 48500 157500 173500 282500

25 1,03,025 1,25,000 63500 206000 188500 331000

End

ofyear

Total

premiums

paid tillend of

year

Benefit payable on death / Amount available on survival up to

the date of vesting for purchase of annuity

GuaranteedVariable Total

Scenario 1 Scenario 2 Scenario 1 Scenario 2

1 53,750 1,00,000 0 0 100000 100000

2 53,750 1,05,000 0 0 105000 105000

3 53,750 1,10,000 0 0 110000 110000

4 53,750 1,15,000 0 0 115000 115000

5 53,750 1,20,000 0 0 120000 120000

6 53,750 1,25,000 2500 12400 127500 137400

7 53,750 1,25,000 5000 24800 130000 149800

8 53,750 1,25,000 7500 37200 132500 162200

9 53,750 1,25,000 10000 49600 135000 174600

10 53,750 1,25,000 12500 62000 137500 187000

15 53,750 1,25,000 25000 124000 150000 249000

20 53,750 1,25,000 53500 268000 178500 393000

25 53,750 1,25,000 70000 350500 195000 475500

benefit illusion in jivan nidhi

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