LIC Jeevan Rekha T.No.52

         One of the common topics related to the investment in 80C is LIC policies. There are various investment options available like PPF, NSC bonds, EPS and other govt securities. But insurance is an instrument which provides you and your family a contingency cover. My dad enrolled my for a LIC policy namely LIC Jeevan Rekha T No 52 in the year 2006. Since last 4 years I am paying the premiums and I used to crib upon paying a lot of premium on insurance policies. Recently I tried to understand what my policy is all about and is it really worth it investing so much in it.

In case of Jeevan Rekha, the minimum age of entry for this policy is 13 years completed while the maximum age is 65 years. The single premium paying terms available are 5,10,15,20 and 25 years and premiums payable for life.

The minimum sum assured is Rs 2 lakh and thereafter in multiples of Rs 10,000.The survival benefits equivalent to 10% of the basic sum assured are paid out to the life assured on survival after every five years from the date of commencement of the policy. For a 20-year term, 20%, 20%, 20% and 40% of the sum assured are paid out in the fifth , 10th, 15th and 20th year respectively. The policy matures on the death of the policy holder whereby the sum assured along with vested bonuses are payable, irrespective of survival benefits paid already. Also, if the policyholder survives till 85 years of age(which I would certainly looking at the lifeline on my palm), he would receive 100% of the assured sum - with bonus. Hence, if the policyholder lives till 85 years of age, he effectively receives 200% of the assured sum including the money paid back during the premium term.

Now my sum assured is Rs 10,00,000. The policy term is 15 years. I pay a premium of 46,700 every year. Every 5 years I would get Rs 1,00,000.The LIC India website public disclosure says that a bonus of 44Rs/1000/year has been declared on an average for this policy. Which means the vested bonus for last 8 years should be around Rs 3,52,000. Assuming the same blended average for next 7 years, the bonus amount on maturity should be Rs 6,60,000. So at the time of maturity I should be getting Rs 10,00,000 (Sum Assured) + Rs 6,60,000 + loyalty bonus if it is declared at that time = Rs 16,60,000(+ 3,00,000 which I had already received every 5th consecutive year). And thereafter maturity I will receive 1,00,000 every 5 years till the age of 85. So I am waiting for 2021, to get a big fat cheque which I would have never received otherwise.. :P

So the highlight of these policies is that they offer you both regular returns all through the term along with a lifelong cover. Thus, they not only provide for your financial needs at every stage of your life, but also ensure the security of the family in case of death.

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P.S: This policy is no longer available for sale, so do not take it as an endorsement or advertisement initiative. This is just an analysis I did for myself and thought of publishing it on my blog.