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Benefit Illusion in Jivan Nidhi

Benefit Illusion in Jivan Nidhi

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Published by: kharoddhaval1 on Dec 14, 2011
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09/16/2014

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BENEFIT ILLUSION IN JIVAN NIDHI Insurance Regulatory & Development Authority (IRDA) requires all life insurance companies operating

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 returns achieved 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 Council are 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, as opted 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 with the 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 Corporation’s life insurance business 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 life assured 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 and Final (Additional) Bonus, if any as a tax-free lump sum. The balance amount shall be

In some circumstances. Surrender Value: Buying a life insurance contract is a long-term commitment. This value will depend on the duration for which premiums have been paid and the policy duration at the date of surrender. However.” Illustration 1: Age at entry: 35 years . the surrender value payable may be less than the total premium paid. This is for illustrative purpose only. If your policy offers guaranteed returns then these will be clearly marked “guaranteed” in the illustration table on this page. The Corporation reviews the surrender value payable under its plans from time to time depending on the economic environment. The benefit payable on surrender reflects the discounted value of the reduced claim amount that would be payable on death or at maturity. The guaranteed surrender value available under this plan for all modes. An additional premium is required to be paid for these benefits. Guaranteed Surrender Value: The policy may be surrendered for cash after the policy is kept in force by payment of premiums for at least three years. Further. the tax benefits are as per present Tax Laws.compulsorily converted into an annuity at the option and the rates applicable at the time of vesting of the annuity. except the single premium mode. 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. Note: The above is the product summary giving the key features of the plan. experience and other factors. Supplementary/Extra Benefits: These are the optional benefits that can be added to your basic plan for extra protection/option. This does not represent a contract and for details please refer to your policy document. the Corporation will pay a Special Surrender Value – which is either equal to or more than the Guaranteed Surrender Value. If your policy offers variable returns then the illustrations on this page will show two different rates of assumed future investment returns. will be equal to 30% of the total amount of premiums paid excluding the first year’s premium and the extra premiums. surrender value is available on the plan on earlier termination of the contract. 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 of your policy is dependent on a number of factors including future investment performance. In case of single premium mode. especially in case of early termination of the policy. Corporation’s policy on surrenders: In practice. The guaranteed surrender value will be 90% of the premium paid excluding all extra premiums.

750 1.000 0 0 115000 115000 Single 5 53.750 1.000 1.000 1.10.000 1.25.484 20.000 1.000 1.00.25.25.25.25.750 53.05.210 61.25.10.121 8.25.750 1.15.750 1.750 53.25.000 1.): 100000 Yearly Premium (Rs.750 1.000 1.): 53750 7 8 9 10 15 20 25 53.000 0 0 120000 120000 Premium 6 53.025 1.25.00.000 1.847 32.20.000 1.000 1.25.25.000 5000 7500 10000 12500 25000 53500 70000 24800 37200 49600 62000 124000 268000 350500 130000 132500 135000 137500 150000 178500 195000 149800 162200 174600 187000 249000 393000 475500 .750 53.815 82.000 0 0 0 0 0 2300 4600 6900 9200 11500 23000 48500 63500 0 0 0 0 0 7300 14600 21900 29200 36500 73000 157500 206000 100000 105000 110000 115000 120000 127300 129600 131900 134200 136500 148000 173500 188500 100000 105000 110000 115000 120000 132300 139600 146900 154200 136500 198000 282500 331000 Total Benefit payable on death / Amount available on survival up to End premiums the date of vesting for purchase of annuity Illustration of paid till Variable Total 2: year end of Guaranteed Scenario 1 Scenario 2 Scenario 1 Scenario 2 Age at entry: year 35 years 1 53.000 1.750 53.000 1.000 1.089 41.25.): 100000 4 53.750 53.750 53.000 1.25.000 1.750 1.420 1.000 1.242 12.25.000 2500 12400 127500 137400 (Rs.): 4121 Total Benefit payable on death / Amount available on survival up to End premiums the date of vesting for purchase of annuity of paid till Variable Total year end of Guaranteed Scenario 1 Scenario 2 Scenario 1 Scenario 2 year 1 2 3 4 5 6 7 8 9 10 15 20 25 4.726 28.000 0 0 100000 100000 Policy Term: 2 53.Policy Term: 25 years Premium paying term: 25 years Sum Assured (Rs.000 1.05.000 1.000 0 0 110000 110000 Sum Assured (Rs.750 1.363 16.000 0 0 105000 105000 25 years 3 53.20.968 37.03.25.15.605 24.25.

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