INTRODUCTION OF LIC’s JEEVAN SARAL– WITH PROFITS
( Table No. 165 )
1. INTRODUCTION
It has been decided to introduce a new Plan  LIC’s Jeevan Saral (Table No.165). Jeevan Saral is a unique plan having good features of the conventional plans and the flexibility of unitlinked plans. To the policyholder it provides –
· higher cover
· a smooth return,
· liquidity and
· a lot of flexibility
2. SPECIAL FEATURES:
In conventional products premium rates are given per thousand sum assured for different entry ages and terms. Under this product death cover will be same irrespective of age at entry and term but the sum payable at maturity will differ for different entry ages and terms.
This plan is more appropriate for employees seeking life cover through a Salary Savings Scheme.
3. PARTICIPATION IN PROFITS:
The policy will participate in profits by way of Loyalty Additions. Loyalty additions will be declared after the policy has been in full force for at least 10 years. Loyalty additions will also be payable if a death claim occurs in the 10th year of the policy provided that the policy is in full force. Loyalty additions will be subject to the Corporation’s experience.
4. BENEFITS:
On death:
· 250 times the monthly basic premium – which will be referred to as the Death Benefit Sum Assured, plus
· return of premiums paid, excluding the first year premium and extra / rider premiums, if any, plus
· loyalty additions, if any.
On Maturity:
· Maturity sum assured, plus
· Loyalty Additions, if any.
5. OPTIONS:
5.1. The plan offers the following optional riders by payment of additional premium:
· Accidental death and disability benefit rider
· Term Assurance benefit rider
5.2.The maximum cover for the above riders will be Rs.25 lakhs under all policies of the Corporation taken together.
5.3. The Term Assurance and Accident Benefit Sums Assured under the riders will not exceed the Death Benefit Sum Assured under the basic plan.
6. ELIGIBILITY CONDITIONS AND OTHER RESTRICTIONS:
6.1. Minimum age at entry : 12 years (completed)
Maximum age at entry : 60 years (nbd)
Maximum age at maturity: : 70 years.
Term : All terms from 10 to 35 years.
Premium : Minimum premium of Rs.250/ per month for entry age
up to 49 years and Rs.400/ per month for entry age 50
years and above. The premium shall be in the
multiples of Rs.50/ per month. There will be no limit on the maximum premium per month.
Mode : Yearly, Halfyearly and Quarterly. Monthly mode will be allowed under Salary Saving Scheme of the Corporation.
Maturity sum assured for ages 12 years to 17 years will be same as that for age 18 years for relevant terms.
6.2. In case term rider is opted for then the following restrictions would apply :
Minimum age at entry : 18 years (completed)
Maximum age at entry : 50 years
Maximum age at maturity : 60 years
Minimum Sum Assured : Rs.1 lakh
Maximum Sum Assured : Rs.25 lakhs (including Term Rider taken under all LIC plans)
The term assurance rider should be offered for the same term as that under the main policy and the Term Assurance Rider Sum Assured should be in multiples of Rs.10,000.
6.3. The total premium payable including all extra premiums and premiums for accident benefit and term rider should be rounded off to the nearest Rupee.
7. REBATES FOR MODE OF PREMIUM PAYMENT AND HIGH SUM ASSURED:
7.1 Mode rebate: 2% for yearly mode and 1% for half yearly mode. There are no rebates for quarterly and SSS mode.
The Maturity Sum Assured has to be calculated based on the basic premium, before allowing for any mode rebate. The rebates will apply to the basic premium (excluding any extra premium under this plan for substandard life) thereafter.
7.2 High benefit rebate: Nil
8. CEIS REBATE
A rebate of 10% of the basic premium will be available for employees of the Corporation.
9. UNDERWRITING
9.1 All underwriting rules for Endowment plan will apply. For the purpose of SUC (Sum under Consideration) and underwriting (Spl. Reports, financial underwriting etc.) the Death Benefit Sum assured plus any Term Assurance Sum Assured should be considered.
9.2. Proposals for Keyman Insurance can also be accepted under this plan.
9.3. Standard extra premium rates (e.g. for Occupational extra or in case of physically handicapped lives) would be those applicable to an Endowment plan and should be calculated per thousand Death Benefit Sum assured under the basic plan.
10. BACKDATING: The policies can be dated back within the financial year. Back dating interest will be charged at the rate of 9% p.a. for dating back in excess of one month. This rate is subject to revision. Same rule of charging interest will apply even where the policy is backdated to a lean month.
11. COMMISSION PAYABLE TO THE AGENTS / BROKERS AND DEVELOPMENT OFFICER’S CREDIT:
11.1. Commission rates (as percentage of premium) payable to Agents and Corporate Agents during the premium paying term (ppt) are as under :
Policy Term
First Year
Commission (excluding bonus commission)
2nd & 3rd year
Commission
Subsequent Year
Commission
10 to 14 years
20%
7.5%
5.0%
15 years & above
25%
7.5%
5.0%
11.2. In addition, a Bonus commission of 40% of first year commission will be payable.
11.3. Commission rates (as percentage of premium) payable to Brokers during the premium paying term (ppt) are as under :
Policy Term
First Year
Commission (excluding bonus commission)
Subsequent Year
Commission
10 to 14 years
25%
5.0%
15 years & above
30%
5.0%
11.4. No bonus Commission is payable in case of brokers.
11.5. Development Officer's Credit : 60% of FY premium for term 10 to 14 years
100% of FY premium for term 15 years and above
12. SURRENDER VALUE : The policy can be surrendered after it has been in force for at least 3 full years. The surrender value will be the greater of the Guaranteed Surrender Value or Special Surrender Value as given below :
12.1. Guaranteed Surrender Value (GSV) :
The GSV will be equal to the 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premium for accident benefit / term riders.
12.2. Special Surrender Value (SSV):
The special surrender value under the policy shall be paid as the sum of (a) and (b) given as under:
a) Discounted value or accumulated value, as the case may be, of the following :
80% Of maturity sum assured if less than 4 years premiums have been paid, 90% of the maturity sum assured, if 4 or more years but less than 5 years premiums have been paid and 100% of the maturity sum assured, if 5 or more years premiums have been paid. The maturity sum assured for this para will be the maturity sum assured corresponding to the term for which premiums have been paid under the policy. If the premiums have been paid for a fraction of a year, the maturity sum assured shall be worked out by way of mathematical interpolation.
The above amount shall be discounted from the due date of the next instalment premium to the date of surrender if the duration elapsed from the date of commencement of the policy to the date of surrender is less than the term for which the premiums have been paid. If the duration elapsed from the date of commencement to the date of surrender is greater than or equal to the term for which premiums have been paid then the above amount shall be accumulated with interest for the period from the due date of the first unpaid premium to the date of surrender.
The period for which the amount is to be discounted or accumulated shall be taken in complete months and fraction of a month will be ignored. The rate of interest to be used for discounting or accumulating under this plan, as the case may be, will be announced by the Corporation at the start of every financial year.
b) The loyalty additions, if any, for the term for which the policy has been in force, as announced while declaring the results of the Corporation’s valuation as at 31st March, immediately preceding the date of surrender.
13. PAID UP VALUE:
If, after at least 3 full years premiums have been paid, and any subsequent premium be not duly paid, the policy shall not be wholly void, but shall subsist as a paidup policy for a reduced sum. The benefit payable on death / maturity under such policies would depend on the number of years for which premiums have been paid and shall be the greater of:
 a sum that bears the same ratio to the full maturity sum assured as the number of premiums actually paid shall bear to the total number originally stipulated in the policy
OR
 the surrender value as per para 12 above assuming that the policy has been surrendered on the date of death / maturity, as the case may be.
14. PARTIAL SURRENDERS:
14.1 Any time after completion of three years or more from the date of commencement provided premiums have been paid for at least three full years, partial surrenders will be permitted. The basic premium under the policy shall be reduced and the surrender value (determined as per para 12 above) corresponding to the amount by which the basic premium is reduced will be paid subject to the following conditions:
¨abc¨ Once a partial surrender is made, all benefits payable under the policy will get automatically reduced proportionately.
¨abc¨ The sum assured under Accident and term rider benefits and the additional premium payable in respect of these benefits will also get correspondingly reduced subject to the satisfaction of restrictive conditions in respect of premium & sum assured.
¨abc¨ The reduced basic annual premium after the partial surrender should not be less than Rs.3,000/, where the age at entry was 49 years or below and Rs.4800 where the age at entry was 50 years or above.
¨abc¨ The minimum basic annual premium that can be surrendered at a time is Rs.1200/ p.a. and should be in multiples of Rs.600 p.a. thereafter.
¨ A minimum waiting period of one year is required between two successive surrenders.
¨ No partial surrenders will be allowed if a loan is outstanding under a policy.
¨abc¨ Subject to the above conditions, any number of partial surrenders will be permitted.
14.2 An endorsement showing the reduced premium and reduced benefits will be made on the policy at the time of partial surrender.
15. AUTO COVER
If a policy has been in force for full benefits (i.e. it is not in a paidup condition) for 3 or more years, the risk cover under the main plan will continue for 12 months from the date of first unpaid premium if subsequent premiums are not paid. The cover, however, in such a case, will not continue under rider benefits. This benefit will be available even if one or more partial surrenders have been made. However, the benefit will be available to the extent of the inforce benefit only.
16. POLICY LOAN
Loan facility is available under this plan after the policy has acquired a paidup value. Loan will be available to the extent of 90% or 85% of the Surrender Value, depending up on whether the policy is inforce or in lapsed condition respectively. The rate of interest will be determined by the Corporation from time to time. Presently, the rate of interest is 10.5%p.a.payable halfyearly.
17. GRACE PERIOD FOR NONFORFEITURE PROVISIONS:
17.1. A grace period of one month but not less than 30 days will be allowed for payment of yearly, halfyearly or quarterly premiums. The grace period will also apply for the premiums payable for the rider benefits.
17.2. If the premium is not paid before the expiry of the days of grace, the policy lapses.
17.3. If death occurs within the days of grace or during the period of auto cover, all premiums that have fallen due but unpaid as well as the premiums, if any, falling due before the next policy anniversary shall be deducted from the claim amount. However, the premiums so deducted shall be considered for refund subject to deductions of extra / first year/ rider benefit premiums etc.
18. CONDITIONS FOR REVIVAL / REINSTATEMENT
If the Policy lapses, it may be revived during the lifetime of the life assured, but within a period of 5 years from the date of first unpaid premium or before the date of maturity whichever is earlier, on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest (compounding halfyearly) at such rate as may be prevailing at the time of the revival. The revival of Term Assurance sum assured, if any, will also be considered along with the revival of the Main Policy, and will not be considered in isolation.
No reinstatement will be allowed under this plan.
19. POLICY STAMPING
Policy stamps will be affixed on Death Benefit Sum Assured or maturity sum assured whichever is greater.
20. PROPOSAL FORM
Form 300 or Form 340 (in case the proposer is different from the life assured) will be used. However, in Question No.3 in Form 300/Question No.4 in Form 340 the Life to be Assured/Proposer will mention the amount of basic annual premium along with the desired mode instead of Sum Assured. e.g.
a. If the proposer wants to pay a premium of Rs.250 per month, then the amount to be shown against question would be Rs.3000/ (i.e. 250 x 12)
b. If the proposer wants to pay a premium of Rs.2400 per halfyear, then the amount to be shown against question would be Rs.4800/ (i.e. 2400 x 2), without taking any mode rebate into account.
21. POLICY DOCUMENT
Specimen Policy Document is enclosed herewith as Annexure III. A specimen of endorsement as mentioned in 14.2 above is enclosed as Annexure IV.
22. BENEFIT TABLE
Maturity Sums Assured per Rs.100 per month basic premium (i.e. Rs.1,200 per year / Rs.600 per halfyear/ Rs.300 per quarter) for different age at entry and term are given in AnnexureI. The Class I Extra premiums for quinquennial terms to be charged under the plan are given in Annexure II. The extra premiums for intermediate terms will be arrived at by way of mathematical interpolation.
23. The plan will be available for sale with effect from 16th February, 2004.
LIC’S JEEVAN SARAL
1. INTRODUCTION:
LIC’s Jeevan Saral is a unique plan having good features of the conventional plans and the flexibility of unit linked plans. To the policyholder it provides –
· higher cover
· a smooth return,
· liquidity and
· a lot of flexibility
2. SPECIAL FEATURES:
Under this product death cover will be same irrespective of age at entry and term but the sum payable at maturity will differ for different entry ages and terms.
This plan is more appropriate for employees particularly seeking life cover through a Salary Savings Scheme.
3. BENEFITS:
3.1 On death:
· 250 times the monthly premium, plus
· return of premiums excluding extra/rider premium and first year premium, plus
· the loyalty addition, if any.
3.2 On Maturity:
· Maturity sum assured, plus
· The Loyalty Additions, if any.
3.3 The specimen Maturity Sums Assured (MSAs) per Rs.100/ monthly premium are given below for some of the ages and terms:
Age at Entry
Policy Term
10 years
15 years
20 years
25 years
20
11,156
19,628
28,039
36,839
30
11,053
19,300
27,345
35,492
40
10,431
17,839
24,598
30,854
50
8,442
13,444
16,164

4. SURRENDER VALUE:
The policy can be surrendered after it has been in force for at least 3 full years. The surrender value will be the greater of Guaranteed Surrender Value or Special Surrender Value as given below:
4.1. Guaranteed Surrender Value (GSV):
The GSV will be equal to the 30% of the total amount of premiums paid excluding the premiums for the first year and all the extra premiums and premium for accident benefit / term riders.
4.2. Special Surrender Value (SSV):
The special surrender value under the policy will be paid as the sum of (a), (b) and (c) given as under:
a) 80% Of maturity sum assured if less than 4 years premiums have been paid, 90% of the maturity sum assured, if 4 or more years but less than 5 years premiums have been paid and 100% of the maturity sum assured, if 5 or more years premiums have been paid. The maturity sum assured for this para will be the maturity sum assured corresponding to the term for which premiums have been paid under the policy. If the premiums have been paid for a fraction of a year, the maturity sum assured shall be worked out by way of mathematical interpolation.
b) The interest from the date of first unpaid premium to the date of surrender on (a) above. The period for which interest is to be paid may be taken in complete months and fraction of a month may be ignored. The rate of interest for this purpose shall be announced at the start of every financial year.
c) The loyalty additions, if any, as announced while declaring the results of the Corporation’s valuation as at 31st March, immediately preceding the date of surrender.
5. PAID UP VALUE:
If, after at least 3 full years premiums have been paid, and any subsequent premium be not duly paid, the policy shall not be wholly void, but shall subsist as a paidup policy for a reduced sum. The benefit payable on death / maturity under such policies would depend on the number of years for which premiums have been paid and shall be the greater of:
 a sum that bears the same ratio to the full maturity sum assured as the number of premiums actually paid shall bear to the total number originally stipulated in the policy
OR
 the surrender value as per para 4 above assuming that the policy has been surrendered on the date of death / maturity, as the case may be.
6. OPTIONS:
6.1 The plan offers following optional riders by payment of additional premium:
· Accidental death and disability benefit
· Term Assurance benefit.
6.2 The maximum cover for the above riders will be Rs.25 lakhs under all policies of the Corporation taken together.
6.3ACCIDENTAL DEATH AND DISABILITY BENEFIT:
6.3.1 On death arising as a result of accident an additional amount equal to the Accident Benefit Sum Assured is payable. On total and permanent disability arising due to accident (within 180 days from the date of accident) this amount will be paid over a period of 10 years in monthly instalments.
6.3.2 The disability due to accident should be total and such that the Life Assured is unable to carry out any work to earn the living. Following disabilities due to accidents are covered –
a) irrevocable loss of the entire sight of both eyes or
b) amputation of both hands at or above the wrists or
c) amputation of both feet at or above ankles, or
d) amputation of one hand at or above the wrist and one foot at or above the ankle,
e) No benefit will be paid in case of accidental death or disability due to accident in case of
f) intentional selfinjury, attempted suicide, insanity or immorality or the Life Assured is under the influence of intoxicating liquor, drug or narcotic,
g) engagement in aviation or aeronautics other than that of a passenger in any air craft.
h) injuries resulting from riots, civil commotion, rebellion, war, invasion, hunting, mountaineering, steeple chasing or racing of any kind
i) accident resulting from committing any breach of law.
j) accident arising from employment in armed forces or military services or police organisation.
6.4 TERM ASSURANCE RIDER:
An amount equal to Term Assurance Sum Assured will be payable on death of the life assured during the policy term.
7. OTHER BENEFITS:
The plan offers a number of other benefits as follows:
7.1. Premium holidays:
The plan offers premium holiday of 12 months after the policy has been in force for a period of 3 years or more.
7.2. Flexible term:
The policyholder can choose a maximum term but can surrender at any time without any surrender penalty or loss.
7.3. Partial surrenders:
The plan will allow partial surrenders from 4th year onwards subject certain conditions for which please refer to Policy document.
7.4. Due to existence of the flexible term and partial surrenders the policyholder will enjoy a lot of liquidity under the plan.
7.5. The plan also provides for “15 days free look period”.
7.6. Loan: Loan is permissible under the policy after it acquires a paidup value. The terms and conditions of loan and the rate of interest applicable will be as fixed by the Corporation from time to time. At present, the rate of interest is 10.5% p.a. compounding halfyearly.
7.7. Grace Period : A grace period of one month but not less than 30 days will be allowed for payment of yearly, halfyearly or quarterly premiums. If the premium is not paid before the expiry of the days of grace, the Policy will lapse.
7.8. Revival: Subject to production of satisfactory evidence of good health, a lapsed policy can be revived by paying arrears of premium together with interest within a period of five years from the due date of first unpaid premium. The rate of interest at present is 9%.
8. LOYALTY ADDITIONS:
Only loyalty additions will be declared under the plan. The minimum term after which a policy can earn loyalty addition will be 10 years. Loyalty additions will be subject to Corporation’s experience. Loyalty additions may be paid in case of death, maturity and surrenders.
9. ELIGIBILITY CONDITIONS AND OTHER RESTRICTIONS:
9.1. Age at entry : Minimum 12 (completed) and maximum 60 years nearest
9.2. Age at maturity: : Maximum 70 years.
9.3. Term : All terms from 10 to 35 years.
9.4. Premium : Minimum premium of Rs.250/ per month for entry age upto 49 years and Rs.400/ per month for entry age 50 years and above. The premium shall be in the multiples of Rs.50/ per month. The maximum premium will be Rs.10,000/ per month.
9.5. Mode : Yearly, Halfyearly, Quarterly and Monthly under Salary Saving Scheme
9.6. In case of term rider, minimum and maximum age at entry will be 18 and 50 years respectively. Further minimum sum assured will be Rs.1 lakh.
10. REBATES FOR MODE OF PREMIUM PAYMENT AND HIGH SUM ASSURED:
Mode rebate: 2% for yearly mode and 1% for half yearly mode. There are no rebates quarterly and SSS mode.
High benefit rebate: Nil
11. EXCLUSIONS :
This policy shall be void if the Life Assured commits suicide(whether sane or insane at the time) at any time on or after the date on which the risk under the policy has commenced but before the expiry of one year from the date of acceptance of risk. In case of death due to suicide during this period, the corporation will not entertain any claim by virtue of this policy except to the extent of a third party’s bonafide beneficial interest acquired in the policy for valuable consideration of which notice has been given in writing to the office where this policy is serviced, at least one calendar month prior to death.
12. BENEFIT ILLUSTRATION :
12.1 Statutory warning
“Some benefits are guaranteed and some benefits are variable with returns based on the future performance of your life insurance company. If your policy offers guaranteed returns then these will be clearly marked “guaranteed” in the illustration table on this page. If your policy offers variable returns then the illustrations on this page will show two different rates of assumed 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 of your policy is dependant on a number of factors including future investment performance.”
12.2 Example:
Frequency of premium payment: monthly under Salary Saving Scheme
Age at entry: 35 years
Policy term: 30 years
Monthly Premium: Rs.400/
Maturity Sum Assured: Rs.1,62,416/
End of Policy Year
Total Premium Paid (Rs)
Death Benefit
Guaranteed
Variable
Total
Scenario 1
Scenario 2
Scenario 1
Scenario 2
1
4,800
1,00,000


1,00,000
1,00,000
2
9,600
1,04,800


1,04,800
1,04,800
3
14,400
1,09,600


1,09,600
1,09,600
4
19,200
1,14,400


1,14,400
1,14,400
5
24,000
1,19,200


1,19,200
1,19,200
6
28,800
1,24,000


1,24,000
1,24,000
7
33,600
1,28,800


1,28,800
1,28,800
8
38,400
1,33,600


1,33,600
1,33,600
9
43,200
1,38,400


1,38,400
1,38,400
10
48,000
1,43,200
4,000
8,000
1,47,200
1,51,200
15
72,000
1,67,200
7,640
16,000
1,74,840
1,83,200
20
96,000
1,91,200
18,520
52,000
2,09,720
2,43,200
25
1,20,000
2,15,200
39,200
1,30,000
2,54,400
3,45,200
30
1,44,000
2,39,200
76,480
3,00,000
3,15,680
5,39,200
End of Policy Year
Total Premium Paid (Rs)
Maturity / Surrender Value
Guaranteed
Variable
Total
Scenario 1
Scenario 2
Scenario 1
Scenario 2
1
4,800





2
9,600





3
14,400
8,099


8,099
8,099
4
19,200
12,942


12,942
12,942
5
24,000
18,660


18,660
18,660
6
28,800
23,180


23,180
23,180
7
33,600
27,856


27,856
27,856
8
38,400
32,744


32,744
32,744
9
43,200
37,892


37,892
37,892
10
48,000
43,360
4,000
8,000
47,360
51,360
15
72,000
75,200
7,640
16,000
82,840
91,200
20
96,000
1,05,404
18,520
52,000
1,23,924
1,57,404
25
120,000
1,35,296
39,200
1,30,000
1,74,496
2,65,296
30
144,000
1,62,416
76,480
3,00,000
2,38,896
4,62,416
12.3 Notes:
i) This illustration is applicable to a nonsmoker male/female standard (from medical, life style and occupation point of view) life.
ii) The nonguaranteed benefits (1) and (2) in above illustration are calculated so that they are consistent with the Projected Investment Rate of Return assumption of 6% p.a.(Scenario 1) and 10% p.a. (Scenario 2) respectively. In other words, in preparing this benefit illustration, it is assumed that the Projected Investment Rate of Return that LICI will be able to earn throughout the term of the policy will be 6% p.a. or 10% p.a., as the case may be. The Projected Investment Rate of Return is not guaranteed.
12.4 The main objective of the illustration is that the client is able to appreciate the features of the product and the flow of benefits in different circumstances with some level of quantification
13. Extract from Section 41 of the Insurance Act :
No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy nor shall any person taking out or renewing or continuing a policy accept any rebate except such rebates as may be allowed in accordance with the published prospectuses or tables of the insurer
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