Surrender Value under Jeevan Saral Plan (T- 165)

Special Surrender Value under Jeevan Saral Plan (T- 165).

Jeevan Saral Plan (T-165) was introduced with effect from 16th February 2004 vide our circular Actl/1934/4 dated 12.02.2004.

As per the policy conditions, the policy can be surrendered after it has been in force for at least 3 full years. The greater of the Guaranteed Surrender Value or Special Surrender Value is payable as Surrender Value under the policy.

In terms of these provisions the Special Surrender Value shall be the sum of (a) Discounted Value or Accumulated Value of 80% / 90% / 100% of the maturity sum assured, as the case may be, and (b) Loyalty Additions, if any. There is also a provision for partial surrenders, 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. It was stated in the introductory circular that 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.

It has been decided to declare 7.75% as the interim rate of interest for the current financial year for calculating the Discounted Value or Accumulated Value for calculation of Special Surrender Value under this plan.

The procedure for determining the Special Surrender Value under this plan shall be as under:

STEP 1 : Determine the period for which Premiums have been paid, i.e. the period from DOC (Date of Commencement) to the due date of First Unpaid Premium (FUP).

STEP 2 : Determine the Maturity Sum Assured.
The maturity sum assured corresponding to the term for which premiums have been paid under the policy will be the Maturity Sum Assured available 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.



STEP 3 : Determine the Amount for Accumulation/ Discounting.

The Amount to be used to calculate the Accumulated Value or the Discounted Value shall then be worked out as under :

Number of years premiums paid Amount for Accumulation/ Discounting
Less than 4 years 80% of Maturity S.A.
4 years or more but less than 5 years 90% of Maturity S.A.
5 years or more 100% of Maturity S.A.

STEP 4 : Determine whether Accumulated Value OR Discounted Value of the above Maturity
Sum Assured is to be calculated.
The duration from DOC to DOS (Date of Surrender) has to be worked out and

• Accumulated Value shall be calculated if the duration elapsed from the DOC to the DOS is more than the term for which premiums have been paid.
• Discounted Value shall be calculated if the duration elapsed from the DOC to the DOS is less than the term for which premiums have been paid.

STEP 5 : The Amount worked out at STEP 3 above shall then be accumulated or discounted, as the case may be. The formulae for calculating the accumulating factor or discounting factor are given below :
Accumulation factor = (1+i) ^ (n/12)

Discounting factor = (1+i) ^ (-) (n/12)

Where ‘i’ is the rate of interest p.a. and ‘n’ is period in complete months from the due date of FUP to DOS. Fraction of a month is to be ignored.

The Accumulated Value or Discounted Value shall be derived by multiplying the relevant accumulation factor or discounting factor to the Amount, calculated as per STEP 3 above.

STEP 6 : The Special Surrender Value shall be the sum of Accumulated Value or Discounted Value and Loyalty Additions, if any.

We are providing two illustrations in the Annexure 1 for clarifying the procedure of calculation of Accumulated Value and Discounted Value, required for working out Special Surrender Value available under the policy. The Accumulation factors for 1 to 18 months and Discounting Factors for 1 to 11 months are enclosed as Annexure 2.

Please acknowledge the receipt.



EXECUTIVE DIRECTOR (ACTUARIAL)




20.03.2004 20.03.2007 20.06.2007 25.08.2007 20.03.2008
________________________________________________________________
DOC 3 FUP DOS 4

Age at entry – 30 years Premium per month - Rs.300/-
DOC - 20/03/2004 Mode – Quarterly
FUP - 20/06/2007 DOS - 25/08/2007

STEP 1 :
In the above case, premiums have been paid for 3 years and 3 months.

STEP 2 :
The Maturity Sum Assured corresponding to the term for which premiums have been paid has to be calculated as on 20.06.2007 as under :

As per Annexure 1 to the introductory circular, Maturity Sum Assured for premium of Rs.100 p.m.
Term 3 years - Rs.2,561/-
Term 4 years - Rs.3,644/-

So the Maturity Sum Assured for a premium of Rs. 300/- p.m. will be
Term 3 years - Rs.7,683/-
Term 4 years - Rs.10,932/-

Hence, the Maturity Sum Assured (by mathematical interpolation) as on 20/06/2007 is

= 7683 + 3 (10,932 – 7,683)
12
= 7683 + 3 (3249)
12
= 8,495.25

STEP 3 :
Since the premiums have been paid for less than 4 years, Amount for accumulation/discounting shall be 80% of the above maturity sum assured, i.e. 80% of Rs.8495.25 = Rs.6,796.20.

STEP 4 :
The premiums have been paid for 3 years and 3 months and the duration from DOC to DOS is 3 years 5 months. So the duration from DOC to DOS is MORE than the term for which premiums have been paid.

Therefore, the Amount worked out at STEP 3 shall be accumulated.

STEP 5 :
Duration from FUP (20/06/2007) to DOS (25/08/2007) = 2 months (taking complete months only)
Accumulating factor for 2 months = (1+ 0.775)^ (2/12) = 1.01252.

The accumulated value of the amount for the said duration as on 25.08.2007
= Rs. 6796.20 x 1.01252
= Rs. 6881.29
= Rs. 6,881/- (to nearest rupee)
…..2


: 2 :

Illustration 2 :

18.04.2004 18.04.2007 04.07.2007 18.10.2007 18.04.2008
__________________________________________________________________
DOC 3 DOS FUP 4

Age at entry – 51 years Premium per month - Rs.450/-
DOC - 18/04/2004 Mode – Half-yearly
FUP - 18/10/2007 DOS - 04/07/2007

STEP 1 :
In the above case, premiums have been paid for 3 years and 6 months.

STEP 2 :
The Maturity Sum Assured corresponding to the term for which premiums have been paid has to be calculated as on 18.10.2007 as under :-

As per Annexure 1 to the introductory circular, Maturity Sum Assured for premium of Rs.100 p.m.
Term 3 years - Rs.2,038/-
Term 4 years - Rs.2,892/-

So the Maturity Sum Assured for a premium of Rs.450 p.m. will be
Term 3 years - Rs.9,171/-
Term 4 years - Rs.13,014/-

Hence, the Maturity Sum Assured (by mathematical interpolation) as on 18.10.2007 is
= 9171 + 6 (13,014 – 9,171)
12
= 9171 + 6 (3843)
12
= Rs.11,092.50/-

STEP 3 :
Since the premiums have been paid for less than 4 years, Amount for accumulation/ discounting shall be 80% of the above maturity sum assured, i.e. 80% of Rs.11,092.50 = Rs.8,874/-.

STEP 4 :
The premiums have been paid for 3 years and 6 months and the duration from DOC to DOS is 3 years 2 ½ months (approx.). So the duration from DOC to DOS is LESS than the term for which premiums have been paid.

Therefore, the Amount worked out at STEP 3 shall be discounted.

STEP 5 :
Duration from DOS (04/07/2007) to FUP (18/10/2007) = 3 months (taking complete months only)
Discounting factor for 3 months = (1+ 0.775)^ (-) (3/12) = 0.98151

The discounted value of the amount for the said duration as on 04.07.2007
= Rs. 8874 x 0.98151
= Rs. 8709.92
= Rs.8,710/- (to nearest rupee)

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Jeevan Akshay- VI (Plan No. 189)

Introduction of LIC’s Jeevan Akshay- VI (Plan No. 189)

1. Introduction :
It has been decided to withdraw the Immediate annuity Plan, LIC’s Jeevan Akshay- V (Plan No.183) with effect from 10th September, 2007 and introduce a New Plan - LIC’s Jeevan Akshay – VI in its place. The new plan will come into force with effect from 10th September, 2007.

2. Type of annuities available:
Various annuity options available under the Plan are as under:
1. Annuity for life
2. Annuity guaranteed for 5, 10, 15 or 20 years and for life thereafter
3. Annuity for life with return of purchase price on death
4. Annuity for life increasing at a simple rate of 3% p.a.
5. Annuity for life with a provision for 50% of the annuity to the spouse of the annuitant for life on death of the annuitant.
6. Annuity for life with a provision for 100% of the annuity to the spouse of the annuitant for life on death of the annuitant.

1. Modes of Annuity Payments:
Annuity can be paid in yearly, half-yearly, quarterly or monthly instalments, subject to a minimum annuity as stated below:

Mode Minimum Annuity p.a.
Monthly Rs. 6,000/-
Quarterly Rs. 4,000/-
Half-yearly Rs. 4,000/-
Yearly Rs. 3,000/-

1. Benefits:
The first instalment of annuity shall be paid one year, six months, three months or one month after the date of purchase of the annuity depending on whether the mode of annuity payment is yearly, half-yearly, quarterly or monthly respectively. Further, annuity shall be paid during the life time of the annuitant with following provisions on death of the annuitant for different options as follows:

1. Under option (i) - payment of annuity ceases.
2. Under option (ii)
i. On death during the guarantee period - annuity is paid to the nominee till the end of the guaranteed period after which the same ceases.
ii. On death after the guarantee period - payment of annuity ceases.
1. Under option (iii) - payment of annuity ceases and the purchase price is returned to the nominee.
2. Under option (iv) - payment of annuity ceases.
3. Under option (v) - payment of annuity ceases and 50% of the annuity is paid to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, nothing is payable after the death of the annuitant.
4. Under option (vi) - payment of annuity ceases and 100% of the annuity is paid to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, nothing is payable after the death of the annuitant.

The amount of annuity shall be assured throughout the period for which it is payable.

1. Annuity Rates:
Annuity rates for different types of annuities are enclosed in Annexures 1 to 9.
The policy can be purchased by payment of single premium which can be worked out by applying annuity rates for the type and mode of annuity opted by the policyholder. The annuity rates may also be used to work out the amount of annuity for a given single premium.
These rates will be applicable for the New Business introduced under the plan as well as under deferred annuity policies (where annuity rates are not guaranteed) which vest on or after 10.09.2007.

2. Rebates:

1. Incentives for high purchase price
Under the policies where purchase price is high, incentive by way of increase in the tabular annuity rate will be given to the annuitant.
Scale of absolute amount of incentive under high purchase price policies as an addition to the annuity rates per annum per rupees one thousand purchase price is as below.

Mode of Annuity Purchase price (in Rs.)
150,000 to 299,999 300,000 & 499,999 500,000 & above
Yearly 3.00 3.75 4.00
Half Yearly 2.50 3.50 3.75
Quarterly 2.50 3.50 3.75
Monthly 2.00 3.25 3.50

1. Rebate for Corporation Employees:
A Rebate of 2% of the purchase price will be available to eligible Corporation employees under CEIS.
1. Eligibility Conditions and Features:
1. Minimum Age at entry: 40 years last Birthday
2. Maximum Age at entry: 79 years last Birthday
3. Minimum Purchase Price: Rs.50,000/= or such amount which may secure a minimum annuity as (d) below.
4. Minimum Annuity Instalment: Rs. 500/= per month
Rs. 1000/= per quarter
Rs. 2000/= per half-year
Rs. 3000/= per year.

1. Commission & D.O. Credit:
Agents Commission shall be payable @ 2% of purchase price. No bonus commission shall be paid.
D.O. credit shall be @ 5% on the purchase price.
No agents commission or D.O.’s credit shall be given on vesting of deferred annuity policies.

2. Underwriting:
No medical examination is required under this plan.
Standard age proof will be required under all the annuity options except the option iii) i.e. “Annuity for life with return of purchase price on death”.

3. Policy stamping:
1. Under the annuity option ii) where certain period is 15 or 20 years, the amount of stamp duty will be based on the total annuity amount payable during the certain period i.e. the annuity per annum multiplied by 15 or 20 respectively.

2. Under the annuity option iv), the amount of stamp duty will be based on the annuity amount payable for 12 years i.e. 13.98 multiplied by the annuity per annum for first year.

3. Under all other annuity options, the amount of stamp duty will be based on the total annuity amount payable for a period of 12 years i.e. 12 multiplied by the annuity per annum.

4. Cooling-off period:
If a policy holder is not satisfied with the “Terms and Conditions” of the policy, he/she may return the policy to the Corporation within 15 days from the date of receipt of the policy. The amount to be refunded in case the policy is returned within the cooling-off period shall be the amount of premium deposited by the policyholder after deducting the charges for stamp duty.

5. Surrender value:
No surrender value shall be available under this plan.

1. Loan:
No loan shall be given by the Corporation to the policyholders under this plan.

1. Assignment / Nominations:
No assignment is allowed under this policy.
Notice of change of nomination should be submitted for registration to the office of the corporation, where this policy is serviced if the type of annuity opted is either for a guaranteed period and for life thereafter or with return of purchase price. In registering a nomination the Corporation does not accept any responsibility or express any opinion as to its validity or legal effect.

2. Normal requirements for claim:
For annuities in payment: The Existence Certificate is to be submitted by the annuitant once in a year before the policy anniversary and before the release of annuity cheques under all the annuity options except in the following cases:
1. Under option ii) during the guaranteed period
2. Under option iii)

On death of the annuitant: The normal documents which the claimant shall submit while lodging the claim in case of death of the Annuitant shall be the claim form, as prescribed by the corporation, accompanied with original policy document, proof of title, proof of death, whichever is applicable, to the satisfaction of the Corporation.
It will apply in case the option exercised is for:
1. Annuity option ii) and death of the annuitant takes place before expiry of the guarantee period
1. option iii) i.e. Annuity for life with return of purchase price on death of annuitant
2. option v) or vi) i.e. Annuity for life with a provision of 50% / 100% of the annuity to spouse for life on death of the annuitant
In other cases the annuity shall stop.
Further, if the age is not admitted under the policy, the proof of age of the Annuitant shall also be submitted.

3. Proposal Form/ Policy Document:
Proposal Form 440 (IA) shall be used under this plan.

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FORTUNE PLUS Plan No 187

Features: It is a unit linked assurance plan where premium payment term (PPT) is 5 years and the premium payable in the first year will be 50% of total premium payable under the policy. The level of cover will depend on the level of premium you agree to pay.

Four types of investment funds are offered. Premiums paid after allocation charge will purchase units of the Fund type chosen. The Unit Fund is subject to various charges and value of the units may increase or decrease, depending on the Net Asset Value (NAV). The plan therefore serves the purpose of insurance-cum-investment.

Payment of Premiums: You may pay premiums regularly at yearly, half-yearly, quarterly or monthly (ECS) intervals for 5 years. The minimum First year premium will be Rs.20,000/- and you may pay any amount exceeding it. From second year onwards each year’s premium will be 25% of the first year premium.

Other Features:

i) Partial Withdrawals: You may encash the units partially after the third policy anniversary subject to the following:

i) In case of minors, partial withdrawals shall be allowed from the policy anniversary coinciding with or next following the date on which the life assured attains majority (i.e. on or after18th birthday).
ii) Partial withdrawals may be in the form of fixed amount or in the form of fixed number of units.
iii) For 2 years’ period from the date of withdrawal, the Sum Assured under the Basic plan shall be reduced to the extent of the amount of partial withdrawals made.
iv) Under policies where less than 3 years’ premiums have been paid and further premiums are not paid, the partial withdrawals shall not be allowed.
v) Under policies where atleast 3 years’ premiums have been paid, partial withdrawal will be allowed subject to Policyholder’s Fund Value being atleast Rs. 10,000/-.

ii) Switching: You can switch between any fund types for the entire Fund Value during the policy term subject to switching charges, if any.

iii) Discontinuance of premiums: If premiums are payable either yearly, half-yearly, quarterly or monthly (ECS) and the same have not been duly paid within the days of grace under the Policy, the Policy will lapse. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium.

I) Where atleast 3 years’ premiums have been paid, the Life Cover and Accident Benefit rider, if any, shall continue during the revival period.

During this period, the charges for Mortality and Accident Benefit cover, if any, shall be taken, in addition to other charges, by cancelling an appropriate number of units out of the Policyholder’s Fund Value every month. This will continue to provide relevant risk covers for:

i. two years from the due date of first unpaid premium, or
ii. till the date of maturity, or
iii. till such period that the Policyholder’s Fund Value reduces to Rs. 5,000/-,
whichever is earlier.

The benefits payable under the policy in different contingencies during this period shall be as under:

A. In case of Death: Higher of Sum Assured under the Basic Plan or the Policyholder’s Fund Value. The Sum Assured shall be subject to provisions of Partial Withdrawals made, if any.

B. In case of Death due to accident: Accident Benefit Sum Assured in addition to the amount under A above, if Accident Benefit is opted for.

C. On Maturity: The Policyholder’s Fund Value.

D. In case of Surrender (including Compulsory Surrender): The Policyholder’s Fund Value. The Surrender value, however, shall be paid only after the completion of 3 policy years.

E. In case of Partial Withdrawals: For 2 years period from the date of withdrawal, the sum assured under the basic plan shall be reduced to the extent of the amount of partial withdrawals made.

II) Where the policy lapses without payment of at least 3 years’ premiums, the Life Cover and Accident Benefit rider cover, if any, shall cease and no charges for these benefits shall be deducted. However, deduction of all the other charges shall continue. The benefits under such a lapsed policy shall be payable as under:

F. In case of Death: The Policyholder’s Fund Value.

G. In case of death due to accident: Only, the amount as under F above.

H. In case of Surrender (including Compulsory Surrender): Policyholder’s Fund Value / monetary value as the case may be, shall be payable after the completion of the third policy anniversary. No amount shall be payable within 3 years from the date of commencement of policy.

I. In case of Partial withdrawal: Partial Withdrawals shall not be allowed under such a policy even after completion of 3 years period.

iv) Revival: If due premium is not paid within the days of grace, the policy lapses. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium or before maturity, whichever is earlier. The period during which the policy can be revived will be called “Period of revival” or “revival period”.

If premiums have not been paid for at least 3 full years, the policy may be revived within two years from the due date of first unpaid premium. The revival shall be made on submission of proof of continued insurability to the satisfaction of the Corporation and the payment of all the arrears of premium without interest.

If atleast 3 full years’ premiums have been paid and subsequent premiums are not paid, the policy may be revived within two years from the due date of first unpaid premium but before the date of maturity. No proof of continued insurability shall be required but all arrears of premium without interest shall be required to be paid.

The Corporation reserves the right to accept the revival at its own terms or decline the revival of a lapsed policy. The revival of a lapsed policy shall take effect only after the same is approved by the Corporation and is specifically communicated in writing to the Proposer / Life Assured.

Irrespective of what is stated above, if less than 3 years’ premiums have been paid and the Policyholder’s Fund Value is not sufficient to recover the charges, the policy shall be terminated and thereafter revival will not be entertained. If 3 years’ or more than 3 years’ premiums have been paid and the Policyholder’s Fund Value reduces to Rs. 5000/-, the policy shall terminate and Policyholder’s Fund Value as on such date shall be refunded to the Life Assured and thereafter revival will not be allowed.

v) Settlement Option: When the policy comes for maturity, you may exercise “Settlement Option” and may receive the policy money in instalments spread over a period of not more than five years from the date of maturity. There shall not be any life cover during this period. The value of installment payable on the date specified shall be subject to investment risk i.e. the NAV may go up or down depending upon the performance of the fund.

Reinstatement: A policy once surrendered will not be reinstated.

Risks borne by the Policyholder:

i) LIC’s Fortune Plus is a Unit Linked Life Insurance product which is different from the traditional insurance products and are subject to the risk factors.

ii) The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.

iii) Life Insurance Corporation of India is only the name of the Insurance Company and LIC’s Fortune Plus is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.

iv) Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer.

v) The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

vi) All benefits under the policy are also subject to the Tax Laws and other financial enactments as they exist from time to time.

Cooling off period: If you are not satisfied with the “Terms and Conditions” of the policy, you may return the policy to us within 15 days.

Loan: No loan will be available under this plan.

Assignment: Assignment will be allowed under this plan.

Exclusions: any amount exceeding it. From second year onwards each year’s premium will be 25% of the first year premium.

In case the Life Assured commits suicide at any time within one year, the Corporation will not entertain any claim by virtue of the policy except to the extent of the Policyholder’s Fund Value on death.

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