LIC Jeevan Saral Plan 165: Maturity & Review

LIC Jeevan Saral Plan 165 (UIN 512N222V01) was a savings-oriented life insurance policy designed around the policyholder's monthly premium, entry age, and policy term. 

Although it is no longer available for purchase, existing policyholders may still need to understand their maturity and other policy benefits. 

This guide covers the LIC Jeevan Saral maturity amount, maturity calculation, loyalty additions, and surrender provisions.

What Is the LIC Jeevan Saral Plan 165?

LIC Jeevan Saral was a participating endowment assurance plan that combined life insurance protection with savings. The plan was designed to offer some flexibility while retaining the features of a traditional life insurance policy.

The key LIC Jeevan Saral policy details included its premium structure, policy term, auto cover, surrender provisions, and loan facility.  

In contrast, the maturity sum assured varied by entry age and policy term. Under the LIC Jeevan Saral policy terms, the plan also offered:

• Auto Cover: Continued death cover for 12 months after premiums stop, subject to the policy conditions and minimum policy duration.
• Flexible Policy Term: Policyholders could choose a term between 10 and 35 years.
• Partial Surrender: Partial surrender was available from the fourth policy year, subject to applicable conditions.
• Loan Facility: A loan could be availed once the policy acquired a paid-up value. The original brochure specifies a loan interest rate of 10.5% per annum, compounded half-yearly. The current applicable rate should be confirmed with LIC for an existing policy.
• Eligibility: Entry age was 12 to 60 years, with maturity age capped at 70 years.
• Premium: The minimum monthly premium was ₹250, or ₹400 for entry ages 50 and above, payable in multiples of ₹50, subject to a maximum of ₹10,000 per month. 

Since LIC Jeevan Saral is a withdrawn plan, these features are relevant primarily to existing policyholders.

How LIC Jeevan Saral Maturity Sum Assured Is Calculated

The maturity benefit under LIC Jeevan Saral is Maturity Sum Assured (MSA) + Loyalty Additions, if declared. You can also use this calculation as an LIC Jeevan Saral maturity calculator to estimate the maturity sum assured.

The MSA is not a fixed multiple of the premium. Instead, LIC's original sales brochure, shown below, provides a table of the MSA per ₹100 of monthly premium, based on the policyholder's entry age and policy term.

An LIC Jeevan Saral Plan 165 maturity calculator Excel sheet can use the same formula, provided the correct MSA values from LIC's brochure are entered.

How to Calculate the MSA?

To estimate your LIC Jeevan Saral maturity sum assured, divide your monthly premium by ₹100, then multiply by the MSA value for your entry age and policy term.

For example, if you entered the policy at age 30, selected a 20-year term, and pay a monthly premium of ₹500: MSA = (₹500 ÷ ₹100) × ₹27,345 = ₹1,36,725

The final maturity amount can be higher if applicable loyalty additions are declared. This is also the basic calculation used by many LIC Jeevan Saral Plan 165 maturity calculators. However, the table covers only selected ages and terms. For the exact maturity benefit applicable to your policy, refer to your original policy documents or obtain the figure directly from LIC.

Loyalty Additions and Death Benefit Under LIC Jeevan Saral

The death benefit under LIC Jeevan Saral is payable to the nominee if the life assured dies during the policy term. It comprises:

• 250 times the monthly premium, plus
• Return of eligible premiums paid, excluding the first year's premium and any extra or rider premiums, plus
• Loyalty additions, if applicable

Loyalty Additions

Loyalty additions under LIC Jeevan Saral are not guaranteed. They are declared based on the insurer's actual experience and profits rather than at a predetermined rate.

The policy becomes eligible for loyalty additions after completing a minimum term of 10 years. They may also become payable if the life assured dies during the 10th policy year, provided the policy is in force. Depending on the applicable policy conditions, loyalty additions may be payable on death, maturity, or surrender.

Since loyalty additions are not fixed in advance, the final payout can vary between policies even when the premium and policy term are similar.

Paid-Up Value

If premiums have been paid for at least three full years and subsequent premiums are discontinued, the policy does not immediately lapse. Instead, it becomes a reduced paid-up policy, subject to the policy terms.

On a paid-up policy, the benefit is based on the applicable reduced benefits. The original LIC brochure provides specific rules for calculating the reduced paid-up value and surrender value, so confirm the exact amount in the policy document or with LIC.

LIC Jeevan Saral Sample Maturity Values by Entry Age

LIC's Jeevan Saral brochure provides a worked illustration showing how the LIC Jeevan Saral Plan 165 maturity amount can build up over the policy term. 

The illustration is based on a 35-year-old policyholder, a 30-year policy term, and a monthly premium of ₹400 under the salary saving scheme. The guaranteed maturity sum assured is ₹1,62,416.

Note: The 6% and 10% figures are non-guaranteed scenarios and should not be treated as assured returns. The guaranteed maturity value is ₹1,62,416 after 30 years, against ₹1,44,000 in total premiums. The maturity benefit is separate from the death benefit, which includes 250 times the monthly premium.

Note: The above metrics reflect LIC's overall performance and are not limited to any particular product. The data is sourced from IRDAI Annual Reports and LIC’s public disclosures. For more data like this, explore the Ditto Data Lab. 

LIC Jeevan Saral Policy: Is It Better to Continue or Surrender?

There is no one-size-fits-all answer. The decision depends on how long the policy has been in force, the benefits accumulated so far, and the policyholder's current financial needs.

• If the Policy Has Completed 10 Years: It may be eligible for loyalty additions, subject to LIC's declarations and the applicable policy terms. Surrendering the policy could mean giving up future benefits that may otherwise become payable.
• If Premiums Have Become Difficult to Afford: After paying premiums for at least three full years, the policyholder may be able to convert the policy into a reduced paid-up policy instead of surrendering it. This allows the policy to continue with reduced benefits without further premium payments, subject to the policy terms.
• If Additional Life Cover Is Required: Jeevan Saral combines savings and insurance and was not designed as a pure protection product. A policyholder with inadequate life cover should assess the protection requirement separately rather than assuming that surrendering Jeevan Saral is necessary.

Before surrendering the policy, the policyholder should obtain the current surrender value from LIC and compare it with the benefits available from continuing or converting the policy to paid-up status.

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Conclusion

For existing LIC Jeevan Saral policyholders, the choice is between continuing, making the policy paid-up, or surrendering it. Since loyalty additions are not guaranteed, assess the policy's current value using LIC's latest statement.

For those looking for additional life cover to protect loans and financial dependents, exploring a comprehensive, low-cost term insurance plan may be worth considering.