Home News LIC Jeevan Saral – Why It Was Abolished?

LIC Jeevan Saral – Why It Was Abolished?


LIC Jeevan Saral – Why It Was Abolished?: LIC Jeevan Saral is buzzing on news channels for its repealing by the LIC of India. There is a bucket of questions by the policyholders and other authorities regarding this decision. Life Insurance Corporation of India is circled with criticism, unresolved queries and allegations. Let’s find out the main reason behind the whole story.

LIC Jeevan Saral – Why It Was Abolished?

Major Controversies Behind Abolition of LIC Jeevan Saral

  • Public Interest Litigation (PIL) repeatedly appealed to the Supreme that LIC is duping policyholders. 
  • LIC is condemned for misselling its policy and misguiding masses.
  • LIC is giving lesser returns on maturity or surrender as guaranteed during purchase.
  • Due to negative returns, poor senior citizens have suffered a lot.
  • 50 Complaints were registered against the Jeevan Saral plan.

Quick Synopsis of LIC Jeevan Saral

Jeevan Saral is an endowment policy that gives 250 times of actual premium paid in a month for the whole policy term. The policyholder has the flexibility to pay the agreed premium either monthly or yearly or half-yearly. 

The policyholder is granted complete right to decide ‘what premium they have to pay?’. The sum insured is evaluated from the monthly premium payment. 

How benefits were given?

  • Payout of the sum insured on the death of the policyholder. Also called death benefit.
  • Payment of Maturity Benefit (return of premium) if death doesn’t happen within the policy tenure. 
  • Surrender Value in case of termination of LIC Jeevan Saral policy before the maturity. For this, the policy must be in force for 3 years minimum. 
  • Guaranteed surrender value provided will be equal to 30% of the net premium paid till date. Premium is paid after deducting first-year premium and rider premium.

Distribution of Guaranteed Surender Value

In LIC Jeevan Saral, the policyholders are designated the option to dissolve the policy. In compensation, the company pays surrender value if any one of the below conditions is obliged.

  • If the Premium is paid for more than 3 years but less than 4 years- 80% of the maturity sum assured.
  • If premium payment is made for 4 years but below 5 years- 90% of the maturity sum assured.
  • If the premium is submitted for more than 5 years- 100% of the maturity sum assured is payable.

Types of Sum insured under Jeevan Saral

LIC gave two choices in sum insured, namely-

  • Maturity Sum Assured: The maturity amount will be given to policyholders when the policy tenure ceases with respect to the age at the time of buying. Also, the maturity sum is granted after subtracting the first year premium and additional rider premiums for if any.

For example- If your annual premium payment is Rs 4704 and you have paid for 4 years, the maturity sum assured would be Rs 12,942. 

  • Death Sum Assured: The sum insured is paid only when the policyholder becomes dead. The amount is given to nominees. Death sum assured is equal to 250 times of monthly premium plus loyalty additions. 

Like, if you are paying Rs 4704 yearly and after 5 years your life ceased. Your nominees will receive death sum assured of Rs 1,19,200 with respect to the calculation stated above.

Important Points to Remeber while purchasing Endowment Plan

  • Always buy a policy after reading its terms and conditions.
  • Research about the policy online and read its reviews beforehand.
  • Study the returns, benefits and analyze how it is going to help you.
  • Consult a financial advisor if you well versed in insurance.
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Abhishek Singh
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