LIC Jeevan Tarun (Plan Table No. 934 and 834) is limited-premium endowment plan with additional moneyback option by LIC that aims to secure children’s future for higher education and other needs. So while it is basically an endowment plan, it gives you the option to receive a part of the amount as moneyback at regular intervals for your child’s higher education yearly fee requirement.
As a parent, this may sound useful to you no doubt. But should you still buy LIC Jeevan Tarun for your children’s education and marriage needs?
I don’t think so. Yes you read it right.
You should NOT buy LIC Jeevan Tarun policy for your children. Avoid it.
Let me explain why in a bit.
If you want to know more about this plan by LIC Jeevan Tarun Review (2023) article.
LIC had launched this participating endowment policy named Jeevan Tarun (LIC Table No. 934) first time in 2015 under plan UIN 512N299V01. But the policy was revised in Feb-2020 and now as latest plan UIN of 512N299V02.
LIC Website link to Policy page – Link
Let’s see the features now.
Features of LIC Jeevan Tarun (934)
Let’s see what are the features of LIC Jeevan Tarun policy Benefits. Here are the plan details and prominent features:
- This is an Endowment-cum-Insurance product that comes under LIC Table No. 934 (earlier 834).
- This policy, surprisingly offers life insurance on child’s name! Generally a parent would want his life to be covered so that if something were to happen, the insurance company pays money to the child or children to secure their future. But here, this policy offers life insurance cover on child’s life!
- The insured is the child here, but the Proposer can be the parents or guardian (like grandfather, grandmother, etc.)
- The proposer can purchase the plan for the child with child’s Minimum Entry Age of 90 days and up to a Maximum Entry Age of 12 years.
- The proposer’s minimum age can be 18 years and the maximum age can be 55 years.
- Child’s Age at the time of maturity is fixed at 25 years of child’s age. That is, as soon as the child attains the age of 25, the policy will be complete and maturity amount will be paid out.
- The Policy Term is calculated as 25 years minus Age of child at Entry. So if you purchase a policy for your child at age 5, then the policy term is 20 years (25 – age of child which is 5 years)
- The Premium Payment Term is calculated as 20 years minus Age of child at Entry. So if you purchase a policy for your child at age 5, then the premium payment term is 15 years (20 – age of child which is 5 years)
- The Minimum Sum Assured amount is Rs 75,000 under this LIC policy 934.
- There is no upper limit on the Maximum Sum Assured for this policy.
- At the time of purchase initially, you are eligible for tax benefit on the investment amount, but only up to Rs 1.5 lakh the under the Section 80CCC (and within the overall limit of Rs 1.5 lakh of Section 80C).
- The plan can be purchased offline via LIC office/agent as well as online on LIC website. Unsurprisingly and to push digital mode, there is a rebate for online purchases of the policy. This means that for the same investment amount you will get a slightly higher annuity income. In addition, this plan can also be purchased from the new distribution channel Common Public Service centers (CPSC – SPV) as per the latest press release.
- There is no need to undergo any medical tests to purchase this plan as a proposer or for the insured child.
4 Survival/Maturity Benefit option of LIC Jeevan Tarun
LIC Jeevan Tarun allows the flexibility wherein at the proposal stage itself, the proposer can choose the proportion of Survival Benefits to be availed during the term of the policy as per the following 4 options from child’s age 20 to 24 years:
- LIC Jeevan Tarun’s Option 1 – Under this option, 100% of the maturity benefits (or 100% Sum Assured) is paid at maturity, i.e., the age 25 of the child. In addition to the sum assured, any bonuses like simple revisionary bonus and final additional bonus will also be paid along with the maturity amount at the age of 25.
- LIC Jeevan Tarun’s Option 2 – Under this option, 75% Sum Assured is paid at maturity, i.e., the age 25 of the child. The remaining amount is paid as moneyback (survival) benefit at the rate of 5% of sum assured each year for 5 years on ages 21, 22, 23, 24 and final one along with the maturity benefit at age 25. In addition to the sum assured, any bonuses like simple revisionary bonus and final additional bonus will also be paid along with the maturity amount at the age of 25.
- LIC Jeevan Tarun’s Option 3 – Under this option, 50% Sum Assured is paid at maturity, i.e., the age 25 of the child. The remaining amount is paid as moneyback (survival) benefit at the rate of 10% of sum assured each year for 5 years on ages 21, 22, 23, 24 and final one along with the maturity benefit at age 25. In addition to the sum assured, any bonuses like simple revisionary bonus and final additional bonus will also be paid along with the maturity amount at the age of 25.
- LIC Jeevan Tarun’s Option 4 – Under this option, 25% Sum Assured is paid at maturity, i.e., the age 25 of the child. The remaining amount is paid as moneyback (survival) benefit at the rate of 15% of sum assured each year for 5 years on ages 21, 22, 23, 24 and final one along with the maturity benefit at age 25. In addition to the sum assured, any bonuses like simple revisionary bonus and final additional bonus will also be paid along with the maturity amount at the age of 25.
So this LIC Plan 934 offers 4 different options of maturity/survivial benefit to choose from. And the option (1 or 2 or 3 or 4) chosen by the proposer, at the time of purchasing LIC Jeevan Tarun, will become a part of the LIC policy contract and no further change in option shall be allowed during the policy tenure.
So basically, in LIC Jeevan Tarun, the Survival Benefit is the annual payment of a fixed percentage of Sum Assured that is paid every year starting from age 20 of the child for 5 years up to the age of 25. The Maturity Benefit is the remaining fixed percentage of Sum Assured along with any vested Simple Reversionary Bonuses and Final Additional Bonus, if any, that is paid at the time of LIC Jeevan Tarun policy maturity at child’s age of 25.
Premium Waiver Benefit Rider of LIC Jeevan Tarun
LIC Jeevan Tarun offers the proposer the option to purchase the Premium Waiver Benefit Rider. If this rider is purchased, then all the future premiums will be waived off in the event of the proposer’s demise).
This is an optional rider on the life of the policy proposer aged between ages 18 to 55 years that can be bought on payment of additional premium.
How to Calculate LIC Jeevan Tarun policy Returns (2023)?
One of the most popular LIC child plans is LIC Jeevan Tarun. But what about the returns of this child plan by LIC?
If you look at LIC New Jeevan Anand policy brochure (link) on LIC’s website, in the Benefit Illustration, it talks about up to 8% gross returns. But that is just an illustration and not the actual returns you get. How?
Let’s see
Let’s say you are the parent of a girl child aged 5 years. You decide to purchase LIC Jeevan Tarun for your 5-year old daughter for Rs 10 Lakh sum assured. The policy tenure is automatically decided based on a formula (25 – Age of child) and comes to 20 years. The premium payment term also gets decided using a formula (20 – Age) and comes to 15 years.
I used the LIC Premium Calculator on one of the sales websites of LIC (link). Depending on the choice of Option A/B/C/D, the premiums will vary. I used the Option A (where there is no regular survival payouts and 100% is paid at the time of maturity at the age of 25).
Here is the annual premium illustration:
So you need to pay approx. Rs 58,000 per year for 15 years. For this, your child will get a Rs 10 lakh life insurance coverage.
Now let’s see what all benefits the policyholders and then calculate LIC Jeevan Tarun Returns.
Here is what your child gets on maturity at age of 25:
- Sum Assured – Guaranteed Rs 10 Lakh in Sum Assured
- Simple Revisionary Bonus – To estimate the simple revisionary bonus component, I have taken LIC’s last years’ declared bonus and assumed that it will remain at least same more or less around the next 20 years of policy term. So looking at the latest LIC Bonus Rates announced, we find that the bonus rate is Rs 39 per thousand of sum assured. So for a Rs 10 lakh policy, this comes to Rs 39,000 each year. This is calculated as = 39/1000 * Rs 10 lakh. If we assume that this is the average bonus that will be declared each year, then in 20 years, this will amount to Rs 7.8 lakh in Simple Revisionary Bonus (calculated as 20 years x Rs 39,000 per year)
- Final Additional Bonus – Now this is a bit tricky. We need to guess what will happen 20 years down the line when the policy matures. So let’s try 3-4 different FAB figures to see how it impacts returns. Let’s say LIC decides to declare Final Additional Bonus of Rs 200 per 1000 of SA. So in this case, the FAB will be one-time amount of Rs 2 lakh as Final Additional Bonus.
So the total of these 3 values, comes to Rs 10 lakh (Sum Assured) + Rs 7.8 lakh (Simple Revisionary Bonus) + Rs 2 lakh (Final Additional Bonus) = Rs 19.8 lakh depending on the final bonus declared in the year of policy maturity.
Note – While LIC has been here for decades and has been paying bonuses each year, please remember that bonus declaration is not guaranteed. So rate of past bonuses should not be considered as a given and guaranteed and these may or may not repeat in future. More so as LIC is now a listed company after the mega LIC IPO. The agents won’t tell you that as they need to sell you policies and for that, they need to promise you everything. I hope you understand.
LIC Jeevan Tarun Return Calculation (2023)
Now we shall see that using the above calculated values, How to calculate Rate of Return on maturity from an LIC Jeevan Tarun life insurance policy?
Let’s now understand the procedure to calculate return on life insurance LIC plan with the example of LIC Jeevan Tarun, using a very simple function of MS Excel’s – IRR Function (that is used to calculate the Internal Rate of Return).
Here are the results of our example –
The LIC Jeevan Tarun return (IRR) results depend on the chosen figures for policy tenure, sum assured, annual premium, simple revisionary bonus rate and final additional bonus rates.
In the image above, the IRR for this example comes to 6.71%. The actual figure for you (and for different combination of policy term, bonus rates, etc.) will either be lower or slightly higher.
So that is What’s your return from LIC Jeevan Tarun policy are and that is how to do Life Insurance Jeevan Tarun Plan Return Calculation using a LIC Maturity calculator.
While most LIC policyholders get attracted to endowment plans because of the idea of ‘getting some money back from insurance on maturity and survival (as term insurance provides no return), the reality is that you can generate far superior returns if you keep investment and insurance separate.
Such a low return of just 6-7% over the long-term is inadequate for child’s future. In fact, if you plan to use this policy to fund child’s future education, then remember that education inflation can easily be 9-10%. So this policy doesn’t grow your money at a rate that takes care of high inflation for education these days.
Imagine what would be the outcome if instead of buying this LIC policy for your child, you invested elsewhere for better returns (say mutual funds giving average 10-11% returns historically though not guaranteed)? Even a PPF at 7.1% or Sukanya Samriddhi Account (for daughter) at 8% does much better than LIC Jeevan Tarun plan.
As for life insurance, you can buy simple term plans very cheaply any day and in any case, there is practically no need to purchase a life insurance in the name of your child. Instead you should buy one for your own self and make the child as nominee so that in case of your absence, the child’s future is secured.
Ref: LIC Jeevan Tarun Policy Brochure and LIC Jeevan Tarun Policy wordings.
How to purchase LIC Jeevan Tarun Plan online?
Step-by-step process to buy LIC’s Jeevan Tarun Plan Online:
- Log-on to LIC website (www.licindia.in) for buying this online product. Click on ‘Buy Policies Online’. Select plan LIC Jeevan Tarun Plan.
- Click on ‘Buy Online’. Choose your desired Purchase Price, Policy Variant option , Date of Birth, Gender, etc.
- Enter other details such as Name, Address, Occupation, Qualification etc. displayed on the screen and complete the proposal form online.
- Pay premium online and fulfil the underwriting requirements, if any.
That’s how you can buy LIC Plan 934 online with rebates of about 2% on purchase amount.
Should You Buy LIC Jeevan Tarun Plan (934)?
That is the key question obviously after all the discussion, review of LIC Jeevan Tarun Review, and analysis of plan and policy benefits (if any).
While there is no doubt about LIC being synonymous with trust in India, should you invest in LIC Jeevan Tarun Plan (934) for your child’s future?
First of all, I don’t think there is need to purchase a life insurance on your child’s life. Think about it as a parent and you will know why. Secondly, you are looking at LIC Jeevan Tarun as a policy to save for child’s future and higher education, then then with returns of around 6-7%, your goals will not be met as education inflation is a lot higher. Anyways the payouts start from age 20 onwards but the graduation expenses begin from age 17-18. So you won’t get anything for the first few years of the graduation. So for some reason, the timelines of the policy is a bit messed up and I am not sure how LIC designed this plan.
While LIC pitches LIC Jeevan Tarun, which is an endowment/moneyback plan as aimed to secure children’s future, it is not that useful. If you are planning to secure your children’s education and marriage, better buy a life insurance on your life (and not your child’s life). This will ensure that your children’s future is taken care of even if you are not there.
Hopefully, you would have found this LIC Jeevan Tarun plan Review (UIN – 512N299V02) useful and the policy details and LIC Jeevan Tarun Policy Benefits would be clear by now. If you are planning to buy LIC Jeevan Tarun in India (2023), make sure you understand and assess the suitability of this LIC Child Plan first.