LIC has recently launched a new single premium guaranteed endowment policy named LIC Dhan Vriddhi (Table No. 869). The policy offers dual benefits of investment as well as life insurance coverage throughout the policy’s term for a single premium. The plan by LIC is under Table No. 869 and UIN 512N362V01. This new non-participating, a guaranteed policy is a close-ended product that has been launched on 23th Jun 2023 but will stop selling or accepting purchase applications after 30th September 2023.
If you want to know about the full details of LIC Dhan Vriddhi Review (2023), then this article will help you understand all the LIC Dhan Vriddhi Plan Details and LIC Dhan Vriddhi Policy Benefits.
Website link to Policy page – Link and the latest details as per the LIC Dhan Vriddhi Policy Wordings on LIC’s website.
It is worth noting that, after its mega LIC IPO, the government-backed insurance company is making a conscious effort to increase its share of non-participating insurance policies to drive up LIC’s profitability margins. Till now, the LIC policy portfolio has been skewed towards the low margin, but with-profits and participating policies that announce regular LIC Bonus Rates. This new LIC Dhan Vriddhi plan is similar to the now-discontinued plan named LIC Dhan Varsha, which too was a Non-Linked, Non-Participating, Individual, Single-Premium, and Guaranteed Life Insurance plan and which was withdrawn on 31st March 2023.
Let’s move on to the details now.
LIC Dhan Vriddhi Plan (Plan 869): Features & Review
- LIC Dhan Vriddhi is a single premium guaranteed plan.
- Since this is a Single Premium plan, you need to pay the policy premium only once, at the time of buying LIC Dhan Vriddhi policy.
- Interestingly, the policy offers a choice of picking between 2 Sum Assured (SA) options. And this choice has a huge implication on taxation of the maturity amount. So there are two sum assured options. Option-1 is 1.25 times the Single Premium. Option-2 is 10 times the Single Premium. And once you choose the option at the start, it cannot be changed.
- There are 3 options in Policy Term – 10, 15 and 18 years policy term.
- The Minimum Entry Age for the policy is 8 years for 10-year policy term; 3 years for 15-year policy term; and 90 days for 18-year policy term.
- The Maximum Entry Age varies from 32 years to 60 years depending upon the policy term and option selected.
- The Minimum Basic Sum Assured is Rs 1.25 lakh for the policy.
- There is no upper limit on the Maximum Basic Sum Assured for this policy.
LIC Dhan Vriddhi – Choosing from 2 Sum Assured options
This is important. As I mentioned earlier, the choice of sum assured will decide your policy taxation! LIC Dhan Vriddhi plan offers 2 sum assured options to choose from:
- Option-1 – 1.25 times the Single Premium
- Option-2 – 10 times the Single Premium
Once you choose the option at the start, it cannot be changed later.
As per the current taxation rules in Section 10(10D) of the Income Tax Act, if the policy premium is greater than 10% of Sum Assured, then the maturity amount is taxable!
Ouch. And does this rule fit on LIC Dhan Vriddhi Plan?
Yes for the 1st option. As you see, in the first option the premium to be paid for LIC Single is one-time, and therefore a large amount which is a lot more than 10% of the sum assured (or sum assured is 10 times of premium). In fact, it is where sum assured is just 1.25 times the premium! And that makes the Option-1 of LIC Dhan Vriddhi maturity payout taxable as per your income tax slab.
In Option-2 (where Sum Assured is 10 times single premium), this condition is met and hence, the maturity proceeds will be tax exempted.
Also, there is a Settlement Option for maturity benefit in LIC Dhan Vriddhi – The settlement option allows you to choose to receive your maturity benefit over the course of 5 years in equal payments rather than all at once. The Policyholder can take this option for all or a portion of the maturity profits payable under the policy while the Life Assured is still a minor or until the Life Assured is 18 years of age or older.
The Policyholders can also choose to add accidental death and disability benefit rider and New Term Assurance rider to the base life insurance policy. It can be purchased through the online route as well as through agents.
LIC Dhan Vriddhi Premium Samples (2023)
To find out the sample illustrative single premiums for Basic Sum Assured of Rs 10 lakh, I have used one of the LIC sales websites to lists down the premium amounts:
- At the age 5 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,75,298.
- At the age 5 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,09,653.
- At the age 5 years, and policy term of 15 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 6,94,493.
- At the age 5 years, and policy term of 18 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 6,36,069.
- At the age 10 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,55,076.
- At the age 10 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,76,476.
- At the age 10 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,10,882.
- At the age 10 years, and policy term of 10 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 8,02,075.
- At the age 10 years, and policy term of 15 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 7,20,557.
- At the age 10 years, and policy term of 18 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 7,60,391.
- At the age 20 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,56,100.
- At the age 20 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,77,602.
- At the age 20 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,12,060.
- At the age 20 years, and policy term of 10 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 8,29,572.
- At the age 20 years, and policy term of 15 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 7,48,617.
- At the age 20 years, and policy term of 18 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 6,89,731.
- At the age 30 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,56,714.
- At the age 30 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,78,780.
- At the age 30 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,13,596.
- At the age 30 years, and policy term of 10 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 8,49,337.
- At the age 30 years, and policy term of 15 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 7,89,325.
- At the age 30 years, and policy term of 18 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 7,45,135.
- At the age 40 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,60,145.
- At the age 40 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,84,618.
- At the age 40 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,20,816.
- At the age 40 years, and policy term of 10 years, under the Option-2 (Sum Assured 10 times Single Premium), the one-time single premium is Rs 9,76,121.
- At the age 50 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,72,588.
- At the age 50 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,03,563.
- At the age 50 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,43,142.
- At the age 60 years, and policy term of 10 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,98,651.
- At the age 60 years, and policy term of 15 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 9,45,603.
- At the age 60 years, and policy term of 18 years, under the Option-1 (Sum Assured 1.25 times Single Premium), the one-time single premium is Rs 8,94,961.
LIC Dhan Vriddhi: Maturity Calculation & Guaranteed Additions (2023)
The Maturity amount of LIC Dhan Vriddhi is calculated as = Basic Sum Assured + Accrued Guaranteed Additions
You chose the Basic Sum Assured at the time of policy purchase. And the sum assured determines your single premium. The Basic Sum Assured (SA) is used to calculate the guaranteed additions and hence the maturity amount.
Guaranteed additions are fixed, pre-decided get added (accrue) to your policy at the end of each policy year but are paid out only once at the time of maturity/demise:
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 60 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 65 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 65 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 25 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 30 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 1.25 lakh and Rs 2.45 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 30 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 65 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 70 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 70 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 30 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 35 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured between Rs 2.50 lakh and Rs 6.95 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 35 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 70 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 75 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-1 (Sum Assured 1.25 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 75 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 10-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 35 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 15-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 40 per 1000 (thousand) of Sum Assured.
- For Basic Sum Assured above Rs 7 lakh, and going for the Option-2 (Sum Assured 10 times of Single Premium) and 18-year policy term, the pre-decided fixed Guaranteed Bonus Addition is done each year at the rate of Rs 40 per 1000 (thousand) of Sum Assured.
LIC Dhan Vriddhi Examples & Illustrations + Return Calculations (2023)
Let us try to understand the LIC Dhan Vriddhi policy with 2 examples
Here is the 1st one.
In this, a 30-year old investor chooses Option-1 (Sum Assured equal to 1.25 times Annual Premium) and purchases this Rs 10 lakh of Basic Sum Assured, single premium LIC Dhan Vriddhi plan for 15-year policy term.
The one-time premium for this comes to Rs 8.79 lakh (inclusive of GST). The premium without GST is Rs 8.41 lakh.
Now the Sum Assured on Death is 1.25 times X Single Premium (before GST) = Rs 10.51 lakh.
The Guaranteed Addition for Basic SA of Rs 10 lakh and Policy tenure of 15 years = Rs 75/ Rs 1000 of Sum Assured for Option 1. This comes to Rs 75,000 per year or Rs 11.25 lakh for 15-year policy term.
So the total Maturity amount = Basic Sum Assured + Accrued Guaranteed Additions, i.e. = Rs 10 lakh + Rs 11.25 lakh = Rs 21.25 lakh.
So let’s see what is the return of LIC Dhan Vriddhi policy in this case.
You invested one time Rs 9.26 lakh and at the end of 15-year term, your investment increased to Rs 21.25 lakh. This is a return (IRR) of just 6.06% per annum. And let’s not forget that this is Option-1, and hence, the maturity amount above is fully taxable!
Here is the 2nd one.
In this, a 30-year old investor chooses Option-2 (Sum Assured equal to 10 times Annual Premium) and purchases this Rs 10 lakh sum assured, single premium LIC Dhan Vriddhi plan for 15-year policy term.
The one-time premium for this comes to Rs 7.89 lakh (inclusive of GST). The premium without GST is Rs 7.55 lakh.
Now the Sum Assured on Death is 10 times X Single Premium (before GST) = Rs 7.55 lakh x 10 = Rs 75.55 lakh
The Guaranteed Addition for Basic SA of Rs 10 lakh and Policy tenure of 15 years = Rs 40/ Rs 1000 of Sum Assured for Option 1. This comes to Rs 40,000 per year or Rs 6 lakh for 15 year policy term.
So the total Maturity amount = Basic Sum Assured + Accrued Guaranteed Additions, i.e. = Rs 10 lakh + Rs 6 lakh = Rs 16 lakh.
So let’s see what is the return of LIC Dhan Vriddhi policy in this case.
You invested one time Rs 7.98 lakh and at the end of 15 year term, your investment increased to Rs 16 lakh. This is a return (IRR) of just 4.83% per annum. But this amount is tax-free.
So the pre-tax returns are lower in Option-2 than Option 1 because Option 2 offers a higher life cover. Comparing the 2 options, we can see that while Option-1 will give higher returns and bigger corpus through life cover via sum assured will be bigger in Option-2.
That was about the calculation of returns using LIC Dhan Vriddhi Return Calculator.
Surrendering LIC Dhan Vriddhi policy (2023)
The policy can be surrendered by the Policyholder at any time during the policy term. On surrender of the policy, the Corporation shall pay the Surrender Value equal to higher of Guaranteed Surrender Value and Special Surrender Value.
The Guaranteed Surrender Value (GSV) payable under the policy shall be:
- During the First three policy year: 75% of the Single Premium
- Thereafter: 90% of the Single Premium Single premium referred above shall not include taxes, extra premiums and rider premium(s), if any.
In addition, the surrender value of accrued Guaranteed Additions i.e. accrued Guaranteed Additions multiplied by GSV factor applicable to the accrued Guaranteed Additions, shall also be payable. These GSV factors expressed as percentages will depend on the policy term and policy year in which the policy is surrendered and are given below:
Loans under LIC Dhan Vriddhi plan (2023)
A loan can be availed under this plan at any time during the policy term after three months from completion of the policy (i.e. 3 months from the Date of issuance of policy) or after the expiry of the free-look period, whichever is later subject to the terms and conditions as the Corporation may specify from time to time.
The maximum loan that can be granted as a percentage of surrender value is mentioned below:
Interest on Loan shall be paid on a compounding half-yearly basis to the Corporation at the rate to be specified by the Corporation at the time of taking the loan under this policy. The rate of loan interest applicable for the full loan term, for the loan to be availed under this policy for every 12 months period from 1st May to 30th April shall not exceed 10 year G-Sec Rate p.a. compounding half-yearly as at the last trading date of the previous financial year plus 300 basis points or the yield earned on the Corporation’s Non-Linked Non-Participating fund plus 100 basis points, whichever is higher. For a loan sanctioned during 12 months period commencing from 1st May, 2023 to 30th April, 2024 the applicable interest rate shall be 9.5% p.a. compounding half-yearly for the entire term of the loan. The basis of determination of applicable loan interest for policy loan is subject to change. The first payment of interest is to be made on the next Policy anniversary or on the date six months before the next Policy anniversary whichever immediately follows the date on which the Loan is sanctioned and every half year thereafter.
How to purchase LIC Dhan Vriddhi Plan (2023)?
This new LIC Dhan Vriddhi plan can be purchased offline through LIC agents/other intermediaries or online as well.
Step-by-step process to buy LIC Dhan Vriddhi Plan Online:
- Log-on to LIC website (www.licindia.in) for buying this online product. Click on ‘Buy Policies Online’. Select plan LIC Dhan Vriddhi Plan.
- Click on ‘Buy Online’. Choose your desired Purchase Price, Policy Variant/Option, Date of Birth, Gender, Smoking status, 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 869 online with rebates of about 2% on the purchase amount.
LIC Dhan Vriddhi: Should you invest (2023)?
While the product is very simple to understand (you pay once and get money with interest after a few years), it is still a very low-return product. Best to never mix investment and insurance – something on which ULIPs, endowment and moneyback plans are built.
Hopefully, you would have found this LIC Dhan Vriddhi Review useful and the (UIN – 512N362V01) policy details and LIC Dhan Vriddhi Policy Benefits (2023) would be clear by now. But please make sure you understand and assess the suitability of this product first and then decide whether to invest in it or not.
Disclaimer – This is just a general discussion. The views expressed above should not be considered professional investment advice or advertisement or otherwise. The article is for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the likes and take professional investment advice before taking any financial decisions or actions which may have financial implications now or in future.