What Is It

• A regular premium, non-linked micro-insurance plan
• Provides protection and savings – Financial support for family in case of the unfortunate event of policyholder’s death. Lump sum amount paid to policyholder on maturity of the policy.

Numbers to Know

• Minimum Sum Assured – Rs. 50,000
• Maximum Sum Assured – Rs. 2,00,000
• Age of Entry – Policy buyer has to be between the ages of 18 and 55 years. Maximum age at maturity – 70 years.

Benefits

• If death occurs within 5 years from the policy date, Sum Assured on Death would be paid to the nominee. If death occurs after 5 years from the policy date, but before maturity, then Sum Assured on Death + Loyalty additions (if any)  would be paid to the nominee
• Sum Assured on death is highest of the following;

           – 10 times of your annualized premiums
           – 105% of basic sum assured
           – Sum Assured on Maturity.

• Basic Sum Assured or absolute amount assured to be paid on death.
• Returns on this plan are around 4%-5%
• You can surrender the policy  after payment of 1 full year insurance premium. Surrender value would be between 30% to 80% of the total premiums paid.

Other Features 

• This plan also takes care of liquidity needs through its Loan facility.
• 2 optional benefit riders which are useful for life insured. They are LIC’s Accidental Death & Disability Benefit Rider and LIC’s Accident Benefit Rider. They are available at additional premium payment.
• Loan can be availed during the policy term provided at least 3 full years’ premiums have been paid and subject to the terms and conditions

Illustration of Benefit (from LIC Brochure)
The image below shows the premium payment and benefits availed from a policy with

• Sum Assured – Rs. 1,00,000
• Age of Policyholder – 35 years 
• Gender – Male

Analysis and Conclusion
The policy has a very low sum assured amount. Even if it is meant for lower income groups, schemes such as Jan Dhan Insurance Scheme with zero premium and a sum assured of Rs. 30,000 and PM Jeevan Jyothi Bima Yojana with a premium of Rs. 330 p.a. and a sum assured of Rs. 2,00,000 seem to be a better choice.
The returns on the policy are also pretty low. If the policyholder expires within first five years of policy, his nominees will not get the loyalty additions which means lower returns.
It is better to take a term insurance plan and look for other micro-insurance plans if the need arises. The remaining amount can be put in an SIP of a well-performing Mutual fund where your money will work better for you.