Jeevan Aastha is the new insurance policy by LIC (Life Insurance Corporation of India) that is being much talked about offlate. I went through LIC’s website to understand the product better.
Before taking up the policy, there are a couple of things one should keep in mind. 
One should clearly understand the difference between Basic Sum Assured and Maturity Sum Assured. For this policy, Basic Sum Assured is 6 times the Maturity Sum Assured. Also, it may be noted that Basic Sum Assured is applicable for the first year of the policy. Apart from these two terms, there is also ‘Guaranteed Return‘ in case of death or policy maturity upon survival. LIC has put up benefit illustation details as well. Let us understand what this means in lay man terms with respect to what is good and what is not.
First the Good:
1. Tax benefit under Sec 80C on initial premium.
2. Maturity benefit is non taxable under Sec 10(10D)
3. On death during the first policy year.
4. Guaranteed Addition at two rates for 5 and 10 year terms.
5. Loyalty Addition – a variable component based on company performance.Keeping aside LIC’s service quality and track record in claim settlement, here comes the bad:
1. Guaranteed additions are not on the Basic sum but on the Maturity Sum assured.
2. Insurance benefit decreases drastically after first year.
3. This policy looks like more of an Investment scheme than an Insurance cover.Now lets see the returns of Jeevan Aastha in comparison with Fixed Deposits and PPF.
Plan (for an individual of 31 yrs) Investment
AmountReturn Amount Risk on 10th year 10th year on maturity LIC’s Jeevan Aastha 53,625 1,65,000 1,07,184 Fixed Deposit 53,625 1,05,814 1,15,338 Public Provident Fund (PPF) 53,625 1,01,525 1,10,155
Disclaimer: I am neither an insurance agent nor an investments advisor. All the info provided in this article is based on my understanding of the policy after going through LIC’s website.
Krishna says
Hello Mohan, Thank you for the good article. Is the plan not available now? It shows that it is only for the 45 days. Please confirm me. Is there any new policy introduced by LIC?
Mohan says
Hi Krishna, you are most welcome. I am glad that you liked this post. Jeevan Aastha is not available any more. It was offered only for a limited period of 45 days during last financial year and this policy availability ended on March 31st of 2009.
Yes, there is a similar new policy by LIC called Jeevan Nischay. You can read my review on that plan here.
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Vishal Agarwal says
Sir I have invested 24900 single premium for jeevan astha a now after 10 years want to close the policy.
Mohan says
Vishal, please check with your agent or the regional LIC office to know the returns. I don’t understand what you mean by close the policy after 10 years.. it is anyways going to mature by then!
Imtiaz shaik says
I have invested 36,000 per year in LIC Jeevan .. , now after 4 years want to close the policy.
How much I will get back the amount
Imtiaz shaik says
I have invested 36,000 per year in LIC Jeevan .. , now after 4 years want to close the policy.
How much I will get back the amount
Arup Baruah says
I am a Govt. employee. Recently I am taking this policy with 20 years plan and premium Rs. 1885/- for quarterly. How this is called money back and I much money back to me after 4 or 5 years. My LIC agent call me that after 5 years when money will come if I invest it to LIC for next years then no other money required. I mean to say actually 5 year due for receiving this policy. Please explain how much I get after 20 years(my plan is for 2 lacs).
Srikanth Matrubai says
Dear Mohan, you are doing a great job with your blog. Keep it up.
Mohan, don’t you think that going for a Term Insurance and investing the difference in either Mutual Funds or ULIP is much better idea than investing in these products like Jeevan Aastha…
Regards,
Srikanth
Mohan says
I am all game for pure insurance products like term insurance. People don’t buy insurance, they go for products that save them income tax. But the fact is, they are loosing more money on these kind of variants of insurance products. Keeping those in mind, i wrote this article to find out the good and bad of the product.
Srikanth Matrubai says
Dear Mohan, you are doing a great job with your blog. Keep it up.
Mohan, don’t you think that going for a Term Insurance and investing the difference in either Mutual Funds or ULIP is much better idea than investing in these products like Jeevan Aastha…
Regards,
Srikanth
Mohan says
I am all game for pure insurance products like term insurance. People don’t buy insurance, they go for products that save them income tax. But the fact is, they are loosing more money on these kind of variants of insurance products. Keeping those in mind, i wrote this article to find out the good and bad of the product.
Raj says
ref:
http://www.incometaxindia.gov.in/Acts/INCOME%20TAX%20Act/10.asp
The Following clause 10(D) of section 10 by the Finance Act, 2003, w.e.f. 1-4-2004:
(10D) any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than-
(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA; or
(b) any sim received under a Keyman insurance policy;or
(c) any sum received under an insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured:
——–
my comment:
Pls note the words, “any of the years during the term” and “exceeds twenty percent of the capital sum”. So, if this policy covers 5x in one years and drops to 1x next years, the 10(10D) exemption is not available. LIC agents and Managers have target to achieve and they would easily overlook few things to sell..
rakesh says
There is a good confusion abt sec 10(10D) implcation even CBDT is not clear on this issue. Alike Jeevan astha some companies like IDBI Forties wealthassurance offers a sum assured of only 1.10 times and relaince total investment plan and other single premium plan gives minimum sum assured of 1.25 times only. Its still not clear as for Single Oremium policy whut is the minimum sum assured requries for 10(10D) benefit. u can see CBDT(central board of Direct taxes) in this regard . I am still not clear as whut is the min SA required.
rakesh says
There is a good confusion abt sec 10(10D) implcation even CBDT is not clear on this issue. Alike Jeevan astha some companies like IDBI Forties wealthassurance offers a sum assured of only 1.10 times and relaince total investment plan and other single premium plan gives minimum sum assured of 1.25 times only. Its still not clear as for Single Oremium policy whut is the minimum sum assured requries for 10(10D) benefit. u can see CBDT(central board of Direct taxes) in this regard . I am still not clear as whut is the min SA required.
Vashi says
You mention Maturity benefit is non taxable under Sec 10(10D)for jeevan astha; but that is not mentioned anywhere in the LIC Jeevan astha website
mahesh says
i dont know english plz send in kannada language what uses this plan plz
mukesh says
you are cleared my doubts very well… Thanks….I have Jeevan Aastha policy worth Rs. 100000
mukesh says
you are cleared my doubts very well… Thanks….I have Jeevan Aastha policy worth Rs. 100000
Jitu says
I have Jeevan Aastha policy worth Rs. 30000/-
Can you please let me know how much i get after 10 years?
Deepak Gupta says
@Gopakumar
Dear Mr. Kumar,
I think you have clarified every thing one wants to know about TAX benefits in Jeevan Astha Plan. I am my self is an agent of LIC sitting at LIC’s Divisional Office-1 in new delhi,where Sr. Div. manager sits. I had a long discussion regarding Tax with my Branch Manager and he has confirmed to me that sec.80c and 10(10d) is applicable in this plan. Thanks Cheers…………..
Deepak Gupta says
@Gopakumar
Dear Mr. Kumar,
I think you have clarified every thing one wants to know about TAX benefits in Jeevan Astha Plan. I am my self is an agent of LIC sitting at LIC’s Divisional Office-1 in new delhi,where Sr. Div. manager sits. I had a long discussion regarding Tax with my Branch Manager and he has confirmed to me that sec.80c and 10(10d) is applicable in this plan. Thanks Cheers…………..
Mohan says
@Sanjay
You can view the soft copy of that mail here.
@satyabhama
yes, this plan was closed on 21st Jan ’09.
Mohan says
@Sanjay
You can view the soft copy of that mail here.
@satyabhama
yes, this plan was closed on 21st Jan ’09.
Sanjay says
@Mohan
can u give me scan copy of that letter
regards
sanjay
satyabhama says
information to all friends…. jeevan aastha was closed for sale on 21st january.
satyabhama says
information to all friends…. jeevan aastha was closed for sale on 21st january.
Nikhil says
I want to ask that if i invested 26198(25000) in this policy. How much tax deduction i get this year as this one time premium policy ? I am confused with term basic sum assured , maturity sum assured and capital sum assured ?
I get information from lic site that section under 80c get deduction of 20% of capital sum assured ?
Please give me information.
Gopakumar says
As per sec 10(10(d)), to get tax exemption the premium should not exceed 20% of capital sum assured. To understand what is meant by Sum assured one should look at the various insurance documents.One such document is the premium receipt wherein LIC clearly states the sum assured, which is 6 times(approx)of the single premium.The next thing is the policy document. As per the law each insurer has to affix stamps based on the sum assured of policy. Here again LIC instruction says that stamp is based on the basic sum assured.(first year sum assured). Therefore it can be concluded that the sum assured under this policy is the sum assured at the time of signing of contract.Accordingly jeevan aastha policies will get the benifit of sec 10(10(d)).It may be noted that there are many life insurance policies currently in the market with variable sum assured during the term.
Gopakumar says
As per sec 10(10(d)), to get tax exemption the premium should not exceed 20% of capital sum assured. To understand what is meant by Sum assured one should look at the various insurance documents.One such document is the premium receipt wherein LIC clearly states the sum assured, which is 6 times(approx)of the single premium.The next thing is the policy document. As per the law each insurer has to affix stamps based on the sum assured of policy. Here again LIC instruction says that stamp is based on the basic sum assured.(first year sum assured). Therefore it can be concluded that the sum assured under this policy is the sum assured at the time of signing of contract.Accordingly jeevan aastha policies will get the benifit of sec 10(10(d)).It may be noted that there are many life insurance policies currently in the market with variable sum assured during the term.
raju says
not convinced about the tax free status as sec 10(D) says “any sum received under an insurance policy issued on or after the 1st day of April, 2003 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured”.
if i invested 48975,then my coverage after 1st year is 1,10,000.So the premium payed ceases to be les then 20% of sum assured.So how can the returns be tax free?
Krishna says
@Raj
you are cleared my doubts very well… Thanks….
prabha says
dear sir,
when a sr manager is not sure of the terms and conditions, how they are giving full details regarding a policy. even in the policy bond of jeevan aastha l i c is silent on this surrender value.
prabha says
dear sir,
when a sr manager is not sure of the terms and conditions, how they are giving full details regarding a policy. even in the policy bond of jeevan aastha l i c is silent on this surrender value.
Mohan says
@vivek
I have a mail from Sr.Divisional Manager @ LIC stating that IT Rebate available under Sec. 80C & 10(10(d)) for this plan. Not sure about the terms and conditions you are referring to. I have no information on that at this point of time.
Arun says
Dear Sir,
everybody (including LIC) is undfer impression that the returns from Jeevan Aastha is Tax Free. However, as Sec10(10D) the maturity proceeds of insurance policy is tax free only if the Life Insurance Cover is 5 times of Premium. However in Jeevan Aastha after first year insurance cover is equal to premium. Hence, the returns are taxable.
nsns says
Wow you guys are the best…i invested today as my uncle is an LIC agent. But then i wasn’t sure whether i had made a wise decision…looking at ur post looks like i’m on the right track…thank you guys for clarifying.
vivek says
You mention Maturity benefit is non taxable under Sec 10(10D)for jeevan astha; but that is not mentioned anywhere in the LIC Jeevan astha website.
Please clarify.
vivek says
You mention Maturity benefit is non taxable under Sec 10(10D)for jeevan astha; but that is not mentioned anywhere in the LIC Jeevan astha website.
Please clarify.
prabha says
can we believe the statement given by satyabhama. can anybody clarify….mohan sir, please clarify this
satyabhama says
To all friends. This is an attempt to show you the surrender value figures under jeevan aastha policy.
Ex- age-35 yrs basic sum-150000 and maturity sum-25000 and term 5 years. Year premium payable surrender value payable
2009 26265 Nill
2010 Nill 23639
2011 Nill 23639
2012 Nill 23639
2013 Nill 24953
2014 Nill 36250 ( + loyalty )
Note : except maturity after the close of the term, the surrender value at any point of time is less than the premium paid by the policy holder. Note that no loyalty is payable on surrender. No LIC agent or development officer will give you the above facts to the public. You can get this from any administrative officer in the office.
Abir says
Maturity amount is totally tax free. There will be no TDS. LIC’S prevailing rate of loan interest is 9%, same will be prevailing for J Aastha, if not changed otherwise after one year.
@S.Goswami
No penalty for early surrender. But if you complete the term you will get loyalty addition/bonus. If you surrender the policy after 1yr, you will get 90% of your invested prm+G.Addition of one year. Policy is available at 5yr and 10yr term. Both will get tax benefit at entry and exit.
vanraj vank says
Dear all,
I have a confusion, can any body clearify this ?
As per my knowledge and according to the website of LIC maturity of jeevan astha can be taxable because at maturity the sum assured is decrease it is less then 5 time of premium which is primary requirement and important clause of Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D)
“All the benefits payable under a Life Insurance policy are tax free. However in cases the premium paid in excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The benefits from a key man Insurance policy and any sum received under Sec 80DD, Sub-section (3) are also taxable.
After reading this clause Do you think the maturity will be tax free ?
satyabhama says
can any body clarify me about the rate of interest on the loan under jeevan aastha? one of my agent friend told that l i c has not sofar declared this rate of interest and expected that it will be more than 10.5% as l i c is already allowing 7 to 8% as guaranteed rate of return. and also request you to clarify that whether the maturity is exempted under sec 10 (d) or not?
satyabhama says
can any body clarify me about the rate of interest on the loan under jeevan aastha? one of my agent friend told that l i c has not sofar declared this rate of interest and expected that it will be more than 10.5% as l i c is already allowing 7 to 8% as guaranteed rate of return. and also request you to clarify that whether the maturity is exempted under sec 10 (d) or not?
Subimal Goswami says
Hi,
I have few queries regarding FD-
1. Does the maturity amount of FD attracts and TDS???
eg- If I invest RS 50000 in a FD for 5 yr term then considering 9% interest compounded yearly then I should get RS 76931.19 at the end of 5 yrs or some TDS will get deducted???
2.If I Close the FD before 5 yrs for (for the above eg) then will there be any penalty/deduction??? eg- If I close the FD after completion of 1 yr then how much I will get (for the above eg)??
3. does 5 yrs fd comes under 80C ie- will I get any tax rebate? If so what %??
rupesh says
dear mohan
thanks for a detailed report. this was an innovative idea 2 collect huge premium in only 45 days….. i felt the LIC mode seem shifted towards better benefits to its customers as it waived 80c and tax free returns. when we consider both tax aspects and product its BETTER OPTION towads those who want 2 invest in FD. as the post tax effect at ages 13 to 40 would be about 12% if the person is in 30% slab…….
please show in your comparision post tax effects as that will give morew better view
Abir says
Basic Sum Assured not only applicable to 1st year but will be all along the term but from 2nd year onward @1/3 of BSA. Plainly speaking the amount of life-cover you choose in J.Aastha is your BSA(min 1.5 lac). Maturity Sum Assured will be 1/6 th of BSA(roughly equals the amount of premium you are paying). Guaranteed Addition and Loyalty Addition will be counted on MSA. You will get good premium rebate if BSA is above 3lac. BSA will increase in multiple of Rs.30000. Loan facility and policy mortgage facility available 2nd year onwards.
One more thing agent will get Re.-0.02/- as commission per Re-1/- you invest as premium in this policy, and also no bonus commission is there.
Mohan says
@Niyati Katial
Basic Sum Assured is the amount to which an individual will be insured for the first year of the policy. Where as Maturity Sum Assured is the amount that you would get without any benefits by the end of the policy term. Usually, Maturity Sum Assured would be almost the same as the premium of the policy.
Mohan says
@Niyati Katial
Basic Sum Assured is the amount to which an individual will be insured for the first year of the policy. Where as Maturity Sum Assured is the amount that you would get without any benefits by the end of the policy term. Usually, Maturity Sum Assured would be almost the same as the premium of the policy.
Ashish says
I agree with you Suman. The FD interest is taxable. Doesn’t matter whether TDS is there or not. If you split the FD amount, then TDS will not be deducted. But, If you do not pay tax, it is considered as Tax evasion, and treated as such. So, take your decision accordingly..
Thanks,
Ashish