LIC Jeevan Vriddhi: New Advertisement

LIC had launched single premium life insurance plan – LIC Jeevan Vriddhi, which has death benefit of 5 times the single premium. With the new rules on Life Insurance in Budget 2012, the minimum death benefit should be at least 10 times the annual premium paid. This rule is however effective from April 1, 2012. So you would get the full benefit of tax exemption u/s 80C of income tax only till March 31, 2012 if you invest in this plan. 

What would happen after April 1, 2012?

If you invest in LIC Jeevan Vriddhi after April 1, 2012 you would be only able to claim 50% of premium paid as tax exemption.

This is how it works. Say you invest Rs. 1 Lakh as premium. You would get Rs 5 Lakh as death benefit. Now the new rule says the tax exemption is only up to 10% of death benefit, which in this case comes out to be Rs. 50,000 [ 10% of 5 lakh]. So this is the sum you would be able to claim as tax exemption u/s 80C.

You can read the review of Jeevan Vriddhi here.

LIC has stated the same in the new advertisement today.

LIC JEEVAN VRIDDHI - New Advertisement

3 thoughts on “LIC Jeevan Vriddhi: New Advertisement

  1. Vishal Rochlani says:

    What will be the implications at the time of maturity if we invest after April’12, will it be exempt under section 10 (10d) or will be taxable. Pl. clarify.

    • As per Section 10(10D) of the Income Tax Act, 1961, any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy is exempt from tax. However, this rule does not apply to following amounts:

      1. sum received under Section 80DD(3), or
      2. any sum received under a Keyman Insurance Policy, or
      3. any sum received other than as death benefit under an insurance policy which has been issued on or after April 1, 2003 and if the premium paid in any of the years during the term of the policy is more than 20% of the Actual Capital Sum Assured.

      So according to this rule the maturity amount of Jeevan Vriddhi would be tax free even if you purchase it after April 2012.

      • With Budget 2012 things have changed. Apologies for the above comment. If you buy policies where premium is more than 10% of sum assured, then on maturity the amount received would be added to your income and taxed according to your tax slab.
        You can read the details here. last 2 paragraphs

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