The sum assured options increase in multiples of 5000 till Rs 10 lakh and the premium increases accordingly. A two per cent rebate is given on the premium in excess of Rs 25,000. The life cover, being equal to the difference between the premium and the sum assured , is small and the instrument is better looked upon as an investment avenue. The policy is available for five and ten-year terms. Only cumulative returns option is available.
Interest is in the form of guaranteed additions per annum accruing at the end of every policy year.
The interest rate increases with the amount invested and gets compounded with the number of years the policy is held. A loyalty addition depending on policy term and LIC s expenses and yield etc. may also be paid on the life assured surviving the date of maturity. This is not a guaranteed return and therefore returns on the investment in the policy should be evaluated both with and without the loyalty additions. Since the policy is not yet five years old, LIC s track record on payment of this loyalty addition cannot be evaluated. The gain without loyalty addition is less and gives a simple per annum return of 11.20 per cent calculated similarly.