Should you buy LIC’s close-ended single-premium guaranteed endowment policy ‘Dhan Vriddhi’?

Life Insurance Corporation of India, or LIC, has recently introduced a new single-premium guaranteed endowment policy known as Dhan Vriddhi plan. This close-ended plan is available for sale from June 23 to September 30.

Dhan Vriddhi is a non-linked, non-participating, individual, savings, single premium life Insurance plan offering protection and savings. This plan provides financial support for the family in case of untimely death of the assured during the policy term. It also provides a guaranteed lump sum amount on the maturity date to the life assured. As a single premium plan, there is no future premium obligation or lapsation.

You will have two options: Sum assured on death can be 1.25 times (option 1) or 10 times (option 2) the premium for the chosen basic sum assured, subject to certain eligibility conditions. The plan is available for 10-, 15- or 18-year terms. The minimum age at entry varies from 90 days to 8 years, depending upon the term selected. The maximum age at entry varies from 32 years to 60 years, depending upon the term and option chosen. The minimum basic sum assured is Rs 1.25 lakh and can be opted for more in multiples of Rs 5,000.

You can buy this plan offline through an agent or other intermediaries, including point of sales persons- life insurance and common public service centres. Besides you can also buy it online directly by visiting the LIC website.

Should you buy it? 

On the death of the life assured, during the policy term after purchasing the policy but before the stipulated maturity date, the amount payable will be the sum assured on death, along with accrued guaranteed additions is payable.

On the life assured surviving the stipulated maturity date, the basic sum assured, along with accrued guaranteed additions, will be payable.

The guaranteed additions will accrue at the end of each policy year, throughout the policy term. The guaranteed additions range from Rs 60 to Rs 75 (Option 1) and  Rs 25 to Rs 40 (Option 2) per Rs 1,000 basic sum assured, depending on the option chosen, the basic sum assured and the policy term. The guaranteed additions are higher for a higher sum assured.

Naval Goel, Founder and CEO of PolicyX.com, said, “For someone looking forward to a one-time investment can buy LIC’s Dhan Vriddhi. The plan comes with a sum assured on death and accrued guaranteed additions, an excellent feature for higher returns against your premiums. It is suitable for the individuals who can afford to invest at once rather than paying smaller premiums overtime.”

However, one must understand that the returns on endowment policy range between 5 to 6%, which sometimes may not beat inflation even if you remain invested for years.

The riders available with the plan are accidental death and disability benefit riders and new term assurance rider. Besides, a settlement option is also available on maturity/death to avail the claim in monthly, quarterly, half-yearly or yearly intervals for five years. The plan offers liquidity through a loan facility, which is available any time after 3threemonths from the completion of the policy.