Life Insurance Corporation of India (LIC) is one of the most trusted and old life insurance companies that has achieved numerous milestones and broken unprecedented performance records. Its primary mission is to “Ensure and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development.”
LIC also offers endowment policies that are specifically designed to offer financial security and protection to its policyholders. Two such policies LIC Bima Ratna and LIC Bima Jyoti plan will be compared and discussed throughout the post. Though both plans are endowment policies and have somewhat similar fundamental aspects, they differ from each other in various ways.
Let’s first take a look at their basic definitions!
What Is LIC Bima Ratna Plan?
LIC Bima Ratna Plan is a non-linked, non-participating, individual savings life insurance plan that can be purchased through corporate agents, brokers, Insurance Marketing Firms (IMF), and Common Service Centres (CSC). Through recurring payments, this insurance plan assists in addressing a variety of financial demands.
The plan’s primary aim is to provide financial assistance to the family in the event of the policyholder’s death while the policy is still in effect. The plan also offers a consistent payout to ensure the policyholder’s survival.
What Is LIC Bima Jyoti Plan?
LIC Bima Jyoti is definitely designed to provide the policyholder and his family with comprehensive coverage by offering both savings and protection. In the tragic event of the policyholder’s passing during the policy’s term, the plan offers financial stability to the policyholder’s loved ones. If the policyholder lives to see their policy’s maturity, they are also guaranteed a payoff. The policy virtually doubles the money invested and guarantees additions, maximizing the policyholder’s savings.
Eligibility Criteria Of LIC Bima Ratna & LIC Bima Jyoti Plan
| Parameters | LIC Bima Ratna | LIC Bima Jyoti |
| Minimum Entry Age |
| 90 Days (Completed) |
| Maximum Entry Age |
| 60 Years (Age Nearer Birthday) |
| Policy Term | 15/20/25 Years | 15 To 20 Years |
| Minimum Basic Sum Assured | Rs. 5,00,000 | Rs. 1,00,000 |
| Maximum Basic Sum Assured | No Limit | |
| Minimum Age At Maturity |
| 18 Years (Completed) |
| Maximum Age At Maturity | 70 Years (Age Nearer Birthday)
(65 Years (Age Nearer Birthday) – (In Case Of Policies Procured Through POSP-LI/CPSC-SPV) | 75 Years (Age Nearer Birthday)
(65 Years (Age Nearer Birthday) – (In Case Of Policies Procured Through POSP-LI/CPSC-SPV) |
| Premium Paying Term |
| Policy Term Minus 5 Years |
Comparing Features & Benefits Of LIC Bima Ratna & LIC Bima Jyoti Plan
Both plans offer a good combination of protection and savings to its policyholders. This section will highlight the similarities and differences between both plans so that one can make a wiser decision on which one to choose!
Death Benefit:
The death benefit is payable under both plans on the death of the life assured during the policy tenure. The ‘Sum Assured on Death’ for the LIC Bima Ratna plan is higher of 125% of the Basic Sum Assured or 7 times of annualized premium amount.
Whereas, the death benefits under the LIC Bima Jyoti plan are payable as follows:
- If the insured passes away before the risk arises, the plan will refund the premium amount, less any applicable taxes or other fees.
- The total assured amount is paid out along with the cumulative guaranteed additions if death happens after the risk cover begins. In certain situations, the death benefit is equal to seven times the annualized premium.
Maturity Benefit:
If the policy is still in effect and the life assured survives the specified date of maturity, the “Sum Assured on Maturity” and accrued “Guaranteed Additions” will be paid. The ‘Sum Assured on Maturity’ for both plans are as follows:
- For LIC Bima Ratna: 50% Of Basic Sum Assured
- For LIC Bima Jyoti: Equal To Basic Sum Assured
Survival Benefit:
This benefit is present with the LIC Bima Ratna plan and not with LIC Bima Jyoti. A predetermined percentage of the basic sum assured will be paid if the life assured survives for each of the given durations during the policy period, providing the policy is in force. The following are the fixed percentages for several policy terms:
| Policy Term (In Years) | Payment Of Survival Benefit |
| 15 | 25% of the Basic Sum Assured at the end of each of the 13th and 14th policy years. |
| 20 | 25% of the Basic Sum Assured at the end of each of the 18th and 19th policy years. |
| 25 | 25% of the Basic Sum Assured at the end of each of the 23rd and 24th policy years. |
Guaranteed Additions:
Both plans offer guaranteed additions only and only if the policy is in force. For Bima Jyoti plan, at the conclusion of each policy year, ‘Guaranteed Additions’ at a rate of Rs. 50 per thousand ‘Basic Sum Assured’ will be added to the contract. In the event of a death covered by an active policy, the ‘Guaranteed Addition’ for the year of death must cover the whole term of the policy. The ‘Guaranteed Additions’ under a policy will stop accruing in the event that the premiums are not paid on time.
For the Bima Ratna plan, the rates of guaranteed additions are specified below:
| Policy Year | Guaranteed Additions (Per Rs. 1000 Basic Sum Assured) |
| From 1st To 5th | Rs. 50 |
| From 6th To 10th | Rs. 55 |
| From 11th To 25th | Rs. 60 |
Rider Benefits:
Both policies come with 5 riders that one can buy by paying an extra premium. This will allow the policyholder to enhance the coverage of his or her policy. The riders available with LIC Bima Ratna and LIC Bima Jyoti policies are as follows:
- Accidental Death & Disability Benefit Rider
- Accident Benefit Rider
- New Term Assurance Rider
- New Critical Illness Benefit Rider
- Premium Waiver Benefit Rider
Settlement Options For Maturity & Death Benefits:
Under the LIC Bima Ratna plan, the policyholder has the option to receive death and maturity benefits in instalments over a period of 5 years instead of a lump sum amount. Whereas, this time frame is of 5, 10, or 15 years for the LIC Bima Jyoti plan.
Rebates:
Both plans, LIC Bima Ratna and LIC Bima Jyoti offer mode and high sum assured rates.
Mode Rebate:
| LIC Bima Ratna & LIC Bima Jyoti | |
| Mode | Rebate |
| Yearly Mode | 2% Of Tabular Premium |
| Half-Yearly Mode | 1% Of Tabular premium |
| Quarterly, Monthly (NACH) & Salary Deduction | NIL |
High Sum Assured Rebate
| LIC Bima Ratna | |
| Basic Sum Assured (BSA) | Rebate On tabular premium Per Rs. 1000 BSA (Rs.) |
| 5,00,000 To 9,75,000 | Nil |
| 10,00,000 To 14,75,000 | 0.50 |
| 15,00,000 To 19,75,000 | 1.00 |
| 20,00,000 & Above | 1.25 |
| LIC Bima Jyoti | |
| 1,00,000 To 2,75,000 | Nil |
| 3,00,000 To 4,75,000 | 4.0 |
| 5,00,000 To 9,75,000 | 5.0 |
| 10,00,000 & Above | 6.0 |
Loan Facility:
The policyholders can take a loan against both policies subject to some terms and conditions that the company may introduce from time to time. The maximum loan amount that can be granted under both policies is up to 90% of the surrender value for in-force policies and 80% of the surrender value for paid-up policies.
Benefit Illustration Of LIC Bima Ratna & LIC Bima Jyoti Plan
In order to understand how return on money will be calculated or invested, it is important to look at the benefit illustration of both plans. It will give a clear idea of how premiums will be invested and how the investment will grow.
LIC Bima Ratna:
Suppose Mr. A, aged 35 years, has purchased the policy for the policy term of 25 years. Other details of the plan are as follows:
- Premium Payment Term: 21 Years
- Amount Of Instalment Premium: Rs. 1,18,726
- Premium Payment Mode: Yearly
- Basic Sum Assured: Rs. 20,00,000
- Sum Assured On Death: Rs. 25,00,000
The plan will offer the following benefits to Mr. X!
| Policy Year (End Of The Year | Annualized Premium (In Rs.) | Guaranteed Benefits (In Rs.) | ||||
| Survival Benefit | Guaranteed Additions | Maturity Benefit | Death Benefit | Minimum Guaranteed Surrender Benefit | ||
| 1 | 1,18,726 | 0 | 1,00,000 | 0 | 26,00,000 | 0 |
| 2 | 2,37,452 | 0 | 2,00,000 | 0 | 27,00,000 | 71,236 |
| 10 | 11,87,260 | 0 | 10,50,000 | 0 | 35,50,000 | 8,35,251 |
| 15 | 17,80,890 | 0 | 16,50,000 | 0 | 41,50,000 | 14,41,547 |
| 20 | 23,74,520 | 0 | 22,50,000 | 0 | 47,50,000 | 22,26,750 |
| 21 | 24,93,246 | 0 | 23,70,000 | 0 | 48,70,000 | 24,16,810 |
| 22 | 24,93,246 | 0 | 24,90,000 | 0 | 49,90,000 | 25,30,330 |
| 23 | 24,93,246 | 5,00,000 | 26,10,000 | 0 | 51,10,000 | 26,56,982 |
| 24 | 24,93,246 | 5,00,000 | 27,30,000 | 0 | 52,30,000 | 25,62,921 |
| 25 | 24,93,246 | 0 | 28,50,000 | 38,50,000 | 53,50,000 | 22,41,421 |
LIC Bima Jyoti:
Suppose Ms. B, a 35 years old female, purchases the plan with the following details:
- Policy Term: 20 Years
- Premium Payment Term: 15 Years
- Amount Of Installment Premiums: Rs. 78,770
- Premium Payment Mode: Yearly
- Basic Sum Assured: Rs. 1,00,000
- Sum Assured On Death: Rs. 12,50,000
- Guaranteed Additions Per Rs. 1000 Per Year: 50
The plan will work for Ms. B in the following manner!
| Policy Year (End Of The Year) | Annualized Premium (Cumulative) | Guaranteed Benefits | ||||
| Survival Benefit | Guaranteed Additions | Maturity Benefit | Death Benefit | Minimum Guaranteed Surrender Benefit | ||
| 1 | 78770 | 0 | 50000 | 0 | 1300000 | 0 |
| 2 | 157540 | 0 | 100000 | 0 | 1350000 | 47262 |
| 5 | 393850 | 0 | 250000 | 0 | 1500000 | 239500 |
| 10 | 787700 | 0 | 500000 | 0 | 1750000 | 543728 |
| 15 | 1181550 | 0 | 750000 | 0 | 2000000 | 992010 |
Which Is Better: LIC Bima Ratna OR LIC Bima Jyoti Plan?
Both endowment policies are designed for savings and protection of their policyholders. In case you wish to have a higher maturity benefit, then you can go for the Bima Jyoti plan as it offers a maturity benefit equal to the basic sum assured, unlike the Bima Ratna plan which offers only 50% of the basic sum assured. The plan can also be a great choice for those who wish to have higher guaranteed additions since it ranges from Rs. 50 to 60 per Rs. 1000 basic sum assured.
However, what makes the LIC Bima Ratna plan also a great choice is its survival benefits, which are not offered by the LIC Bima Jyoti plan. The plan also has a high potential to offer higher returns with short premium periods.
It becomes clear that both policies offer assured incentives and returns with significant weight. Investors can quantify the bonus they will receive upon maturity because of the shortened premium payment period, giving them a sense of security and convenience. But deciding on whether to buy LIC Bima Ratna or LIC Bima Jyoti plan largely depends on your financial needs, future goals, and budget.
