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LIC Bima Jyoti Plan 860 – Features, Benefits Review

Shitanshu Kapadia
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LIC Bima Jyoti Plan 860 – Features, Benefits Review

LIC Bima Jyoti Plan 860 is new plan by LIC in the year 2021. The new plan is being launch by keeping tax saving season in mind. The plan is expected to be launched on 22nd Feb, 2021. LIC Bima Jyoti is Non-linked, Non- participating, limited premium endowment plan. The guaranteed addition on this plan is already announced by LIC. LIC Bima Jyoti Plan 860 will give 50 Rs per thousand guaranteed additions.

LIC Bima Jyoti provides life cover during the policy term and sum assured and bonus on survival as maturity. This plan can be purchased offline as well as online.

LIC Bima Jyoti Plan

LIC Bima Jyoti Plan 860 Eligibility

Minimum Entry Age90 days (completed)
Maximum Entry Age    60 years (nearer birthday)
Policy Term15 years to 20 years
Premium Paying Term5 years less than policy term
Premium Paying ModeYearly, Half Yearly, (Quarterly and Monthly – ECS Only)
Sum Assured1 Lakh and above
Minimum age at Maturity18 years
Maximum age at Maturity75 years
LoanAfter 2 Years
SurrenderAfter 2 Years
RevivalWithin 5 Years from FUP

Key Features

  • Premium paying term is 5 years less than policy term.
  • No bonus is offered against this plan instead fixed guaranteed addition at rate of Rs.50 per thousand basic sum assured offered at end of each policy year.
  • On maturity sum assured along with Guaranteed additions is given to policy holder.
  • Options for additional term rider is available. You can get accidental, disability and critical illness rider.
  • Loan option is offered after 2 years
  • Settlement option available for maturity and death benefits in installment 5, 10 and 15 years

LIC Bima Jyoti Plan 860 Benefits

Maturity Benefit

On the life assured surviving to the end of the policy term, Sum Assured on Maturity along with accrued Guaranteed Additions, shall be payable. Where sum assured on maturity is equal to basic sum assured.  

Example

Age 20 years, Policy Term 20 years

Premium Paying term in above case would be 15 years.

Sum assured – 10 Lakh

Maturity Amount – Sum Assured + Guaranteed Additions

Guaranteed Addition is fixed Rs.50 /1000 Sum assured yearly.

1 Lakh Sum Assured = 5000 Guaranteed Addition

10 Lakh Sum Assured = 50000 Guaranteed Addition

20 Years = (50000 x 20 years) = 10 Lakh Guaranteed Addition

Death Benefit

On death during the policy term Sum Assured on Death along with accrued Guaranteed Additions
Where Sum Assured on Death is defined as the higher of 125 % of Basic Sum Assured or 7 times of annualized premium.

Example

Age 20 years, Policy Term 20 years

Sum Assured – 10 Lakh

Death of Policy Holder at 30 Years (During policy term)

Death Benefit = Sum assured + Guaranteed additions

Sum assured in above case would be 125% of basic sum assured or 7 times of annualized premium whichever is higher.

In above case death benefit would be 10 x 125% + (50000 x 10 years) = 12.5 Lakh + 5 Lakh = 17.5 Lakh

Other Benefits

Loan Facility – After 2 years

Surrender – After 2 years

Policy Revival – Within 5 years

Grace period – 15 days for monthly mode, 30 days for any other mode

Tax benefit – Premium under section 80C

Maturity / Death Benefit – Exempt under section 10(10D)

LIC Bima Jyoti Plan 860 – Review

Bima Jyoti is endowment plan. It is non- linked and non-participating plan. The main benefit of this plan is guaranteed addition. The policy will not offer any bonus.

On doing calculation it seems to be attractive. The premium detail of plan is not yet known but overall guaranteed addition would be 5% only. This means you will get return less than fixed deposit.

So if you are planning to purchase this product as insurance product you should avoid it and purchase term plan. From investment point of view also you should avoid this plan.

How to open SBI FD online? – SBI Fixed Deposit Interest Rate

Shitanshu Kapadia
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How to open SBI FD online? – SBI Fixed Deposit Interest Rate

SBI FD Online – State Bank of India is India’s largest public sector bank. SBI FD is one of the most preferred, popular, and safe investment options. SBI FD’s are offered with an interest rate of 2.9% to 6.2%. SBI fixed deposit can be purchased offline as well as online. You just required a net banking facility to open SBI fixed deposit online. You can also renew or close fixed deposit online.

SBI Fixed deposit key features

  • SBI Fixed deposit interest rate payment is monthly, quarterly, or maturity basis as per your requirement.
  • The rate of interest applicable is different based on duration and amount of FD.
  • A higher interest rate applies to the senior citizen.
  • Deposit tenure is 7 days to 10 years.
  • The minimum deposit amount is Rs.1000. No limit on the maximum amount.
  • The nomination facility is available on the fixed deposit.
  • Premature withdrawal can be done by paying a penalty.
  • TDS is applicable if form 15G or 15H is not submitted.
  • Automatic renewal is done in case instruction for closure is not given.

SBI FD Options

SBI Term Deposit

SBI Term Deposit is also known as normal fixed deposit. This type of deposit is opened for a specific term. Term deposit offers guaranteed returns, choice of interest payout & liquidity. The tenure of this deposit is from 7 days to 10 days. Interest payout is monthly, quarterly, half-yearly and yearly.

SBI Tax Saving FD

The fixed deposit that is used for saving tax is known as Tax Saving FD. The rate of interest applicable to SBI Tax Saving FD is same as that of term deposit. The lock-in period for tax saving FD is 5 years. The amount is payable only at the time of maturity.

SBI Recurring Deposit

A recurring deposit is one that allows investor to invest fixed sum over a period of time. The minimum period is 12 months and the maximum period is 120 months. The minimum deposit amount is Rs.100 per month.

SBI FD reinvestment scheme

SBI FD reinvestment scheme is a scheme where interest earned is reinvested in the fixed deposit again to generate appreciation. The maturity duration is 6 months to 10 years. If you are not in need of money for long term you can opt for a reinvestment scheme.

SBI FD Online

Who can open SBI FD?                                

The eligibility criteria to open SBI FD is given below.

  • The depositor must be an Indian resident
  • NRI are also eligible to open NRE fixed deposit
  • Partnership firm and HUF

SBI FD Interest Rates 2021

Domestic term deposit interest rate below 2 Cr.

TenorsRevised Rates For Public w.e.f. 08.01.2021Revised Rates for Senior Citizens w.e.f. 08.01.2021
7 days to 45 days2.90%3.40%
46 days to 179 days3.90%4.40%
180 days to 210 days4.40%4.90%
211 days to less than 1 year4.40%4.90%
1 year to less than 2 year5.00%5.50%
2 years to less than 3 years5.10%5.60%
3 years to less than 5 years5.30%5.80%
5 years and up to 10 years5.40%6.20%

How to open SBI FD Online?

Step by step method to open SBI FD online is given below.

  • Visit SBI net banking website and login via net banking user name and password.
  • Under fixed deposit section you will find e-TDR/e-STDR (FD). Click on that option to proceed. TDR stands for term deposit and STDR stands for Special Term Deposit.
  • Select the appropriate option and click on Proceed. You will be able to see multiple bank accounts that you have with SBI.
  • You need to select the account from which the money needs to be debited.
  • Now enter the fixed deposit principal amount in the amount column.
  • Select the tenure of the deposit. You have options to select days, years, months, days or maturity date.
  • Now choose the maturity instruction on your tem deposit. Click on the terms and condition and press submit button.
  • Your Fixed deposit will be generated with complete details such as name, tenure, principal amount, maturity amount. You need to press OK button.
  • You can note down the transaction number for the future reference. The on screen PDF can be downloaded.

You will need documents such as identity proof – Aadhaar card, Passport, PAN card, passport size photos. Bank will also ask for resident proof, age proof and income proof for opening for fixed deposit.

ULIP Tax Rules 2021 – Should you still invest?

Shitanshu Kapadia
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ULIP Tax Rules 2021 – Should you still invest?

ULIP Tax Rules are changed in Budget 2021. Capital gain tax is applicable on the gain from ULIP policy provided yearly premium is exceeding 2.5 Lakh. The new rule is introduced to bring equality between mutual funds and ULIPs. Let’s demystify ULIP Tax Rules 2021.

ULIP is a unit-linked insurance policy. ULIP provides life coverage as well as wealth generation to the purchaser. In ULIP part of the premium goes for the life insurance coverage and the remaining is invested in the market in the combination of equity and debt. The return of the money invested varies based on the investment done by the ULIP fund.

ULIP Tax Rules

ULIP Tax Benefits

#1 ULIP tax benefits on premium

The premium paid for the ULIP plan allows you to claim tax deduction under section 80C and 10D. You can claim up to 1.5 Lakh. You need to make sure that you continue the ULIP policy for 5 years to get the tax exemption benefits. In case you stop contributing to the ULIP plan before lock-in period of 5 years the entire amount claimed in the earlier years shall be considered as income in the termination year and tax is charged as per the applicable tax slab.

#2 ULIP tax benefits on maturity

ULIP is a market link product. However, the maturity amount on ULIP was tax-free, provided the premium amount is less than 10% of the sum assured.  Now the rule of tax-free maturity is tweaked. As per the new rule if the premium paid for the policy is exceeding 2.5 Lakh per annum you need to pay capital gain tax on the maturity amount.

#3 ULIP withdrawal tax rule

Withdrawal from the ULIP fund is allowed after 5 years of lock-in period. If you make a withdrawal of money from the ULIP plan, you need not to pay any taxes on the withdrawal amount provided the withdrawal amount is not exceeding 20% of fund value. In case of the death of the policyholder, the entire amount received from the fund which includes sum assured and return generated is tax-free.

New ULIP Tax Rules 2021

The tax rule applicable to ULIP is now modified. As per new tax rules, the maturity amount from the ULIP is no longer tax-free in case the yearly premium amount is more than 2.5 Lakh. The investors need to pay capital gain tax on the maturity amount as per section 112A. The new rule is applicable for the ULIP policy purchased after 1st February 2021. This means if you have already purchased a ULIP policy where the yearly premium amount is more than 2.5 Lakh you need not worry.

Let’s understand this by example –

Old ULIP Policy Holder

ULIP Policy purchased – Before Feb 2021

Premium Amount – Monthly premium more than Rs.20833 (Yearly premium above 2.5 Lakh) or less than Rs.20833.

Premium paid on the policy – Less than 10% of the sum assured

Lock in period – 5 years (Policy in force since 5 years)

Under above case policy holder will enjoy benefits of section 80C up to 1.5 Lakh as well as tax free maturity amount. No rule change for old ULIP policy holder.

New ULIP Policy Holder

Case 1

ULIP Policy purchased – After Feb 2021

Premium Amount – Yearly premium of the policy less than 2.5 Lakh

Premium paid on the policy – Less than 10% of the sum assured

Lock in period – 5 years (Policy in force since 5 years)

Under this case the policy holder still enjoys the tax free return on the maturity of the policy. All income tax related benefits will remain same.

Case 2

ULIP Policy purchased – After Feb 2021

Premium Amount – Yearly premium of the policy more than 2.5 Lakh

Premium paid on the policy – Less than 10% of the sum assured

Lock in period – 5 years (Policy in force since 5 years)

Under case 2 income or return on maturity shall be treated as long term capital gain and charged as per section 112A. The capital gain in excess of 1 Lakh shall be taxable @ 10% without indexation.

Should you still invest in ULIP?

After understanding the new tax rules applicable you must be thinking is it advisable to invest in ULIP or not. Here are few pointers in this direction.

  • The 80C deduction up to 1.5 Lakh for the ULIP premium paid is still available to the investors.
  • If the yearly premium amount is less than 2.5 Lakh you will still enjoy the tax-free return from the ULIP.
  • ULIP is now treated at par with equity-oriented funds as per section 112A.
  • You can enjoy the flexibility of switching between various funds.
  • ULIP comes with lock-in period of 5 years.
  • You can enjoy the benefits of insurance as well as wealth generation by investing in ULIP.

ULIP is claimed to be a good investment option however, you need to be extremely careful before investing in ULIP. The returns generated by most of the ULIP is very low. ULIP is not liquid as it comes with lock in period.

As per me, you should go for a combination of term insurance plans and Mutual funds instead of investing your money in ULIP.

Credit card reward points – How to earn and redeem?

Shitanshu Kapadia
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0
Credit card reward points – How to earn and redeem?

Credit Card reward points –  Credit card comes with multiple benefits one such benefit is the reward. A reward means a freebie, gift, discount, or additional benefits that are offered to credit cardholders. It is offered against the usage of a credit card. Rewards are offered in terms of reward programs. These programs are made to trap credit card users for increasing usage of their credit cards for bill payments, shopping, dining, travel, etc. The value of reward points is much lesser than the amount spent using a credit card. Many credit card users spend money using a credit card just to increase reward points.

If you are using a credit card, you should understand credit card reward points and the method to redeem them.

Each credit card company has different criteria when it comes to giving credit card reward points. The process of redeeming these points also varies. However, most of the process is common. Let’s take a look at What is Credit Card Reward Points? How to earn and redeem reward points?

credit card reward points redeem

What is credit card reward points?

Credit card reward points are points that are given for every credit card spend. The value of reward points and calculation methods are different for every lender. The reward point calculation also differs based on purchases made by you.

For example, SBI Signature credit card customers can earn 2 reward points on every Rs.100 spent on purchase transactions and earn 10 reward points for every Rs.100 spent on departmental store purchases.

Credit card reward point benefits

The reward points offer multiple benefits to the credit card user. The points can be redeemed and following benefits can be earned.

  • Gift vouchers & E-vouchers
  • Air Miles
  • Room Miles
  • Cash back
  • Gift
  • Merchandise
  • Discount

The accumulated reward points need to be redeemed within a specific period. The reward points if not use can be expired. The maximum time limit allowed to redeem points varies from bank to bank. Generally, the bank allows 2-3 years’ time period for redeeming points.

Type of rewards points

Different types of reward points offered by credit card companies are given below.

#1 Welcome rewards – Given for becoming credit card holder

#2 Regular reward – By spending on the card

#3 International points – Given for spending money at overseas

#4 Accelerated points – For spending money on specific category

#5 Loyalty points – Points that are given for renewal of credit card

How to redeem credit card reward points?

There are two different ways to redeem your credit card reward points. Details are given below.

#1 Internet Banking

You need to login into your bank account using an internet banking customer ID and password. On successful login visit the credit card section.

Click on the reward points section. You will be taken to a new page where you will be able to see the reward point summary. Click on ‘Redeem Now’.

Now select the reward of your choice from various categories and confirm the redemption. You will get a redemption voucher or selected reward.

#2 Mobile App

Many banks and credit card companies provide Mobile App facility. You need to download the mobile app of the bank. Login using your internet banking customer ID and password. Click on the Rewards tab from the menu to view your balance points. Click on the “Redeem Now” button. You will be taken to the reward store from where you will be able to select the reward of your choice. Click on the confirm redemption and you will get a reward of your choice.

FAQ about credit card reward point

How many reward points are required for redemption?

Each bank has a different minimum balance requirement for the redemption of points. Some banks do not keep any minimum limit for the redemption of points. Generally, 500 reward points are enough for redemption.

Do reward points have any expiry?

All earned points have expiry date. The time period of expiry is variable. Bank gives time period of 2-3 years for the redemption of point.

What is redemption fee?

The fee that is charged for the redemption of the point is known as redemption fee. It is charged for processing and handling rewards. It is also known as redemption handling fees. GST will be charged on redemption fee.

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