LIC has launched a new life insurance plan in 2023 – The name of the new policy is LIC Jeevan Utsav (Plan No. 871), and Jeevan Utsav not only offers life insurance but is also meant to generate regular income after the premium payment term is over. It’s a Non-Linked, Non-Participating, Individual, Savings, Whole Life Insurance Plan. This policy (LIC Table No. 871) has been launched for the first time in 2023 under the UIN 512N363V01.
LIC Website link to Policy page – Link
Now there is a lot of discussion about policy offering 10% Guaranteed Returns. But is that correct?
The answer is No.
The Jeevan Utsav policy is not a 10% Guaranteed Return product as many people believe and LIC agents tend to pitch it as.
So why this fuss about 10%?
The policy after completion of the Premium Paying Term, simply offers 10% of the Sum Assured annually till the policyholder survives. So say you pay Rs 1 lakh each year for 10 years for Rs 10 lakh sum assured. And after that, the policy will give back 10% of sum assured (Rs 1 lakh) each year for the next several years.
So while this looks like 10% return, in reality it isn’t as we will see in a bit.
Let’s see the plan features in a bit more detail first.
Features of LIC Jeevan Utsav Plan (Table 871)
LIC’s Jeevan Utsav is a traditional Non-Linked, Non-Participating, Individual, Savings, Whole Life Insurance plan, that has a Limited Premium payment term (with Guaranteed Additions throughout Premium Paying Term) followed by 10% of the Sum Assured being paid out annually till the policyholder survives.
Now let’s have a look at the Policy Details of Jeevan Utsav Plan.
The Eligibility Criteria of the LIC Jeevan Utsav Plan and its features are listed below:
- The Premium Paying Term can be chosen from 5 years to 16 years
- The Minimum & Maximum Entry Age for the policy depends on the Premium Payment Term chosen. For 5-8 year premium payment term, the minimum and maximum entry ages are 7 years and 65 years respectively. For 9-year premium payment term, the minimum and maximum entry ages are 7 years and 65 years respectively. For 10-year premium payment term, the minimum and maximum entry ages are 6 years and 65 years respectively. For 11-year premium payment term, the minimum and maximum entry ages are 5 years and 64 years respectively. For 12-year premium payment term, the minimum and maximum entry ages are 4 years and 63 years respectively. For 13-year premium payment term, the minimum and maximum entry ages are 3 years and 62 years respectively. For 14-year premium payment term, the minimum and maximum entry ages are 2 years and 61 years respectively. For 15-year premium payment term, the minimum and maximum entry ages are 1 year and 60 years respectively. For 16-year premium payment term, the minimum and maximum entry ages are 90 days and 59 years respectively.
- The Minimum Age at the beginning of Policy Year in which first Regular Income Benefit/ Flexi Income Benefit becomes due for the policy is 18 years
- The Minimum Sum Assured is Rs 5 lakh.
- There is no upper limit on the Maximum Sum Assured for this policy.
Maturity / Income Benefits of LIC Jeevan Utsav Plan (2024)
As it is a whole-life plan, there is no maturity benefit under this plan.
Survival Benefit in the form of Regular Income Benefit or Flexi Income Benefit as per the option chosen shall be as under:
Here, there are two options provided.
Regular Income Benefit – Under this option, on survival, a Regular Income equal to 10% of the Basic Sum Assured will be payable each year starting from the year as specified in the list below:
- Premium Payment Term 5-8 Years – Regular Income starts from 11th Year
- Premium Payment Term 9 Years – Regular Income starts from 12th Year
- Premium Payment Term 10 Years – Regular Income starts from 13th Year
- Premium Payment Term 11 Years – Regular Income starts from 14th Year
- Premium Payment Term 12 Years – Regular Income starts from 15th Year
- Premium Payment Term 13 Years – Regular Income starts from 16th Year
- Premium Payment Term 14 Years – Regular Income starts from 17th Year
- Premium Payment Term 15 Years – Regular Income starts from 18th Year
- Premium Payment Term 16 Years – Regular Income starts from 19th Year
Flexi Income Benefit – Under this option, on survival, a Regular Income equal to 10% of the Basic Sum Assured will be payable each year starting from the year as specified in the list below, but here, the policyholder will have the flexibility to defer the payments as well.
- Premium Payment Term 5-8 Years – Regular Income starts from 11th Year
- Premium Payment Term 9 Years – Regular Income starts from 12th Year
- Premium Payment Term 10 Years – Regular Income starts from 13th Year
- Premium Payment Term 11 Years – Regular Income starts from 14th Year
- Premium Payment Term 12 Years – Regular Income starts from 15th Year
- Premium Payment Term 13 Years – Regular Income starts from 16th Year
- Premium Payment Term 14 Years – Regular Income starts from 17th Year
- Premium Payment Term 15 Years – Regular Income starts from 18th Year
- Premium Payment Term 16 Years – Regular Income starts from 19th Year
Under the flexible option, the policyholder shall have the flexibility to defer and accumulate such Flexi Income Benefits. LIC shall pay interest on the deferred and accumulated Flexi Income Benefit at the rate of 5.5% p.a. compounding yearly for completed months from its due date till the date of withdrawal. Policyholder on written request can withdraw once in a policy year, a maximum of 75% of balance accumulated Flexi Income Benefit(s) including interest, if any, which has not already been withdrawn and the net amount after withdrawal will continue to accumulate as mentioned above.
Death Benefits of LIC Jeevan Utsav Plan
On the death of the policyholder and after the date of commencement of risk, Death Benefit equal to “Sum Assured on Death” along with accrued Guaranteed Additions shall be payable, provided the policy is in force.
The Guaranteed Additions shall accrue at the rate of Rs. 40 per thousand Basic Sum Assured at the end of each policy year during the Premium Paying Term. There shall be no further accrual of Guaranteed Additions after Premium Paying Term. There are no LIC Bonus Rates for this policy.
Sample Premium Illustrations of LIC Jeevan Utsav Plan (2024)
Let’s have a look at the premium calculations for LIC Jeevan Utsav Policy now.
As per the policy brochure available on the website, here are the sample premiums for the Basic Sum Assured of Rs 5 Lakh with different ages and policy terms for different premium payment term:
Here are the details of the premium –
- For a 10-year old person buying LIC Jeevan Utsav policy with 5-year Premium Paying Term, the annual premium is Rs 1,09,575 per year.
- For a 10-year old person buying LIC Jeevan Utsav policy with 8-year Premium Paying Term, the annual premium is Rs 72,600 per year.
- For a 10-year old person buying LIC Jeevan Utsav policy with 12-year Premium Paying Term, the annual premium is Rs 44,250 per year.
- For a 10-year old person buying LIC Jeevan Utsav policy with 16-year Premium Paying Term, the annual premium is Rs 29,900 per year.
- For a 30-year old person buying LIC Jeevan Utsav policy with 5-year Premium Paying Term, the annual premium is Rs 1,10,150 per year.
- For a 30-year old person buying LIC Jeevan Utsav policy with 8-year Premium Paying Term, the annual premium is Rs 72,600 per year.
- For a 30-year old person buying LIC Jeevan Utsav policy with 12-year Premium Paying Term, the annual premium is Rs 44,275 per year.
- For a 30-year old person buying LIC Jeevan Utsav policy with 16-year Premium Paying Term, the annual premium is Rs 30,025 per year.
- For a 50-year old person buying LIC Jeevan Utsav policy with 5-year Premium Paying Term, the annual premium is Rs 1,18,625 per year.
- For a 50-year old person buying LIC Jeevan Utsav policy with 8-year Premium Paying Term, the annual premium is Rs 72,600 per year.
- For a 50-year old person buying LIC Jeevan Utsav policy with 12-year Premium Paying Term, the annual premium is Rs 44,225 per year.
- For a 50-year old person buying LIC Jeevan Utsav policy with 16-year Premium Paying Term, the annual premium is Rs 33,475 per year.
LIC also offers some rebate for policies with higher premiums.
Proof Why LIC Jeevan Utsav Plan Doesn’t Give 10% Return
Suppose a 30-year old purchases LIC Jeevan Utsav policy for Rs 5 lakh Sum Assured with 8-year premium payment term. The annual premium will be Rs 72,600 per year to be paid for each of the 8 years.
Now assume that the policyholder after paying premiums regularly for 8 years, lives to the ripe old age of 90. So while during the first 8 years, annual premium of Rs 72,600 has to be paid, after the 11th policy year (policyholder age 41), the policy pays back 10% of sum assured, i.e. Rs 50,000 per year from age 41-42 to age 90.
If you now calculate the return on investment for this policy, it will come to about 5.9%. And you can try it for any combination of entry age, life expectancy, premium payment term. The returns will be in the range of 5-6% only.
Related Reading – How to calculate LIC policy Returns?
So while many insurance agents will try to fool by saying that policy gives 10% returns, the fact is that it gives 10% of sum assured as regular income – which if you calculate properly, will only come to about 5-6% per annum returns. So no 10% Guaranteed returns here.
But to be fair – here is one thing that might interest many. As per the latest life insurance maturity taxation rules, the maturity proceeds of traditional life insurance plans where total annual premiums are below Rs 5 lakh are tax-free. So any ‘income’ payouts under this policy will not attract any tax. So you get post-tax returns of 5-6% if your premium is less than Rs 5 lakh and hence, it may suit for some type of conservative savers.
It is advisable to keep insurance and investment needs separate. An optimal strategy involves obtaining a straightforward term insurance policy to safeguard your family’s future and making investments in various mutual funds aligned with your goals, risk tolerance, and investment horizon—especially suitable for knowledgeable investors. For those willing to endure market fluctuations over the long term, equity emerges as the most favorable asset class for constructing a retirement portfolio.
Hopefully, you would have found this LIC Jeevan Utsav Review useful and the policy details and LIC Jeevan Utsav Policy Benefits (2024) in India would be clear by now. But please make sure you understand and assess the suitability of this product first.