LIC launches Jeevan Utsav, promises 10% of sum assured as regular income

LIC has announced the rollout of its non-linked, guaranteed, non-participating money back plan Jeevan Utsav

The Life Insurance Corporation of India (LIC) has unveiled a new non-linked, non-participating whole life insurance product that offers income benefits of 10 percent of the sum assured.

The minimum sum assured under this limited premium payment policy is Rs 5 lakh. The premium paying terms range from five to 16 years. The minimum age at entry is eight years, while the maximum limit is 65 years. The income benefit, that is, survival benefit, will start flowing in after the periods specified in the policy that are, in turn, linked the premium paying term. You can choose between two payout options – regular income and flexi income benefits.

In the case of the former, 10 percent of the basic sum assured chosen by the policyholder will be paid starting from the 11th policy year, depending on the premium paying term selected. For instance, if you have chosen to pay premiums for five to eight years, the payouts will begin from the 11th year, but if you have chosen a longer-term – say, 10 years – income benefits will start from the 13th policy year.

Also read: Does life insurance make sense without tax benefits?

Since the payouts are made periodically under this whole life plan, there is no lump-sum, maturity benefit that will be paid out under the policy.

In the case of the ‘Flexi income benefit’ option, too, you will receive payouts worth 10 percent of the basic sum assured at the end of each policy year, depending on the premium paying term. The premium-paying term-income benefit payout matrix is applicable to this option too.

However, here, you will have the flexibility to defer these payouts and earn interest on the accumulated balance. LIC will pay interest on these deferred benefits at the rate of 5.5 percent per annum, compounding yearly till the date of withdrawal or surrender or death, whichever is earlier.

You can, however, make a written request to withdraw, once in a policy year, up to 75 percent of the accumulated benefits, including interest. The balance amount will continue to earn interest of 5.5 percent per annum.

Also read: Endowment plans looking attractive post-debt funds tax mess? Think again

In the case of death, policyholders’ dependents will receive a death benefit that is equivalent to the ‘Sum Assured on death’ mentioned in the policy documents, along with guaranteed additions earned until then. As per the product brochure, LIC will credit guaranteed additions at the rate of Rs 40 per thousand basic sum assured at the end of each policy year during the premium paying term.

In line with the insurance regulator’s mandate, the sum assured on death will be at least seven times the annual premiums. The minimum death benefit will be 105 percent of the total premiums paid until death.