LIC Jeevan Utsav Plan No 871 – Introduction
LIC recently launched Jeevan Utsav Plan No. 871. Jeevan Utsav from LIC is a whole life insurance plan that promises lifetime guaranteed returns. It offers flexible payment options and guaranteed additions during the premium payment term. The question is, are these returns truly guaranteed? In this article, we will analyze LIC Jeevan Utsav Plan No. 871, examining its features, benefits, sample premium, calculators for various benefits, positive aspects, negative factors, and provide a comprehensive review.
About LIC Jeevan Utsav Plan No 871
LIC launched Jeevan Utsav on November 29, 2023. LIC’s Jeevan Utsav is a Non-Linked, Non-Participating, Individual, Savings, Whole Life Insurance plan. This plan provides financial support to the family in the event of the unfortunate death of the Life Assured and survival benefits in the form of Regular Income Benefit or Flexi Income Benefit, depending on the option chosen by the surviving policyholder.
The plan is available for purchase both offline (through licensed agents, corporate agents, brokers, and insurance marketing firms) and online directly through the website.
LIC Jeevan Utsav – Key Features
- This is a whole life insurance plan with a limited premium payment.
- Available in two options at inception, you can choose the benefit under the plan: Option I – Regular Income Benefit and Option II – Flexi Income Benefit.
- Guaranteed Additions are offered throughout the Premium Paying Term.
- It provides flexibility to choose the Premium Paying Term, ranging from 5 years to 16 years.
- The plan offers the benefit of an attractive High Sum Assured Rebate.
- It also provides the option to enhance coverage by opting for riders with an additional premium payment.
- The policy allows for availing a loan, providing a form of liquidity.
LIC Jeevan Utsav – Eligibility
|Premium Paying Term
|5 to 16 Years
|Minimum and Maximum Age at Entry
|Prem paying Term
|Maximum Premium ceasing age
|Min Basic Sum Assured
|Max Basic Sum Assured
LIC Jeevan Utsav – Benefits in this plan
This plan offers various benefits, including death benefit, survival benefit and guaranteed additions.
#1 – Death Benefit
- In the event of the Life Assured’s death after the date of commencement of risk, the Death Benefit is equal to the ‘Sum Assured on Death’ along with accrued Guaranteed Additions.
- This Death Benefit will not be less than 105% of the total premiums paid up to the date of death.
- ‘Sum Assured on Death’ is defined as the higher of the ‘Basic Sum Assured’ or ‘7 times the Annualized Premium’.”
#2 – Survival Benefit
#3 – Maturity Benefit
No maturity benefit available in this plan.
#4 – Guaranteed Additions
- Guaranteed Additions will accumulate at the rate of Rs. 40 per thousand Basic Sum Assured at the end of each policy year during the Premium Paying Term. There will be no further accrual of Guaranteed Additions after the Premium Paying Term.
- If premiums are not paid on time, the accrual of Guaranteed Additions will cease under the policy.
LIC Jeevan Utsav – Various Options available
#1 – Rider Option
There are five rider options available:
- LIC’s Accidental Death and Disability Benefit Rider
- LIC’s Accident Benefit Rider
- LIC’s New Term Assurance Rider
- LIC’s New Critical Illness Benefit Rider
- LIC’s Premium Waiver Benefit Rider
#2 – Option to Receive Death Benefit in Installments
LIC Jeevan Utsav – Premium Options
Premiums can be paid regularly at yearly, half-yearly, quarterly or monthly intervals (monthly premiums through NACH only) or through salary deductions.
LIC Jeevan Utsav Sample Premium Chart
The sample illustrative yearly premiums for Standard lives for Sum Assured of Rs 5,00,000 for policies to be sold through Offline are:
LIC Jeevan Utsav Calculator – Explained with an example
Due to the size of the table, it is provided in PDF format. Please check the link here.
LIC Jeevan Utsav Plan details in Hindi
Refer this link for Jeevan Utsav Plan of LIC in Hindi
LIC Jeevan Utsav – Positive Aspects in this plan
Positive Aspects of LIC Jeevan Utsav Plan No 871. These are considered from LIC Jeevan Utsav Policy Brochure.
- Whole Life Coverage with Limited Premium Payment: The plan provides whole life insurance coverage, ensuring financial support for the family in case of the life assured’s unfortunate demise. The limited premium payment option adds flexibility for policyholders.
- Flexible Payment Options: Policyholders can choose premium payment terms ranging from 5 to 16 years, allowing them to tailor the plan to their financial preferences.
- Guaranteed Additions: The plan offers guaranteed additions throughout the premium-paying term, providing an additional layer of assured returns.
- High Sum Assured Rebate: Policyholders benefit from an attractive high sum assured rebate, potentially increasing the overall coverage.
- Rider Options: The plan offers various rider options, such as Accidental Death and Disability Benefit Rider, Accident Benefit Rider, New Term Assurance Rider, New Critical Illness Benefit Rider, and Premium Waiver Benefit Rider, enabling customization based on individual needs.
- Loan Facility: The policy allows for loans, providing a source of liquidity for policyholders when needed.
- Death Benefit: In the event of the life assured’s death, the plan ensures a death benefit equal to the “Sum Assured on Death,” along with accrued guaranteed additions. This benefit is not less than 105% of the total premiums paid.
- Option to Take Death Benefit in Instalments: The plan provides the option to receive the death benefit in installments, offering flexibility in managing the financial payout.
- Premium Payment Flexibility: Premiums can be paid at various intervals, including yearly, half-yearly, quarterly, monthly (through NACH only), or via salary deductions, making it convenient for policyholders.
- Variety of Rider Options: The inclusion of rider options enhances the plan’s coverage, allowing policyholders to tailor their insurance to specific needs.
LIC Jeevan Utsav – Hidden or negative aspects
- Product Misrepresentation: This plan is being advertised that it provides life time guarantied returns, safe returns and 10% guaranteed returns etc., While 10% indicated is correct, however it is 10% of basic sum assured paid every year and not returns. This could lead to confusion and misinterpretation among potential policyholders.
- Target for individuals looking for year end tax savings: LIC often launches new products, including Jeevan Utsav, towards the end of the year to capitalize on the tax-saving mindset of individuals, especially the salaried class. Don’t just go for tax savings. First understand the plan and if suitable, consider such plans.
- Limited Maturity Benefit: The plan lacks a maturity benefit since it is a whole-life insurance policy. This may be a drawback for individuals seeking both protection and a financial return upon reaching a certain age.
- Low Return on Investment: Even if a policyholder lives up to 100 years, the return on investment is less than 6%. As rightly pointed out by Basu Nivesh, SEBI Registered Investment Advisor, the returns for a 30 year old is merely 5.88% from LIC Jeevan Utsav.
- Complex Survival Benefit Options: The plan offers two survival benefit options, Regular Income Benefit and Flexi Income Benefit, with deferred and accumulated benefits. The complexity of these options, including the ability to defer and accumulate benefits with interest, may make it challenging for some policyholders to fully understand and utilize the features.
- Guaranteed Addition Limitations: While the plan mentions guaranteed additions, these additions cease after the premium paying term. This limitation might disappoint policyholders expecting continuous guaranteed additions throughout the policy’s lifetime.
LIC Jeevan Utsav (Plan No 871) – Should you Invest?
- LIC Jeevan Utsav Plan No. 871 offers several positive features, including whole life coverage with limited premium payment, flexible payment options, guaranteed additions, high sum assured rebate, various rider options, a loan facility, and a range of death benefits. Additionally, the plan provides options for premium payment intervals, making it convenient for policyholders.
- However, potential drawbacks include concerns about misrepresentation, as some may perceive it as a guaranteed 10% return product. The timing of the plan’s launch near the end of the year for tax-saving purposes raises questions about its long-term investment benefits. The lack of a maturity benefit, low return on investment, complex survival benefit options, limitations on guaranteed additions, and dependency on the policyholder’s lifespan are also major drawbacks.
Individuals who are comfortable with less than 6% returns owning to LIC brand can still go ahead and consider this plan. Whoever is looking for return on investments beyond 6% can consider several investment options like mutual funds or simple bank FD while there are plenty of investment options as well.