LIC's Jeevan Utsav (Plan 871)

Comprehensive Guide to LIC’s Jeevan Utsav (Plan 871): Lifetime Income and Security in Bhadra

When it comes to securing your family's financial future and building a robust Saving and Investment Planning portfolio, understanding the nuances of life insurance policies is paramount. For the residents of Bhadra, Ashuram Insurance Expert serves as the ultimate local authority on life insurance.

In this comprehensive Pillar Page, we will deep-dive into LIC’s Jeevan Utsav (Plan No. 871).

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1. What is LIC’s Jeevan Utsav (Plan 871)?

LIC’s Jeevan Utsav is officially classified as a Non-Linked, Non-Participating, Individual, Savings, Whole Life Insurance plan.

• Non-Participating Nature: The benefits payable on death or survival are 100% guaranteed and fixed, irrespective of the actual market experience or the Corporation's profits. Therefore, the policy is not entitled to discretionary benefits like bonuses or a share in the Surplus.
• Purchase Channels (During Availability): The plan was available for purchase Offline through Licensed agents, Corporate agents, Brokers, and Insurance Marketing Firms, as well as Online directly through the LIC website. It was strictly not available through Point of Sales Persons-Life Insurance (POSP-LI) or Common Public Service Centers (CPSC-SPV).

Key Features of the Plan

• Whole life insurance coverage with limited premium payment terms.
• Two distinct options available at inception: Option I (Regular Income Benefit) and Option II (Flexi Income Benefit).
• Guaranteed Additions accrued throughout the Premium Paying Term.
• Exceptional flexibility to choose a Premium Paying Term ranging from 5 Years to 16 Years.
• Attractive High Sum Assured Rebate benefits.
• Option to enhance life coverage by opting for riders upon payment of additional premium.
• Strategic liquidity solutions through an integrated loan facility.

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2. Eligibility Conditions and Policy Restrictions

Understanding the exact eligibility conditions is crucial for policy servicing. The parameters are as follows:

Basic Sum Assured Multiples

Minimum and Maximum Age at Entry based on PPT

Risk Commencement and Vesting

• For Minors (Under 8 Years): Risk commences either 2 years from the date of commencement of the policy or from the policy anniversary coinciding with or immediately following the attainment of 8 years of age, whichever is earlier.
• For Age 8 and Above: Risk commences immediately from the date of acceptance of the risk (Date of issuance).
• Vesting: If issued on the life of a minor, the policy automatically vests in the Life Assured on the policy anniversary coinciding with or immediately following the completion of 18 years of age.

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3. Comprehensive Benefit Structure

As your trusted Life Insurance Advisor in Bhadra, Ashuram Insurance Expert breaks down the exact payouts guaranteed under an in-force policy:

A. Death Benefit

On the death of the Life Assured after the commencement of risk, the Death Benefit equals the “Sum Assured on Death” along with accrued Guaranteed Additions.

• Minimum Guarantee: The Death Benefit shall not be less than 105% of total premiums paid up to the date of death.
• Definition: “Sum Assured on Death” is defined as the higher of the ‘Basic Sum Assured’ or ‘7 times of Annualized Premium’.
• Minor Exclusion: If a minor Life Assured (entry age below 8 years) dies before the commencement of Risk, the death benefit is strictly a refund of premiums paid without interest (excluding taxes, extra premiums, and rider premiums).

B. Guaranteed Additions

During the Premium Paying Term, Guaranteed Additions accrue at the rate of ₹40 per thousand Basic Sum Assured at the end of each policy year.

• There is no further accrual of Guaranteed Additions after the Premium Paying Term ends.
• In case of death during the PPT, the Guaranteed Addition for the year of death is payable for the full policy year.
• Upon surrender during the PPT, Guaranteed Additions accrue on a proportionate basis for completed months in the year of surrender.

C. Survival Benefit Options

The policyholder had the choice of two survival benefit options at inception. The chosen option can be altered up to six months before the beginning of the policy year in which the first benefit becomes due.

Option I - Regular Income Benefit:

On survival, a Regular Income Benefit equal to 10% of the Basic Sum Assured is payable at the end of each policy year starting from a specified year, provided all due premiums are paid.

Option II - Flexi Income Benefit:

On survival, the policyholder is eligible for a Flexi Income Benefit equal to 10% of the Basic Sum Assured at the end of each policy year.

• Accumulation: The policyholder can defer and accumulate this benefit.
• Interest Rate: LIC pays interest on the accumulated Flexi Income Benefit at the rate of 5.5% p.a. compounding yearly for completed months.
• Withdrawal: The policyholder can withdraw up to a maximum of 75% of the accumulated balance (including interest) once in a policy year upon written request.

Benefit Start Year (Table 1):

The year the first Income Benefit starts depends entirely on the chosen PPT:

*Note: Maturity benefit is not available under this whole life plan.*

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4. Optional Rider Benefits and Settlement Options

Rider Enhancements

Policyholders could attach up to five optional riders, subject to premium limits (Critical Illness/Accident riders cannot exceed 100% of base premium; other life riders cannot exceed 30% of base premium):

1. LIC’s Accidental Death and Disability Benefit Rider: Provides lump sum accident benefit and 10-year monthly installments for disability (available before age 70, opt-in before age 65).
2. LIC’s Accident Benefit Rider: Provides a lump sum on accidental death (available up to age 70, opt-in before age 65).
3. LIC’s New Term Assurance Rider: Available at inception for a term of 35 years or up to age 75, providing additional life cover.
4. LIC’s New Critical Illness Benefit Rider: Available at inception for 35 years or up to age 75, paying a lump sum on diagnosis of 15 specified illnesses.
5. LIC’s Premium Waiver Benefit Rider: Waives future base policy premiums upon the death of the Proposer. Rider term is the outstanding PPT or 25 minus the minor's age, whichever is lower.

Death Benefit in Instalments

Beneficiaries or policyholders can opt to receive the Death Benefit in installments over 5, 10, or 15 years rather than a lump sum.

• Minimum Instalments: Monthly ₹5,000/- | Quarterly ₹15,000/- | Half-Yearly ₹25,000/- | Yearly ₹50,000/-.
• Interest Rate: For options commencing between May 1, 2023, and April 30, 2024, the applicable interest rate was 5.31% p.a. effective.

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5. Premium Regulations, Grace Period, and Rebates

• Premium Modes: Yearly, half-yearly, quarterly, or monthly (NACH only), or through salary deductions.
• Grace Period: 30 days for yearly, half-yearly, or quarterly premiums; 15 days for monthly premiums.
• Modal Loadings: Monthly Nil, Quarterly 1.75%, Half-Yearly 2.50%, Yearly 3.25% of Tabular Annual Premium.
• Rebates: High Sum Assured rebates are provided across three slabs: ₹10L to ₹24L, ₹25L to ₹49L, and ₹50L and above. Online purchases enjoyed an additional 10% tabular premium rebate.

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6. Policy Servicing: Paid-Up Value, Surrender, and Revival

For existing policyholders in Bhadra, understanding the mechanics of a lapsed or surrendered policy is a core aspect of Financial Planning in Bhadra.

Revival and Paid-Up Value

• Revival: A lapsed policy can be revived within 5 consecutive years from the First Unpaid Premium. The interest rate for revival from May 2023 to April 2024 was 9.50% p.a. compounding half-yearly.
• Paid-Up Condition: The policy acquires a paid-up value after at least two full years’ premiums have been paid. No further Guaranteed Additions accrue once paid-up.
• Paid-Up Income Benefits: If the Paid-up Sum Assured is less than ₹2,00,000, no income benefits are payable. If it is ₹2,00,000 or more, income benefits are scaled:
  - ₹2L to <₹3L: 5% of Paid-up Sum Assured.
  - ₹3L to <₹4L: 6% of Paid-up Sum Assured.
  - ₹4L to <₹5L: 7% of Paid-up Sum Assured.
  - ₹5L and above: 10% of Paid-up Sum Assured.

Surrender Value and GSV Factors

A policy can be surrendered at any time provided two full years’ premiums are paid, yielding the higher of the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV). The GSV is calculated using specific factors:

GSV Factors for Total Premiums Paid by Policy Year:

GSV Factors for Guaranteed Additions by Policy Year:

*(Note: There is a 30-day Free Look Period to return the policy if the terms are unsatisfactory).*

Policy Loan Facility

To meet liquidity needs, a loan facility is available after two full years' premiums are paid.

• Before Income Benefit Starts: Up to 75% of the surrender value for in-force policies, and up to 50% for paid-up policies.
• After Income Benefit Starts: The effective annual loan interest cannot exceed 50% of the annual Regular/Flexi Income Benefit, subject to the 75% (in-force) and 50% (paid-up) maximums. Under Option II, a loan up to 50% of accumulated, unwithdrawn Flexi Income is also permitted.
• Interest Rate: For loans sanctioned from May 2023 to April 2024, the rate was 9.5% p.a. compounding half-yearly.

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Secure Your Legacy with Ashuram Insurance Expert in Bhadra

Although LIC’s Jeevan Utsav (Plan 871) was officially discontinued on October 1, 2024, managing an existing policy requires deep expertise and continuous monitoring. Calculating your exact accrued Guaranteed Additions, navigating the Flexi Income withdrawal rules, or managing Policy Loans demands precise, localized support.

As the leading Ashuram Insurance Expert in Bhadra, we provide unmatched post-sales service, policy tracking, and strategic advice for your discontinued LIC portfolios. We ensure that your investments continue to yield the maximum benefits promised by the Life Insurance Corporation of India. If you currently hold a Jeevan Utsav policy and need professional administrative support, revival assistance, or claim management, contact Ashuram Insurance Expert today—your ultimate partner for Family Financial Security in Bhadra!