LIC Jeevan Utkarsh – New Single Premium Plan | Features, Review & Returns Calculation

Life Insurance Corporation of India (LIC) has launched a New Single Premium plan called as ‘LIC Jeevan Utkarsh‘. This new plan from LIC is a traditional, Non-linked, with-profits, savings cum protection plan. The risk cover under Jeevan Utkarsh is ten times of tabular single premium amount. This plan will be available for sale from 06/09/2017 up to 31/03/2018.

What is a Single Premium Plan? – It is the insurance policy where you pay insurance only in the first year but continue to enjoy the life cover and other plan related benefits throughout the term of the policy.

Basic Features of LIC Jeevan Utkarsh

Below are the main eligibility conditions to buy LIC’s new single premium policy – Jeevan Utkarsh

  • Minimum entry age : 6 years
  • Maximum entry age : 47 years
  • Minimum Sum Assured : Rs 75,000
  • Maximum Sum Assured : No Limit (If the Sum Assured under a policy is below Rs. 3,00,000, the Sum Assured shall be in multiples of Rs. 5,000 & if the Sum Assured under this policy is Rs. 3,00,000 and above, the sum Assured has to be in multiples of Rs. 20,000.)
  • Premium payment mode : Single Premium (one-time lump sum payment)
  • Policy Term : 12 years
  • Optional Riders : Accidental Death & Disability riders (additional premium is payable)

Benefits under LIC’s New Single Premium plan 2017 –  Jeevan Utkarsh Policy

Death Benefits under LIC Jeevan Utkarsh ;

  • On death before the commencement of risk : Refund of Single Premium without interest. Single Premium mentioned above shall not include any taxes, extra premium chargeable under the policy due to underwriting decision and rider premium, if any. (Life assured aged 8 or more, risk will commence immediately.)
  • On death after the of commencement of risk : “Sum Assured on Death” shall be payable.
    • On death before completion of Five policy years – The policyholder’s nominee would receive ‘Sum assured on death’ as death benefit.
    • On death after completion of five policy years but before the Date of Maturity : “Sum Assured on Death” equal to 10 times the Tabular Single Premium along with Loyalty Addition, if any, shall be payable.
      • Where “Sum Assured on Death” is defined as the highest of ;
        • 125% of the single premium; or
        • Guaranteed Sum Assured on Maturity i.e. Basic Sum Assured ; or
        • “Absolute amount assured to be paid on death” i.e. 10 times of Tabular Single Premium

Maturity Benefits under LIC Jeevan Utkarsh Policy – If the Life Assured surviving to the end of the policy term, “Sum Assured on Maturity” along with Loyalty Addition (LA), if any, will be payable. Where “Sum Assured on Maturity” is equal to Basic Sum Assured.

Surrender Value under Jeevan Utkarsh policy – The Guaranteed Surrender Value shall be as under ;

  • First year: 70% of the Single premium.
  • Thereafter: 90% of the Single premium
  • If the policy is surrendered after completion of five policy years, Loyalty Addition, if any, shall be payable..

New Settlement option under LIC Jeevan Utkarsh

Under Jeevan Utkarsh, a new feature called ‘Settlement Option‘ is available. Below are some of the important points related to this option ;

  • The policyholder can receive the settlement amount, it can be either death or maturity benefit, in installments over the chosen periods like 5 years, 10 years or 15 years (or) in the form of one-time lump sum payment.
  • The installment modes can be as monthly (Minimum Rs.5,000),  Quarterly (Minimum Rs 15,000), Half-Yearly (Rs 25,000) or yearly (Minimum Rs 50,000).
  • If the installment amounts are below the threshold limits, then the death/maturity amount will be settled as lump sum payment only.
  • Death Claim & Settlement Option – The policyholder can opt for either installment payment or lump sum payment during the policy tenure. The nominee would receive the payments (death claim) accordingly.
  • Maturity Claim & Settlement Option – The policyholder can inform the insurer (LIC) about his choice, atleast 3 months before the maturity date. He/she would receive the maturity claim amount accordingly (either in installments or as lump sum payment).

Illustration of LIC Jeevan Utkarsh Plan

I have tried to explain the features of LIC’s new Jeevan Utkarsh Policy and how it works through the below info-graphic. (You may click on the image to open it in a new browser window.)lic jeevan utkarsh illustration example maturity benefits settlement option plan 846 pic

Let’s consider an example – Policy holder’s current age is 30 years (male), buys this policy for Sum Assured of Rs 5 Lakh and pays single premium amount of Rs 2.8 Lakh. The policy term is for 12 years.

In case, policy holder expires during the policy term, within 5 years from the date of purchasing the policy then death benefit ie Basic Sum Assured on death (10 times of single premium amount) is payable to his nominee.

If death occurs between 5 years and before the maturity date (12 years), death benefit (Basic Sum Assured + Loyalty Additions) is payable to the nominee. (Basic sum assured = 10 times of single premium amount)

Death Benefit under this plan = 10 times of tabular premium amount ie Single premium amount – Service Tax.

In this example, for Sum Assured of Rs 5 Lakh, the premium amount is Rs 2,80,243. Out of this, Rs 2,68,175 is tabular base premium and Rs 12,068 is Service Tax.

So, death benefit = 10 times of tabular single premium = 10 * Rs 2,68,175 = Rs 26,81,750.

In case, the policy holder survives till the maturity of policy, maturity benefit (SA + LA) is payable to him/her. (Here, SA is not equal to 10 times of single premium but it is normal Sum Assured ie Rs 5 Lakh in our example).

LIC Jeevan Akarsh Plan & Calculation of Returns on maturity 

Below is the IRR (return on investment) calculation on LIC Jeevan Utkarsh scheme. LIC new single premium plan 2017 Jeevan Utkarsh maturity returns calculation example

The above calculation is for sum assured of Rs 5 Lakh, tenure is 12 years, for a 30 year old male and no optional riders have been chosen. I have assumed Loyalty Additions @ of Rs 300 per Rs 1,000 Sum Assured. (Related Article : ‘Latest LIC Bonus Rates 2017-18‘).

With the above assumptions, the returns on Jeevan Utkarsh can be around 7 to 8%. Kindly note that returns are highly dependent on the LA rate only.

If you consider LA @ Rs 200 per sum assured then returns would be around 6.55%. In case, you consider LA @ 400, returns would be around 7.93%.

My Opinion on LIC’s Jeevan Utkarsh 

You may kindly ponder over below points before buying this new LIC policy ;

  • No Simple Reversionary Bonuses : There are no simple and annual bonuses under Jeevan Utkarsh Plan. Loyalty Additions alone are paid on policy maturity / on death after 5 years of taking the policy.
  • Tax Benefit: As this is a single premium plan, kindly note that you can claim premium of up to Rs 1.5 Lakh only u/s 80c, for the Financial year in which you buy this policy. For example, if you buy an insurance policy for premium of Rs 3 lakh, you can claim only Rs 1.5 lakh as the benefit under section 80c in that financial year.
  • Fixed Term : You do not have an option to pick a policy tenure of your choice. The policy term is fixed under this plan.
  • Lump sum investment : You are investing a lump sum amount as single premium, so it always advisable to evaluate the opportunity cost of the money you are willing to invest, as there could be alternative investment options available which may benefit you more.
  • Life Insurance cover : If your requirement is to get adequate life cover at affordable premium rate, consider buying a term life insurance plan. (Read : ‘Best Term Insurance plans‘).
    • As explained in the above illustration, to get around Rs 26 lakh as life cover as death benefit, the premium amount of Rs 2,80,243 (one-time) has to be paid by the policy holder.
    • If the same policyholder opts for LIC’s e-Term plan, to get Rs 27 Lakh life cover as death benefit, the premium amount of just Rs 3,600 per annum for 12 years is to be paid, that’s a total of just Rs 43,200 for 12 years (Rs 3,600 * 12 years).
  • Returns : As explained in the above calculation table, the returns are primarily dependent on Loyalty Additions. Do note that LA can be dependent on the quantum of Sum Assured and tenure (death benefit / maturity benefit). The higher the LA amount, the higher the returns you get and vice versa. You need to wait till policy maturity date, to know the exact returns that you get from this plan. Though the returns on this policy seem to be decent, I believe that long term savings option like PPF (Public Provident Fund) can be a better choice, as the returns are known up-front (periodically). In case, you would like to take risk then there are plethora of investments options available. Ex : ELSS Tax saving mutual funds, balanced equity oriented funds, equity funds, Debt funds etc., (Related Article : ‘List of Best Investment Options‘)

Continue reading ;

(Post published on : 02-September-2017) (This article is based on limited available information, if required, the above details can be edited/updated soon….)

  • Sagar Trivedi says:

    Dear Sir,

    IF some on with age of 47 invest of Rs. 100000/- for special attraction of 10 time.
    How much Return he will get at maturiry (In LIC Jeevan Utkarsh)

    Pls Reply

    Thanks in adance

    Sagar Trivedi

    r

    • Dear Sagar ..What is ‘special attraction of 10 time’?
      Are you referring to death benefit (sum assured)>
      May I know the investment objective here, getting adequate life cover or getting better returns in long-term?

      • Sagar Trivedi says:

        Yes Sir Referring to Death Benefit (Sum assured).
        Invest objective is adequate life cover only.
        Just assume return on maturity.

        How much return he get on maturity

        Invest Rs. 100000/-
        Invest age – 47

        Sagar

  • Mazibar Rehman says:

    Life Insurance is based on two tenets
    1.Dying prematurely
    2. Living too long
    This product from LIC meets the 2 sutras . Hence, it is a good product if not the best. Fin Bloggers feel that Insurance particularly Life Insurance deals with death only. This is a wrong notion. There are two moral hazards as mentioned above. Hence, Ins cos can dole out pensions. Settlement Option is nothing but pension but not for eternity. Moreover, Mr Reddy has not deducted the Risk Premium while calculating the returns. One needs to deduct Risk premium and GST from the amount payable in order to arrive at exact calculations. Anyways, this close ended product is well accepted by the public and is the talk of the times. It has added flexibility or liquidity too. In the days when interest rates are going down , I think one can well consider this product.

    • Dear Rehman,
      Thank you for sharing your views!
      If ‘dying prematurely’ is the biggest risk factor, then don’t you think a term plan which can provide better sum assured at affordable premium rate serves the purpose??
      If ‘living too long’ is another risk factor then don’t you think in a growing economy like India, inflation will eat away the nominal returns generated by traditional products like these? Dont you think there are better investment opportunities that can give better inflation adjusted returns over the long-term?

      • Mazibar Rehman says:

        Definitely Sir…. But an Insurance product has to look into or satisfy those two ‘sutras’. At the same time you need to look into the Liquidity factor too. Why just in India, Life insurance is not a mandatory must have the world over…… It’s a PUSH COMMODITY……..Believe it or nor , Me Reddy, it is the declining interest rates that gave a fillip to insurance selling in India. Or else , people should not be going for life insurance at all. And, if you deduct the Risk premium, yes, this Product is giving handsome returns…. LIFE INSURANCE+ LIQUIDITY+ HIGH MATURITY—– what else is needed ? Leave alone, The EEE- EXEMPT- EXEMPT- EXEMPT – provision Mr Reddy. As regards, Term Plans——- You cannot have a Term plan beyond the age of 70 yrs. Moreover, you need to keep on paying your premiums……..It’s not minimum Premium paying terms……. Hence, Jeevan Anand Table no 815 is better if not the best. We insurance agents, actually know whom to sell Term Plans and whom to sell Traditional Plans. Terms plans are life guards….. Very good but not the best….. You will be surprised to know that My best friend who lived and worked at Puna did not pay his premiums for the last 1 year and 4 months and expired suddenly due to cardiac related problems. Luckily, His Poona Agent had given him BIMA GOLD…… He enjoyed 2 Survival benefits…..too. His family received the death claim without any hassles due to 2 reasons
        1. Qualification under sec 45
        2. Auto cover facility.
        Mr Reddy, had my friend opted for Term plan, his family would not have benefitted. But if he had a Term plan which was in an in force condition, his family would have got better. But as I said earlier, Life Insurance is a PUSH COMMODITY………………..Nothing can be guaranteed………………Thanks

        • Dear Rehman,
          The point is whether Term plans are the best or not, but they are a MUST, if one has dependents and financial commitments.
          They are affordable and the policy holder can apply for adequate sum assured. That’s not the case with traditional products.
          Once, a policyholder is adequately covered with life cover, he/she can then plan for other investments as per their financial goals.

          In the said case, your friend’s family would have actually benefited had your friend taken a term plan.

          You are not commenting on inflation factor.

          • Maziber Rehman says:

            Not convincing…………..Mr Reddy…………….Term plans are good as I said but you are saying it is the best…. That’s where we are differing…..For lower ages this plan will give 7.75-8 per cent returns and that’s not bad……. Life Insurance at lower ages is an unwanted thing…….Would any father like to insure his child aged 10 yrs…The answer is NO…… The sole purpose of Adding Life Insurance in JUtkarsh is to provide for a collateral in case of educational loans from banks……. I have worked numerous times on this……..

          • Dear Rehman,
            My earlier point is – Term plans are a MUST.
            Ofcourse, the kids do not need any insurance cover. Unfortunately, we have meaningless products like Jeevan Tarun which insures child and not the parent. I am not sure if you are aware of such plans.
            If a person is a sole breadwinner of a family, an earning member and has dependents, he/she should have adequate life cover, which is possible through Term plans as they are affordable (for most of us) .

            Kindly note that insurance should be primarily taken for risk cover and Education loan collateral etc are value additions only.
            You may kindly share your views on inflation! Do you think that returns of around 7% is good when avg inflation rate is around 6 to 8%??

  • Jagdish s Kamath says:

    One need to understand the concept of insurance.
    Payment of premium is not for whose who are interested only in earning higher return. As per my opinion,if you pay one instalment of premium of RS 5000/- for the sum assured of RS 1lakhs. & The life assured is dead due to accidents. Then what will the nominee get from LIC.?
    LIC will pay RS 2lakhs.tax free returns. In same way if the life assured invest in long term scheme. & If death accres.then will the nominee get?.
    I think the concept is clearly understood to you. Jklic

  • Sanjeev says:

    First time I think you are satisfied to some extent with LIC plan.
    Secondly please tell me if i opt for maturity settelment option is lic going to pay me intrest on it.

    • Dear Sanjeev,
      Satisfied ? – Personally, NO. I will not invest my money for 12 years to get a return of around 8%, that too not guaranteed return, it depends on loyal additions rate…

      Interest?? Are you referring to bonus?

  • rsr anjaneyulu says:

    simply invested 1,oo,ooo/-
    on death amount receivable

    on maturity amount receivalable____________ & plus taxex, service charge reduces clam amount

  • Sudhanshu says:

    How your calculation is basis 12 years and not 25 years….

  • Sudhanshu says:

    Tenure is 12 years and not 25 years as mentioned by you.

  • Sudhanshu says:

    Why have you written that Tenure is 25 years though it is just 12 years? Please correct your post.

  • RAJ says:

    Dear Sreekanth,

    One drawback of this policy is its maturity proceedings are taxable as per tax rules. Annual premium of < 5% SA or policy with 20 yrs or more is only entitled for tax benefits as per tax laws. So, in such cases, is it worth investing in it? if maturity benefit is taxed at 30% customer will be at huge loss. its just like FD with a life cover i feel. Investing 2.8 l for 5 l SA is foolishness i feel.

    regards
    RAJ

    • RAJ says:

      and this plan is a replica of old JEEVAN SHIKHAR policy

    • Dear Raj,
      As per Section 10(10D), if the premium amount on Single Premium is more than 10 times of sum assured payable on death, in such cases the maturity proceeds are tax-free.
      As per available information, this plan provides 10 times of single premium amount as Sum assured on death (as death benefit), so maturity proceeds (Normal sum assured + LA) are tax-free.

    • durga shanker says:

      no its maturity proceeds are not taxable, its a wrong information you have.

      • Bipin Borgohain says:

        I have been watching your insurance related for quite some time and of course, blogs written by other Fin Bloggers. Stay blessed that in Life Insurance , there is a Indisputability clause called Section 45- the most prominent reason why Life Insurance companies( LIC included) are paying death claim amounts….. Fin Bloggers like do not picture out what is position of GIC companies in matters of Claim Settlement and also Health Insurance Companies…….These are the most corrupt Insurance companies, I must say. Doesn’t insuring assets other than life insurance form a part of one’s finance basket? You have never talked on this. What I could discover from your blogs is that you are trying to popularise Term Insurance Plans and pooh pooh any other plan launched by LIC. That’s ok with me…….But I must advise you to write about the harrassment faced by people in matters of settlement of claims by GIC and Health Insurance. An indisputability clause like sec 45( as it is attached to Life insurance) should also be attched with GIC and Health Insurance.

        • Dear Bipin,
          Thank you for sharing your views!
          If any blog reader is ready to share his/her claim experience, I am very much ready to share it on my blog.
          Let’s hope that IRDA plans similar section for non-life insurance companies as well – reg claim settlement.

          • navin says:

            10(10)d is being missed so returns are higher than what is talked about here.
            This plan is nothing but a tax free FD. Good to add to your portfolio if age is below 10 or above 47.

          • navin says:

            plan open till june 02, 2018 as it has been extended.

          • Dear navin ..So, you believe that this plan is good for kids who are below the age of 10 years??

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