What the 10% income in LIC Jeevan Utsav policy implies

The policy only offers subscribers a guaranteed 10% payout of the sum assured annually

- Apraiita Sharma

Guaranteed income for the lifetime! Sounds enticing, especially when it is from insurance behemoth Life Insurance Corporation (LIC) of India, whose famous tagline in ads ‘jeevan ke saath bhi; jeevan ke baad bhi, has influenced generations to buy a policy. Many of its polices continue to be popular, be it Jeevan Umang or Saral Pension, for its multiple benefits—so much so that many people look forward to its new launches. And with LIC Jeevan Utsav’s launch on 29 November, the insurer created a buzz in investment circles. The reason: 10% guaranteed payouts annually, for the rest of your life. But what exactly does the 10% imply for an investor?

All about the product

Jeevan Utsav is a non-linked, non-participating, savings whole life insurance plan. This implies that the policy payouts are not linked to stock market movements or the company’s profits. The payout though is guaranteed. Also, the policy will be in force for the entire life of the subscriber. And in case of the policyholder’s death, the benefit or proceeds goes to the family.

LIC Jeevan Utsav has a premium payment term (PPT) of 5-16 years.. The deferment period will range from three to six years. It means, in case the PPT is 5 years, the guaranteed income will be given from the 11th policy year onwards. In case of 10 years or 16 years of PPT, the pay-outs will start from the 13th and 19th policy years, respectively.

As for the payouts, the policy offers 10% guaranteed annual income for the lifetime. That, though does not mean 10% annual returns on the investment. This is not the right way to interpret it, say financial experts. What LIC means is policyholders will get 10% of the sum assured as annual income once the payout period starts .