LIC Pension Plan: LIC's impressive policy offering a four-fold benefit—risk cover and pension, plus a bonus..

LIC Pension Plan: LIC’s Jeevan Umang is a plan that offers a threefold benefit package. Since it is an LIC policy, insurance coverage is naturally included. Alongside insurance coverage, LIC provides a guaranteed annual pension equal to 8% of the Sum Assured for life. Additionally, bonuses accumulate over time; this means that if the need arises while receiving the pension, one can access a substantial lump sum (including the accumulated bonus), or the nominee receives financial support in the event of an unfortunate incident. Tax benefits are also available. Thus, Jeevan Umang delivers a 'four-in-one' benefit package.

Jeevan Umang Details: Key Highlights

Jeevan Umang is a non-linked, participating, whole-of-life insurance and savings plan from LIC.

The Jeevan Umang policy can be purchased for individuals ranging from infants (30 days old) to those aged 55.

The minimum sum assured is ₹2 lakh, with no upper limit on the maximum amount.

Maturity occurs when the policyholder reaches the age of 100.

Premium payment terms of 15, 20, 25, or 30 years can be selected based on the policyholder's entry age. A 15-year payment term is not available for children up to two years of age; conversely, individuals aged 51–55 have only the 15-year payment term option. Those aged 46–50 can choose between 15- and 20-year terms, while those entering between the ages of 41 and 45 have options for 15-, 20-, and 25-year payment terms. Upon completion of the Policy Payment Term (PPT), the policyholder receives an annual pension equal to 8% of the Sum Assured until the age of 100. Upon reaching the age of 100, the Basic Sum Assured and the accumulated bonuses from the entire policy term are paid out.

In the event of an unfortunate incident during the policy term, the nominee receives the Sum Assured along with the Simple Reversionary Bonus and the Final Additional Bonus. However, the situation differs slightly for children under the age of 8. For policies taken for a child under 8, the risk cover commences either one day before the completion of two years from the policy inception or one day before the policy anniversary coinciding with the child turning 8—whichever occurs earlier. If the policyholder passes away before the risk cover begins, only the base policy premiums paid are refunded.

Riders are also available with this policy.

Tax benefits under Section 80C are available on the premiums paid, and maturity proceeds are generally tax-free under Section 10(10D).

Let us understand this with an example:

Example of a 2-year-old child

If a policy with a Sum Assured of ₹10 lakh is purchased for a term of 20 years for a 2-year-old child, and the guardian is 35 years old, the annual premium—including ADDB (Accidental Death and Disability Benefit) and PWB (Premium Waiver Benefit) riders—comes to ₹55,765 (translating to a daily contribution of ₹153). Without the PWB rider, the annual premium would be ₹53,535.

Upon completion of the 20-year term—when the child turns 22—an amount of ₹80,000 will be credited to the policyholder's account annually. Regarding risk cover: since the plan includes a PWB (Premium Waiver Benefit) rider, the entire premium is waived if an unfortunate event befalls the guardian, allowing the policy to continue. Conversely, if an unfortunate event occurs involving the policyholder (the child), the nominee receives the payout calculated based on the policy term. If accidental death occurs within one year of purchasing the policy, the nominee receives an amount roughly equivalent to the deposited premium (around ₹1.11 lakh); however, if accidental death occurs at age 10 (after the risk cover has commenced), the payout would be approximately ₹16 lakh.

**Taking the policy at age 30**

If you purchase a ₹10 lakh policy for a 20-year term at age 20, the annual premium—including the ADDB (Accidental Death and Disability Benefit) rider—comes to ₹54,985, which works out to a daily contribution of ₹151.

Upon completion of the 20-year policy term, ₹80,000 will be credited to the account annually for the rest of the policyholder's life, starting from age 40.

Regarding unfortunate events: in the case of natural death, the payout consists of the Sum Assured plus the accumulated bonus; in the case of accidental death, the nominee receives the Sum Assured, the rider benefit, and the accumulated bonus. Suppose the policyholder receives annual payouts for five years after the policy term ends (totaling ₹4 lakh) and an unfortunate event occurs thereafter; in an accidental death scenario, the nominee would receive approximately ₹41–₹42 lakh, based on current bonus rates.

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