LIC's Jeevan Umang Plan Review 2024

Life insurance policies are a common financial product for long, considering the financial security it offer to one’s family in the event of the policyholder’s death. Recent financial awareness, multiple health scares, and the rise of lifestyle ailments led to an increase in the demand for different types of life insurance policies. While one of the most popular options, in this case, was term insurance policies, other plans like ULIPs and Endowment policies also gained rapid popularity.

Catering to such increased demand for life insurance-based financial products, multiple new insurers surfaced, while some old insurers like LIC prevailed. Now, LIC is one of the sharks in the insurance industry with a vast pool of policyholders, offering an extensive financial product portfolio. The insurer is popular on account of its years of experience in the industry, however, since it’s a public sector insurer, issues with its overall operational proficiency are a given.

On the other hand, LIC's stable has brought forth a few unique plans, like the LIC Jeevan Umang Plan, which is essentially a whole life insurance policy that offers multiple riders, coverage for minors, survival and maturity benefits, participation in the company’s profits, and more. However, like any other plan from LIC, this comes with its set of cons, and there is a concern regarding the insurer’s credibility.

So, are the features and benefits worth the cons fetched by the LIC Jeevan Umang Plan? Considering how you will be confiding in this policy and insurer with substantial financial responsibility, it’s worth looking into a customised review of this policy before you purchase the plan -

LIC Jeevan Umang Plan Review

LIC Jeevan Umang Plan is definitely a one-up from the stable, considering its previous list of life insurance plans (term, whole, ULIPs, retirement, child education, and endowment policies). The plan is far more comprehensive than its predecessors and offers features like coverage for minors, multiple riders, loans against the plan, survival and maturity benefits, payment of death benefits over instalments, and participation in company profits.

However, LIC as an insurer does not still stand a chance against the top term insurers across the industry, especially considering its complaint volume. Moreover, this plan offers the Return of Premiums as a mandatory feature, and it’s a whole life insurance plan - both of which add up to fetch high premiums. The coverage starts from a minimum of ₹2 lakhs, which might fall short as an income replacement endeavour.

Thus, it might be better to look out for other top-term insurance plans and avoid whole life insurance plans and the insurer as a whole.

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LIC Jeevan Umang Plan Brief

Life Insurance Corporation of India (LIC) is the oldest public sector life insurance provider in India. The provider commenced its operations in 1956 and based on its extensive track history in this industry and an extensive range of financial products (term insurance plans, life insurance policies, ULIPs, Endowment plans, retirement policies, higher education plans, etc.) has earned the brand a vast client pool.

Before we start discussing the credibility of this well-known insurance provider, let’s take a quick look at the data of the metrics used to determine its reputation -

• Claim Settlement Ratio (CSR) of 98.71% (the industry average is  97.74%)
• Amount Settlement Ratio (ASR) of 95.1 (the industry average is  90.9%)
• Complaint Volume of 10.5 (the industry average is 72.8)
• Annual average business volume of ₹205,137 crores (the industry average is ₹14,204 crores)

(Please note the data mentioned above is an average of 3 years and is meant to offer a comprehensive look into the overall performance of the insurer and its respective consistency.)

While a majority of the metrics have great data that should technically reflect a credible insurer, LIC still isn’t a common choice for new policyholders. The “word-of-mouth”, physical hiring of agents, and extensive track record had made it a household name some 30-35 years ago. However, over the years, the financial goals, requirements, and planning have undergone major transformations. Gen Z, Y, and X are equally invested in ensuring pure financial protection, investment channels, and return options on their investments. Now, LIC has brought in endowment plans, ULIPs, etc. to cater to this evolving requirement. However, one quick look at the list of financial products from LIC and compare it with the top term insurance policies, you will find that the financial products from LIC lack cutting-edge features, perks, substantial coverage, and affordability.

Despite such cons, if you are a LIC loyalist and seeking a whole life insurance policy (which you shouldn’t, considering that whole life insurance plans are expensive and redundantly offer coverage until a policyholder reaches 99 or 100 years of age) from this stable, then you can check out the LIC Jeevan Umang Plan.

The LIC Jeevan Umang Plan is a non-linked, participating life assurance savings policy. The plan is unique across the entire portfolio of LIC’s financial policies, considering the combination of features that it offers -

1. Non-Linked: The plan is not market-linked (not affected by market fluctuations), so the policy's returns are free from risks.
2. Participating: The policyholders of this can participate in the profits raised by the insurer (certain conditions apply).
3. Life assurance: The policyholder is guaranteed a payout, whether they pass away during the policy or survive the entire period.
4. Loans: A policyholder can take out loans against this policy.

Such a long queue of benefits, along with the presence of multiple-term insurance riders, coverage for minors, and options across death benefit payout as instalments, is a rarity for any financial product from the LIC stable. Naturally, the plan seems sufficiently appealing on pen and paper since it covers most of the bases.

Now, the policy also offers a Return of Premium feature as an in-built perk, wherein the accrued premiums for the entire policy are reimbursed in full (deducting the GST and the rider premiums). However, since Return of Premium or ROP generally fetches a higher premium, that’s not really a recommended rider/feature to have in your ideal life insurance plan. Moreover, the LIC Jeevan Umang policy is a whole life insurance plan that offers coverage till you turn 99 years old and survival benefits are offered when you turn 100. Such an extensive policy period suggests that insurers are shouldering a much higher risk of assured death benefit payout considering the average lifespan of Indians (70 years). Hence, it can be expected that the premiums might be pretty high.

The higher premiums, possible low cover amount (minimum starts at ₹2 lakhs and the maximum is determined by your eligibility and the underwriter’s discretion), mandatory presence of ROP, and the issues with LIC (considering its operational performance as it’s a public sector insurer) - all pose as definite cons if you are planning to purchase the LIC Jeevan Umang policy.

In case you are still interested in the policy, here’s a comprehensive look into the policy and its complete list of features.

Features of LIC Jeevan Umang Plan

Should You Buy LIC Jeevan Umang Plan?

1. LIC as an insurer: LIC has long held the monopoly in the life insurance industry, thanks to word of mouth, a long solo presence, and physical agents selling plans.

While in terms of CSR, ASR, and average annual business volume - LIC seems like a credible insurer, the complaint volume is not exactly the industry best as one would expect from an age-old insurer. Moreover, please remember that the insurer has one of the highest client pools, so the complaint volume (which is calculated for every 10,000 claims) is majorly watered down as compared to the new private players in the industry. This speaks volumes about the insurer’s overall operational proficiency.

While the insurer has several products across its insurance portfolio genres, the plans lack the kind of diversity in features that we have come to expect from term insurance policies or life insurance plans in general.

Given an opportunity, unless you are a LIC loyalist, you should probably look towards other top life insurance providers for more comprehensive, affordable, and heavily customisable policies.

2. In-built features of the plan: Unlike any other policies from LIC, the LIC Jeevan Umang Plan has a lot to offer as a vanilla financial product without adding any of the available riders. Here’s a look at the in-built perks of the policy -

• Death Benefit: Under this policy, there are two cases of death benefit involved -

CASE 1: If the policyholder passes away before the date of commencement of risk

The plan offers a reimbursement of the accrued premiums paid to date, along with any additional premiums and rider premiums that the policyholder had opted for.

CASE 2: If the policyholder passes away after the date of commencement of risk

The policy offers the pre-decided sum assured, simple reversionary bonus and final and additional bonus

• Survival Benefit: If the policyholder is still alive at the end of the premium-paying period and the policy is active, they will receive a survival benefit equal to 8% of the Basic Sum Assured every year. The first payment will be made at the end of the premium-paying term and then each year after that until the policyholder either passes away or the policy matures, whichever comes first.
• Maturity Benefit: If the policyholder is alive on the maturity date and the policy is active, they will receive the "Sum Assured on Maturity," which is the same as the Basic Sum Assured, along with any earned bonuses.
• Participation in company profits: As per the LIC Act, 1956 (which gets revised from time to time), the plan offers its policyholders a unique opportunity to participate in the insurer’s profits over the years.

a. Profit distribution during payment of premiums - During the premium-paying period, your policy can earn a Simple Reversionary Bonus each year based on the Basic Sum Assured as long as the policy is active. In case you stop paying the premiums, the policy will no longer earn bonuses. If you surrender the policy, you may receive the value of any earned bonuses at that time. A Final Additional Bonus may be paid if the policy results in a death claim unless the policy is paid up or surrendered during the premium-paying period.

b. Profit distribution after the payment of premiums - For a fully paid-up policy or a paid-up policy with a Maturity Sum Assured of ₹2 lakhs or more, the way profits are shared after the premium-paying period might change, depending on the company's performance. A Final Additional Bonus may also be given when the policy ends, either due to death or maturity. If you surrender the policy, you'll get the value of any earned bonuses and any applicable Final Additional Bonus. However, if the paid-up policy has a Maturity Sum Assured of less than ₹2 lakhs, it won't earn any future bonuses.

3. Option of Death Benefit Payout over Instalments: The LIC Jeevan Umang policy offers policyholders the option to go ahead with monthly instalment payouts of the cumulative death benefit instead of paying it as a lump sum. You can choose the instalments at different frequencies - annual, half-yearly, quarterly, or monthly. The amount to be paid out can be fixed or a certain % of the total sum assured -

4. Loans against policy: A policyholder can obtain a loan against this policy, provided he/she can meet the following conditions -

• If you have paid at least two full years of premiums.
• If you take a loan after the premium-paying period, the loan amount will be capped so that the yearly interest doesn’t exceed 50% of the annual survival benefit you receive from the policy.
• You can borrow up to 90% of the surrender value of active policies and up to 80% of the surrender value of paid-up policies.
• The insurer has the right to decide the loan amount. If the policyholder is a minor, the person who bought the policy can take the loan on their behalf, but the loan must benefit the minor. The company will hold the policy as security until the loan and interest are fully repaid.

5. Available Riders: Unlike the usual life insurance policies from the stable of LIC, this whole life insurance plan has several riders to offer that boost the customisation potential of the plan. Here is a quick look at the riders offered with the LIC Jeevan Umang Plan -

• Accidental Death and Disability Benefit Rider: This is an effective rider to have that can be added to your plan any time during the premium-paying period, provided both the policy and the rider have at least 5 years left. If you choose this rider, you can have 3-fold benefits -first, in case of accidental death, a lump sum equal to the Accident Benefit Sum Assured will be paid. Second, suppose an accident causes a disability of the policyholder within 180 days of the date of the accident. In that case, the Accident Benefit Sum Assured will be paid in equal monthly instalments over 10 years. Third, the future premiums for the Accident Benefit and the matching portion of the Basic Sum Assured under the main policy will be waived.
• Accident Benefit Rider: You can add this rider to your active policy at any time during the premium-paying period, as long as both the policy and the rider have at least 5 years left. The rider provides coverage only during the premium-paying period. If you choose this rider and accidental death occurs, a lump sum equal to the Accident Benefit Sum Assured will be paid.
• New Term Assurance Rider: In case you want to opt for this rider, you have to make the choice during the policy purchase only. Under this rider, if the policyholder passes away during the rider tenure, the pre-decided new term assurance rider amount is disbursed to the beneficiaries. This rider provides coverage for up to 35 years or until the policy anniversary closest to the insured person's 75th birthday, whichever comes first.
• New Critical Illness Benefit Rider: This rider can only be opted for during the inception of the plan. Under the LICJeevan Umang Plan, 15 critical illnesses are mentioned. In case you have opted for this rider and are diagnosed with any of the 15 ailments, the critical illness benefit amount is disbursed to the policyholder to be used at his/her discretion. This rider provides coverage for up to 35 years of the policy tenure or until the policy anniversary (that falls on the 75th birthday of the policyholder), whichever is closest.
• Premium Waiver Benefit Rider: You can add this rider to your policy on the policy anniversary as long as both have at least five years left. It’s available for minors, with the rider term being 25 minus the minor’s age. If the combined rider term and proposer’s age exceed 70 years, the rider isn’t allowed. If the proposer dies, future premiums are waived until the rider term ends. If the policy’s premium period is longer, remaining premiums must be paid after the rider term ends, or the policy will become paid up.

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What’s Unique About the LIC Jeevan Umang Plan?

LIC Jeevan Umang policy offers a number of unique offerings - getting loans against the plan, participation in the company’s profits, multiple riders (which is rare in the case of life insurance plans from the stable of LIC), and death benefit payouts over instalments (as an option for the policyholder to choose).

Conclusion

Compared to the other life insurance policies offered by LIC, the LIC Jeevan Umang plan is truly comprehensive. However, LIC can’t be held as a benchmark for life insurance providers if you think of the cutting-edge features available across other policies from credible private insurers. Moreover, with the policy’s guaranteed payouts (irrespective of whether the policyholder survives the tenure or not) and extensive coverage till the policyholder reaches 99 or 100 years of age, the insured will most probably be paying out significant premiums as compared to the standard term insurance plans.

So, if this plan seems appealing to you on pen and paper, we would request you to reconsider the decision to purchase a whole life insurance plan (since a term insurance policy only needs to cover you as an income replacement till your retirement age + 5 years at the most), and the insurer you purchase the policy from (preferably choose a provider with low complaint volume).