LIC New Jeevan Dhara-II: Features & Review

According to a press release, the New Jeevan Dhara-II (UIN: 512N398V01) was available for sale from October 19, 2026, offering a way for individuals to plan for a financially secure retirement. 

The LIC pension plan allows policyholders to pay premiums today and receive guaranteed annuity payments after a chosen deferment period. 

However, while income certainty can be appealing, it’s important to assess whether the plan aligns with your retirement needs and offers suitable value for your money.

In this review, we examine LIC New Jeevan Dhara-II’s annuity options, premiums, tax treatment, key benefits, and limitations to help you decide whether it fits your retirement goals.

Note: LIC permits joint life annuities for specified family relationships, including spouses, parents, children, grandparents, grandchildren, siblings, and parents-in-law, subject to policy conditions. 

Under Options 8, 9, and 11, annuity payments can continue to the surviving annuitant after the first death. Any return of premiums or purchase price depends on the selected option.

Key Features Under LIC New Jeevan Dhara-II Plan

• Survival/Death Benefit: LIC pays the applicable benefits if the policy remains in force and the annuitant survives or dies. The payout depends on the selected annuity option and the policy’s terms and conditions.
• Death Benefit During Deferment: Under single life options, LIC pays the higher of 105% of total premiums paid or the applicable purchase price, and the surrender value. Under joint life options, the policy continues after the first death. Any remaining premiums remain payable, and the death benefit is paid after the last surviving annuitant’s death, subject to policy terms.
• Flexible Annuity Options: LIC New Jeevan Dhara-II offers 11 annuity options with single life and joint life cover, with or without premium or purchase price returns. 
• Maturity Benefit: The plan does not offer a maturity benefit. Instead, it provides annuity payments after the deferment period, according to the selected option, for the lifetime of the annuitant or annuitants.
• Top-Up Annuity: You can increase your annuity by paying an additional single premium. This option is available under all annuity options. Each top-up is priced at the prevailing annuity rates and subject to the applicable policy terms. The additional annuity is paid alongside the base annuity after deferment. Its death and surrender benefits are calculated separately, but you cannot surrender the top-up independently of the base policy.
• Liquidity Option: Under Options 2, 9, 10, and 11, you can make up to three partial withdrawals after five years from the first annuity payment. Withdrawals are based on the applicable surrender value and capped at 60% of base premiums paid, excluding top-ups. Each withdrawal reduces future annuity payments, death benefits, and surrender benefits. Top-up annuities are excluded.
• Advanced Annuity Option: Under joint life Options 9 and 11, the surviving annuitant can receive a lump sum equal to the discounted value of annuity payments for up to five years. This option is available after deferment and must be exercised within six months of the first death.

Note: New Jeevan Dhara-II (Plan 892) is a non-linked, non-participating individual deferred annuity plan with 11 annuity options. The LIC annuity plan replaces the earlier Plan 872 and provides death benefits during the deferment period, subject to the selected option and policy terms.

Note: The deferment period is the time between purchasing a deferred annuity plan and the start of regular income payouts. Once this period ends, the policy enters the payout phase, subject to the annuitant meeting the policy conditions.

Key Insights

1) Why Options 1 and 8 Pay More

• Higher Annuity Payouts: Options 1 and 8 offer higher annual annuities because they do not return the purchase capital after the annuitant’s death. This allows LIC to offer higher lifetime payouts than comparable options with a return-of-premium benefit.
• Mortality Pooling: The higher payout does not reflect better investment performance. It reflects mortality pooling, where the insurer uses premiums from policies that end without a capital refund to help fund annuity payments across the pool.

2) Why Option 7 Is Different

• Gradual Premium Return: Option 7 returns 5% of total premiums paid each year from ages 76 through 95 while continuing the lifetime annuity. If the annuitant receives all 20 payments, the total returned equals 100% of premiums paid.
• Death Benefit: If the annuitant dies before receiving the full premium amount, LIC pays the remaining unreturned balance as the death benefit, subject to policy terms. This differs from options that return premiums only after death.

3) Options 3–6: Early Premium Return

• Premium Return at a Specified Age: Under Options 3–6, LIC returns 50% or 100% of total premiums at the specified age of 75 or 80, while continuing the annuity. This returns your capital, not an additional investment gain.
• Impact on Death Benefit: Once LIC has returned the full premium amount, no further premium refund is due on death under that option. Compare the payout timing and annuity amount before choosing.

Sample Annuity Payouts by Age and Purchase Price

The illustration from the official policy brochure is based on a 60-year-old choosing Option 2 (Single Life Annuity with Return of Premium), with an annual premium of ₹1,00,000, a five-year premium payment and deferment period, and offline purchase.

• Years 1–5: Pay an annual premium of ₹1 lakh for five years, totaling ₹5 lakh.
• From Year 6: Receive an annual annuity of ₹36,130 for life.
• On Death After Deferment: The nominee receives ₹5 lakh, equal to the total regular premiums paid, subject to policy terms.

Note: The IRR calculation assumes that premiums are paid at the beginning of each policy year.

LIC New Jeevan Dhara-II provides contractually guaranteed lifetime annuity income, while Senior Citizen Savings Scheme (SCSS) and fixed deposits pay interest for a defined period. For October–December 2026, SCSS offers 8.2% annually, equivalent to ₹41,000 per year on ₹5 lakh, paid quarterly.

However, these figures are not directly comparable. The LIC illustration assumes ₹1 lakh paid annually for five years before annuity income begins. A fair comparison must align the investor’s age, cash flows, tax assumptions, and investment horizon while accounting for longevity protection and access to capital.

Note: LIC New Jeevan Dhara-II expands access to younger customers and offers shorter regular-premium deferment, with revised surrender and paid-up provisions.

However, it has lower maximum vesting ages and somewhat lower annuity rates in comparable illustrations. Jeevan Dhara-II (Plan 872) is a withdrawn LIC plan. However, existing policyholders can continue their plans as per the terms and conditions.

Note: The data is for the insurer as a whole and has been derived from LIC public disclosures and IRDAI annual reports. To explore more insurer metrics, refer to the Ditto Data Lab.

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Conclusion

A guaranteed lifetime annuity can protect your retirement income from market volatility and sequence-of-returns risk. However, fixed payouts lose purchasing power over time due to inflation. Treat an annuity as one part of your retirement plan, alongside investments that can support long-term growth.

Before committing a large share of your retirement corpus, maintain an adequate emergency fund and comprehensive health cover. Comparing the best health insurance plans can help you manage unexpected medical expenses without disrupting your retirement income. Review your coverage and out-of-pocket costs before you annuitize a substantial amount.

During your accumulation years, consider the National Pension System (NPS) and diversified investments for retirement growth, along with the best term insurance plans to protect your family.

For retirement income, compare annuity plans with fixed deposits, debt mutual funds with Systematic Withdrawal Plans (SWPs), SCSS, and RBI Floating Rate Savings Bonds based on your need for predictable income, liquidity, and inflation protection.

Note: Ditto is not a SEBI-registered investment advisor. We currently offer advice on health and term plans. Consider consulting a SEBI-registered investment advisor before making decisions about annuities, pension plans, or other investment products.