LIC Jeevan Umang Plan 745: Annual Survival Benefit, Tax and GST Explained

Summary: LIC Jeevan Umang, Plan 745 (UIN 512N312V03), is a participating, non-linked individual whole-life savings insurance product. According to LIC’s sales brochure applicable from 22 September 2025, the policy provides a survival payment equal to 8% of the basic sum assured each year beginning at the end of the selected premium-paying term, subject to policy conditions, while life cover and a maturity benefit continue. Premiums are paid for 15, 20, 25 or 30 years, and the contractual policy term generally runs to age 100. This article explains the distinct death, survival and maturity benefits; the significance of bonuses, paid-up and surrender rules; and the separate treatment of premium deductions, policy receipts and GST in tax year 2026–27. The 8% benefit is calculated on the basic sum assured, not on total premiums paid, investment value or a guaranteed investment return. Tax exemption is conditional, particularly where premiums across qualifying non-ULIP policies exceed the statutory threshold.

Product Identity and Eligibility

The product must be identified by both its plan number and Unique Identification Number, because marketing names can persist across revised versions. LIC’s current product page lists Jeevan Umang as Plan 745 with UIN 512N312V03, and hosts a sales brochure labelled as applicable from 22 September 2025. This is a participating policy: bonuses depend on LIC declarations under the product conditions. It is not a market-linked unit-linked insurance plan, nor is it a pure term-insurance contract.

The minimum basic sum assured is ₹2,00,000 and LIC specifies no overall maximum basic sum assured in the brochure, although underwriting, financial and eligibility rules remain relevant. Available premium-paying terms are 15, 20, 25 and 30 years. The maximum entry age depends on the chosen term, while the maturity age is 100 years on the brochure’s age-nearer-birthday basis. For a policy on a minor, commencement of risk and vesting must be examined separately.

How the Annual Survival Benefit Works

LIC states that an in-force policy pays a survival benefit of 8% of the basic sum assured on survival to the end of the premium-paying term, with subsequent annual payments on policy anniversaries until the earlier of death or the anniversary immediately before maturity. These payments are distinct from the maturity benefit. They are contractual cash-flow amounts and should not be described as an 8% return on premium, an 8% internal rate of return, or a yield on accumulated savings.

For example, if the basic sum assured is ₹10,00,000, 8% corresponds to ₹80,000 for an eligible annual survival payment. That arithmetic is illustrative only: it is not a premium quote, a benefit illustration or an estimate of investment return. Actual economics depend on the premium charged, age, payment term, timing and number of survival instalments, bonuses, surrender terms, taxation and whether the policy stays in force. A benefit illustration supplied for the actual proposal is therefore essential for understanding cash flows.

An important timing point is that a policyholder does not receive the survival benefit during the initial premium-paying period. Someone selecting a 30-year premium term will normally wait substantially longer for the first scheduled survival payment than someone selecting a 15-year term. The longer period also changes total premium commitments and potential lapse exposure. The brochure should be read in conjunction with the issued policy schedule, which records the applicable dates.

Death Benefit and Maturity Benefit Are Different

After risk commencement, the in-force death benefit is the sum assured on death together with vested simple reversionary bonuses and final additional bonus, if any. LIC defines sum assured on death as the higher of seven times the annualised premium or the basic sum assured, and stipulates a floor of 105% of total premiums paid up to death. Annualised premium and total premium are defined for this purpose with exclusions for taxes, riders and specified extras. This is a benefit formula, not a representation that bonuses will necessarily be declared.

Where death occurs before risk commences for an insured minor, the brochure instead provides return of eligible premiums without interest, excluding taxes, extra premium and rider premium. The policy also has a separate rule for the date on which cover commences for minors. Any family considering insurance on a child should distinguish the proposer, life assured and nominee, and should not assume immediate full risk cover.

On survival to the end of the policy term, the stated maturity benefit is the basic sum assured plus vested simple reversionary bonuses and final additional bonus, if any, subject to the policy being eligible. LIC’s maturity age is 100 years. Annual survival payments are not a substitute for the stated maturity formula, but bonus declarations and policy status can change the eventual amount.

Bonuses, Riders and Instalment Choices

As a participating plan, Jeevan Umang may receive simple reversionary bonuses during the premium-paying term while it is in force. Once declared, the bonuses vest according to the policy terms. The brochure separately explains participation after the premium-paying term and the circumstances in which a final additional bonus may arise. It is inaccurate to add an assumed bonus rate to the guaranteed 8% survival benefit and present the combined figure as an assured annual yield.

LIC lists optional accidental-death/disability, accident, term-assurance and premium-waiver riders, subject to eligibility and additional premiums. Some rider choices are mutually exclusive, and the rider terms need not match the base policy. For death claims, the policyholder may also elect payment of all or part of the death benefit in instalments over five, ten or fifteen years under the prescribed conditions. These options affect the form and timing of protection rather than the basic annual survival percentage.

Grace Period, Paid-up Value, Revival and Surrender

LIC allows a grace period of 30 days for yearly, half-yearly and quarterly premiums and 15 days for monthly premiums. Once the grace period ends without payment, the policy may lapse. The brochure permits revival within five consecutive complete years from the first unpaid premium, subject to arrears, interest, underwriting and LIC’s acceptance. A revival request is not itself evidence that full benefits have been restored.

Where less than one full policy year’s premiums have been paid, failure to continue may cause benefits to cease. After at least one full year’s premiums, a policy may acquire reduced paid-up status under the brochure. A paid-up policy’s death and maturity amounts are adjusted by the ratio of premiums actually paid to the full premium-paying term. Annual survival payments on a paid-up policy require the maturity paid-up sum assured to reach the minimum ₹2 lakh threshold; otherwise those payments do not arise. The distinction can materially affect long-term cash flow.

Surrender is permitted after completion of the first policy year if one full year’s premium has been paid, but the applicable surrender amount is governed by the guaranteed and special surrender value provisions. The guaranteed surrender value requires at least two full years’ premiums. The payable surrender value is the higher of the relevant guaranteed or special value as determined under the terms. A policyholder should obtain a dated surrender quotation instead of estimating the amount from premiums already paid.

Income-tax Treatment in Tax Year 2026–27

For the period beginning 1 April 2026, the Income-tax Act, 2025 is the operative framework. Section 123 read with Schedule XV continues the specified savings deduction, broadly corresponding to section 80C of the earlier Income-tax Act, 1961. The overall eligible deduction ceiling remains ₹1,50,000 under the applicable conditions, and the deduction is not available under the default new tax regime in section 202. The deductible amount is not necessarily equal to every rupee of premium: the premium-to-capital-sum-assured limits and other statutory conditions must be checked.

Exemption of policy receipts is a separate question. Section 11 read with Schedule II, serial number 2, governs exclusion of qualifying life-insurance sums, including bonus, from total income. For a non-ULIP policy issued on or after 1 April 2023, the legislation contains both a premium-to-sum-assured test and an aggregate premium ceiling of ₹5,00,000 for relevant policies in a tax year. The aggregate test must consider other qualifying policies of the same taxpayer; it is not automatically available as a separate ₹5 lakh limit for every contract. The statute treats amounts received on death separately from the ordinary maturity and survival-premium limitations.

Consequently, the tax treatment of the 8% survival payment cannot be decided simply from the words “life insurance”. If the exemption conditions are not met, the tax consequences require evaluation under the applicable provisions and rules for non-exempt insurance receipts. Surrender receipts, survival instalments and maturity amounts may arise in different tax years. Maintain annual premium records, policy issue dates, benefit statements and details of other non-ULIP policies to support the return position.

GST on Individual Life Insurance Premiums

The Government of India has confirmed that GST exemption applies to individual life-insurance policies with effect from 22 September 2025, as part of the insurance GST reforms. Accordingly, an individual life policy premium payable in October 2026 should not be described using the earlier standard 18% GST burden. The relevant exemption and invoice treatment must be assessed for the actual supply and product, particularly where group insurance, riders, historical premium periods or mixed supplies are involved.

The GST position is distinct from income-tax deductibility and receipt exemption. An exempt GST treatment does not automatically make premiums deductible under section 123 or survival benefits exempt under Schedule II. Nor should the product brochure’s historic illustrative premiums, expressly exclusive of taxes, be treated as current personalised quotes. LIC underwriting and the premium illustration govern the actual payable amount.

Practical Review of Cash Flows and Documentation

A careful product review begins with the issued Customer Information Sheet, policy schedule and current sales brochure. Confirm the sum assured, premium term, frequency, commencement of risk, age at maturity, premium due dates and whether riders were actually chosen. Then build a dated cash-flow schedule showing premiums paid, the first survival payment, subsequent instalments and the contractual maturity event. Keep guaranteed elements separate from bonus illustrations and tax assumptions.

For household liquidity, the main risks are long premium commitments, possible lapse or reduced paid-up benefits, and the opportunity cost of cash locked into the contract. For tax reporting, the main risks are incorrectly assuming automatic exemption, overlooking aggregate non-ULIP premiums, or claiming a deduction while taxed under the default regime. For claims, nomination details, identity documents, policy status and the insurer’s claim procedures are operationally important. None of these observations is a recommendation to buy, retain or surrender the product.

Frequently Asked Questions

Is Jeevan Umang Plan 745 a ULIP?

No. LIC describes it as a participating, non-linked whole-life savings insurance plan. Its benefits are governed by the contract and declared bonuses, not by unit prices.

Does the policy guarantee an 8% investment return?

No. The contractual annual survival amount is 8% of basic sum assured after the premium-paying term, subject to conditions. It is not an IRR or an annual percentage return on premiums.

When does the first survival benefit become payable?

Under the current brochure, the first eligible annual survival benefit arises at the end of the premium-paying term, provided the policy meets the stated conditions.

Does the policy continue after survival payments start?

The brochure provides continuing whole-life cover and a maturity benefit to age 100, subject to the policy remaining eligible and to any intervening death claim.

Can I claim an income-tax deduction for the premium?

Potentially under section 123 and Schedule XV of the Income-tax Act, 2025, within the ₹1.5 lakh overall ceiling and policy conditions, but not under the default section 202 new regime.

Are survival and maturity proceeds always exempt?

No. Section 11 and Schedule II impose conditions including premium-to-sum-assured and aggregate premium limits for relevant post-April 2023 non-ULIP policies. Death claims receive separate statutory treatment.

Is GST still charged at 18% on individual life policies?

The government confirms exemption for individual life insurance effective 22 September 2025. Check the actual policy and invoice, particularly for riders and non-individual contracts.

Can a lapsed policy be revived?

The LIC brochure describes a five-year revival window from the first unpaid premium, subject to arrears, interest, insurability and acceptance by LIC.

Key Takeaways

• The stated 8% survival benefit is a percentage of basic sum assured, not a policy investment yield.
• Plan 745 is a participating, non-linked whole-life product with 15-, 20-, 25- or 30-year premium terms.
• Death, survival and maturity benefits have different triggers; bonuses are conditional on LIC declarations.
• Tax year 2026–27 requires applying the Income-tax Act, 2025, including section 123 and section 11/Schedule II.
• Individual life-insurance GST exemption has applied since 22 September 2025; income-tax consequences remain separate.
• Policy-specific premium illustrations and issued contractual documents take priority over generic examples.

Primary Sources and Verification Date

• LIC product page (Plan 745/UIN 512N312V03): https://licindia.in/web/guest/lic-sjeevanumang-745%09512n312v03
• LIC sales brochure, applicable from 22 September 2025: https://licindia.in/documents/20121/1319704/745%2BLIC_Jeevan%2BUmang_Eng%2B_141025.pdf/d67dc9dc-ca37-7e1e-d662-132423c49d15?t=1760458103167
• Income-tax Act, 2025 as amended by Finance Act, 2026, including section 11/Schedule II and section 123/Schedule XV: https://www.incometaxindia.gov.in/documents/d/guest/income_tax_act_2025_as_amended_by_fa_act_2026-pdf
• Income Tax Department official guidance on section 123 and section 202: https://www.incometax.gov.in/iec/foportal/hi/help/all-topics/e-filing-ervices/set%20off/carry%20forward%20of%20losses%20-faq
• Government of India, insurance GST exemption effective 22 September 2025: https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=158322&id=158322&lang=1&reg=36

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Disclaimer: This article is published for general information and is not insurance, investment, tax or legal advice. Product availability, premium quotations, underwriting, riders, claim decisions and policy terms are governed by LIC’s current documents and the issued contract. Tax outcomes depend on the taxpayer’s facts and the law applicable to the relevant tax year. TaxGuru accepts no responsibility for any loss, damage, action or omission arising from reliance on this article; readers should independently verify primary documents and seek appropriate professional advice.