CRM Department, Central Office.

5th Floor (Link), “Yogakshema”,

Jeevan Bima Marg, P.O.Box No.19953,
Mumbai – 400 021.
Tel : 66598353, Fax : 22825829
E-mail co_crm@licindia.com

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Ref: CO/CRM/778/23 March 10, 2010

To,
All Zonal Managers,
All Regional Managers (CRM)
All Sr/Divisional Managers,
M.D.C., Audit & Inspection

Re: PENSION PAYMENT UNDER ULIP- IPP PLANS Nos -172,181,191

At present, we have three unit linked deferred pension plans namely LIC’s Future plus ( plan
172) , LIC’s Market plus ( plan 181) , LIC’s Market plus -1 ( plan 191). These plans will be due
for payment of pension from 3//2010, 7/2011 and 6/2013 respectively.

As per policy condition; If the policy is in the books of the corporation and the policyholder
survives up to the date of vesting, the bid value of the units held in the policyholder’s unit
account, or a part thereof in case of commutation, will be compulsorily utilized to provide a
pension at the then prevailing immediate annuity rates under the relevant annuity option.

We have designed the procedure for settlement of claim under above plans as follows:-

1. For the policies which are on the books of the corporation (means policies not
surrendered/ foreclosed/ or request for surrender is not registered upto day before
date of vesting), the total no. of units in policyholder’s fund will be basis for
calculating fund value. The system will lock these units on the date of vesting and no
further request for surrender or any other exit will be processed. However, the fund
value of such units will be calculated as per NAV rate applicable on the date of
vesting, which will be declared on the next working day following the date of vesting.
This fund value will be treated as purchase price under immediate annuity plan.
2. As per policy condition, the policyholder will have to intimate his/her choice of
annuity option to the corporation 6 months prior to the date of vesting under the
policy. However, if policyholder does not exercise the option 6 months before date of
vesting, then also he can do the same, even after date of vesting. For this purpose,
letters will be generated 9 months in advance before date of vesting from CUS server
in the Division. At present, we have arranged to send the intimation letters for the
months from March 2010 to December 2010 through MASH. From January 2011 and
onwards, division should extract the letters 9 months in advance at their end and
forward the same to respective policyholders. i.e for the due month January 2011,
records should be extracted in the month of April 2010 and so on.
3. Since the fund value can not be estimated in advance at the time of sending the
intimation letters to policyholder, it has been decided to give annuity rates of all
annuity options per Rs.50,000 purchase price of the then prevailing immediate annuity
plan as on date of vesting. These annuity rates will be as per age last birthday (LBD) of
policyholder as on date of vesting i.e (date of vesting - date of birth). At present,
immediate annuity plan available is LIC’s Jeevan Akshay plan 189.
 ………………….2……………………….

4. The intimation letter sent to policyholder specifically mentions that the actual amount
of annuity instalment will depend on the value of units available on the date of
vesting. Also, the annuity rates mentioned in the letter may undergo change if the LIC
changes annuity rates for immediate annuity plan.
5. The policyholder will also have the option to commute up to 1/3rd of the bid value of
the units held in the policyholder’s unit account at the time of vesting of the annuity.
He/she should opt for the commutation 6 months prior to the date of vesting. While
commuting the bid value, it should be noted the balance amount should be equal to
minimum purchase price of prevalent immediate annuity plan. If the same falls below
the purchase price, then amount of commutation will be adjusted downward
accordingly. For payment of commuted value, option 4.1.2.5.5.is available in Branch
claims module.
6. There will also be an option to purchase pension from any other insurance company. If
policyholder desires so, then he/she should send the name and address of insurance
company, letter addressed to the said insurance company for purchasing the pension.
The option for this also should be exercised 6 months prior to date of vesting date. In
such cases LIC will transfer the bid value of the units held in the policyholder’s unit
account directly to the chosen company.
7. In case the Bid value of the units at the time of vesting date is insufficient to purchase
the minimum amount of pension allowed by LIC, then the said amount shall be
refunded to the policyholder in full after obtaining the maturity discharge form and
policy document as final settlement under the policy.
8. If policyholder registers surrender request prior to date of vesting, then the same will
be accepted and processed. Payment will be made as per applicable NAV rate. No
surrender request will be allowed to register on and after date of vesting. Hence,
Branches should ensure to register the request for such surrender, promptly on the
same day.
9. On the date of vesting , if there is no surrender request or death intimation is
registered, then no of units available in the policyholder’s fund account will be locked
and the value of the fund will be calculated as per NAV as on date of vesting; which
will be declared on the following working day . On this working day, the accounting
entry will be passed by the system for transferring the fund value from unit fund to
non-unit fund. See accounting entry no…1...
10. Every day as per date of vesting and after passing the entry for transferring the fund
value, system will add policy number in o/s maturity list of ULIP- IPP cases. The listing
of such policies can be available through IPP module of branch no- 4.2.U.2
11. Branch should ratify the liability created for such policy no, through issue of discharge
option under IPP module of Branch- 4.2.U.3 as per the option letter received from
policyholder. The options are as follows:-
1. if opted for commutation value and balance for purchasing annuity
2. if opted for purchasing annuity utilizing full bid value
3. If bid value is less than purchase price of prevailing immediate annuity plan,
then same will be refunded in full.
4. If opted for purchasing the annuity from any other private insurance
company.
( under option no-1, the commuted value will be adjusted in such a way that the
balance amount of maturity claim will not be less than the minimum purchase price of
the then prevailing immediate annuity plan.)
5. If policyholder does not exercise the option before end of the month in which
policy vests, then Branch should simply ratify/ okay the liability, using this
option. In future, as and when policyholder gives the option letter, Branch
can ratify the policy record accordingly. (Unless all policy nos are ratified,
the monthly intimation register or provision for such liability could not be
printed)
 …………………………3………………………………

12. The letters will be issued to policyholder taking into account the option he/she
exercised, informing about unit value available under the policy. This letter will be
issued through option no 4.2.U.3 of IPP module- Branch. The letters should be printed
daily/weekly, for particular policy no or for all policy numbers. If policyholder has
exercised the option no 1, letter will be generated informing the actual annuity
amount payable as per annuity option and discharge form for commuted value.

13. If policyholder has exercised the option-2 of above, then intimation letter will inform
the actual annuity payable as per annuity option. If policyholder has exercised option
no-3 and 4 then maturity claim discharge form will be issued along with intimation
letter.
14. If policyholder opts for option no 3 or 4, then after payment of claim amount policy
status in master will change from ‘72- expiry of deferred period under deferred
annuities’ to ‘ status 83- maturity claim paid’. Under option 1and 2, policy status will
remain as 72.

15. After receipt of discharge form ( if applicable) and policy document, following process
will take place.
Option no Action to be taken by branch
1 Prepare payment voucher for commutation value and ratify the
record for balance amount for escalating to IPP cell. Endorse the
policy document as per specimen and return the same to
policyholder with covering letter.
2 Ratify the record for full amount and escalate to IPP cell. Endorse
the policy document as per specimen and return the same to
policyholder with covering letter.
3 Prepare the payment voucher and cancel the policy document.
4 Prepare the payment voucher in the name of other private
insurance company as informed by policyholder. Cheque should be
forwarded to insurance company with covering letter informing
the full name and address of the annuitant. Policy document
should be cancelled.

• If policyholder has opted for pension, then policy document should be sent to
policyholder with covering letter

LIFE INSURANCE CORPORATION OF INDIA

…………………..DIVISIONAL OFFICE, BRANCH NO/ NAME- ……..

DATE:-

POLICY NO:-…………………………………………….. ON THE LIFE……………………………..

Consequent upon exercising the option by policyholder to purchase pension from

LIFE INSURANCE CORPORATION OF INDIA under above mentioned ULIP pension plan,
It has been decided as follows:-
1) Commutation value of RS. …………….. stands paid on………………..
2) Immediate annuity under Jeevan Akshay plan no-…….. is payable under annuity
option………………………………….. with………………. mode of payment for Rs………….
3) The 1st annuity falls due on……..

P Chief/ Sr/ Branch manager

(in case life assured purchase full annuity , then strike out item no-1)
 …………………………..4……………………………

1) The accounting entries will be passed as follows:-

NATURE OF ACCOUNTING ENTRY AND ACCOUNT CODES OF ULIP IPP PLANS

HEAD OF ACCOUNT CODES
PLAN 172 PLAN 181 PLAN 191
1 booking of maturity claim liability i.e
transferring the amount from Unit
fund to non-unit fund
1)repurchase if unit capital account— 711042/44/ 741042/44/46 771042/44/46
debit 46/48 /48 /48
2) repurchase of unit capital
premium account ( if NAV is more 711051/53/ 741051/53/55 771051/53/55
than Rs. 10/-/ fund value ---------Dr 55/57 /57 /57

3) claims outstanding on vesting ---Cr 711111/13/ 741111/13/15 771111/13/15

15/17 /17 /17
4) repurchase of unit capital
premium account ( if NAV is less than 711051/53/ 741051/53/55 771051/53/55
Rs. 10/-/ fund value ---------Cr 55/57 /57 /57

2 Payment of liability for benefit on

vesting i.e bid value is less than
purchase price or payment to other
insurance company
2) claims outstanding on vesting 711112/14/ 741112/14/16 771112/14/16
paid- --------Dr 16/18 /18 /18
3) bank account---cr 111804 111804 111804
3 When policyholder opts for
commuted value and balance in the
form of annuity
1) claims outstanding on vesting 711112/14/ 741112/14/16 771112/14/16
paid- ---------- debit 16/18 /18 /18
2) bank account---cr 111804 111804 111804
3) premium account of annuity –cr 223851 223851 223851
4 When policyholder opts for annuity
payment in full without commutation
1) claims outstanding on vesting 711112/14/ 741112/14/16 771112/14/16
paid- ---------- Dr 16/18 /18 /18
2) premium account of annuity –cr 223851 223851 223851
( this is adjustment entry)

Account codes to be operated as per plan and fund in operation as on date of vesting of the
policy
 ………5………….

17. The summary of FEAP options will be as follows:-

SR PARTICULARS OF OPERATION FEAP OPTION

NO
1 Extraction of intimation letters 9 month in advance for Will be in CUS
eligible cases which are due for maturity server
2 Records will be extracted for the policies which are U-3 in CUS server
vested on the previous day in daily AFM at CUS-Division of Division
3 Merging of records at Branch and to list of extracted 4.2.U.1.E of IPP
cases- module in branch
4 On receipt of option letter from policyholder , keying in 4.2.U.3 of IPP
the option chosen i.e okay of the claim intimation module in Brach
claim
5 Printing of discharge form and letter to be sent to 4.2.U.3 of IPP
policyholder module in Brach
claim
6 For payment of full bid value or commuted value or 4.1.2.5.5 of branch
forwarding the bid value to private insurance company, claim module
on receipt of discharge form and policy document
7 On receipt of policy document where life assured opt for 4.2.U.4 of IPP
pension(full ) or for balance amount of bid value module in branch
,ratifying the record for escalating to IPP cell having password of
access level 4
8 Duplicate discharge voucher print option 4.2.U.5 of IPP
module in branch
9 Duplicate option letter print option on policy no basis 4.2.U.6 of IPP
module in branch
10 list of voucher prepared / ratified records/all records in 4.2.U.2 of IPP
plan wise/voucher preparation date/extraction date/ module in branch
ratification date
11 All other options in claim module of branch will be the
same for processing the claims under these plans.

The provisions of this circular will come into existence with immediate effect.

EXECUTIVE DIRECTOR (CRM)