With a slogan of “Zindagi Ke Saath Bhi, Zindagi ke Baad Bhi”, Life Insurance Corporation of India (LIC) has reached a height from where the rest look tiny. With an asset of 15,60482 INR, LIC is the largest Insurance company in India. In the first week of January 2016, LIC launched a life insurance scheme namely LIC Jeevan Labh which is a non-linked, limited premium with profit endowment plan.

Likewise every year LIC launches a plan in this session for individuals who look for investment from saving tax.

Features of LIC Jeevan Labh Insurance Plan
The main feature includes-

  • Payment of premium is limited to a period shorter than the policy.
  • The maturity amount is allocated at the conclusion of the policy period, or on the demise of the policy owner which one is prior.
  • Minimum age for application: 8 years.
  • Maximum ages for application: 59 years
  • Maximum age of maturity:75 years.
  • Policy tenure options:16 years / 21 years / 25 years.
  • Tenure of paying premium: 10 years / 15 years / 16 years.
  • Minimum sum assured:2 lakhs INR.( the basic sum assured should be in multiples of 10,000)
  • Maximum sum assured: No limit
  • Death benefits under this scheme:  Nominee will get; Sum assured +Bonus + Final additional bonus.
  • Maturity benefits:Sum assured + Bonus + FAB.
  • Optional riders: Accident death benefit, disability benefit and new term assurance benefit.

The premium of the plan shall be paid yearly, half-yearly, quarterly or monthly. For premiums paid yearly, there shall be 2% discount. Here is an example to show how this policy will work for you.
Mr. Singhania aged 30 wants to invest in LIC Jeevan Labh for the term of 21 years with a premium paying tenure of 15 years. He chooses the sum assured as 5 lakhs. He is required to pay the premium for 15 years, after that he does not need to pay the premium but the policy will continue till 21 years.

The possible proceedings that can happen are :
  • On the demise of policy holder: If Mr. Singhania dies during the policy term, his nominee will obtain the sum assured + accrued bonuses + FAB. After this the policy will expire.
  • On Survival till maturity:  Mr. Singhania will get the sum assured + accrued bonuses + FAB. The policy will cease to exist.
Our suggestion for LIC Jeevan Labh Insurance Plan: if you are thinking to invest in this plan to save taxes, you should surely ignore this plan. It will give you tax benefits under section 80c but the returns on these traditional policies are much dependent on bonus rates that LIC declares every year.
The return plan from LIC is not lucrative, even a Recurring Deposit account will give you a better return. Kindly think beyond taxes while investing in Financial Products. A return of 6% to 7% for a term of 16-25 years sounds quite low.
We hope that this article would have helped you in deciding your investment plan. If you are thinking to save some taxes, you can consider buying ELSS funds for long term.

See also  How to estimate the actual insurance need for you and your family

Disclaimer : Before Purchasing any LIC plan do contact with the LIC agent or LIC. The Author has just expressed his understanding about the insurance plans and nothing to do with LIC or any other insurance company.