When it comes to secure, long-term investments that offer both life cover and guaranteed returns, LIC (Life Insurance Corporation of India) stands out as one of the best options. Among its range of investment-cum-insurance plans, one policy, in particular, is gaining widespread attention for its ability to turn a modest annual investment into a significant maturity amount. In this article, we’ll break down how investing ₹72,000 annually in LIC can help you accumulate a maturity value of up to ₹28 lakh.
Let’s dive into the details of this high-performing LIC policy, explore its benefits, and understand how it can help you achieve your long-term financial goals.
Why LIC Policies Are Among the Best Investment Options
LIC has built a strong reputation over the decades, offering reliable, government-backed insurance and investment products. Its policies combine the dual benefits of insurance and investment, making them an attractive option for individuals looking for a safe and guaranteed return on their investment. Here’s why LIC policies remain a top choice for millions of Indians:
- Government-Backed Assurance: LIC is a government-owned organization, providing policyholders with a sense of security and reliability.
- Dual Benefits: Life cover coupled with long-term savings makes LIC plans ideal for individuals seeking comprehensive financial protection.
- Tax Benefits: Premiums paid towards LIC policies are eligible for deductions under Section 80C of the Income Tax Act. Additionally, the maturity benefits are tax-free under Section 10(10D).
- Consistent Bonuses: LIC is known for providing attractive bonuses to policyholders, ensuring that investments grow over time.
- Flexible Terms: LIC offers a wide variety of policies with flexible terms to meet diverse financial goals.
How ₹72,000 Annually Can Grow to ₹28 Lakh
LIC’s endowment plans are designed to deliver guaranteed returns, making them an excellent option for long-term investment. Let’s take an example to illustrate how investing ₹72,000 per year (₹6,000 per month) for a fixed term can potentially yield a maturity amount of ₹28 lakh.
Investment Illustration
| Particulars | Details |
|---|---|
| Plan Name | LIC New Endowment Plan |
| Entry Age | 30 Years |
| Policy Term | 25 Years |
| Annual Premium | ₹72,000 |
| Total Premium Paid | ₹18,00,000 (₹72,000 x 25 years) |
| Estimated Bonus (Approx.) | ₹7,00,000 to ₹8,00,000 |
| Final Additional Bonus (FAB) | ₹2,50,000 to ₹3,00,000 |
| Total Maturity Value | ₹27,50,000 to ₹28,00,000 |
Note: The bonus rates and FAB are indicative and may vary depending on LIC’s annual performance.
Key Features of This LIC Investment Plan
LIC’s New Endowment Plan is a well-structured policy with numerous benefits for long-term investors:
1. Life Coverage
The policy provides life coverage for the entire policy term, ensuring that your family is financially protected in case of an unfortunate event.
2. Maturity Benefits
On maturity, you receive the Sum Assured, accrued bonuses, and, if applicable, the Final Additional Bonus (FAB). These benefits make this plan a great choice for building a corpus for future needs.
3. Loan Facility
You can avail of loans against your policy after a few years of investment. This flexibility helps in times of financial need.
4. Tax Benefits
- Section 80C: Premiums paid towards the policy are eligible for deductions up to ₹1.5 lakh.
- Section 10(10D): Maturity benefits, including bonuses, are tax-free if the policy meets the required conditions.
5. Bonus Linked
LIC’s participating plans earn bonuses based on the company’s annual performance, enhancing the maturity value over time.
6. Flexible Premium Payment Modes
You can choose to pay premiums annually, semi-annually, quarterly, or monthly, based on your convenience.
Benefits of Investing in LIC Over Other Investment Avenues
Let’s compare LIC’s endowment plan with other popular investment options to understand why it is a preferred choice for many:
| Feature/Plan | LIC Endowment Plan | Bank FD | PPF | Mutual Funds |
|---|---|---|---|---|
| Risk | Low | Very Low | Very Low | Medium to High |
| Returns | Moderate (With Bonus) | Fixed | Fixed | Market Linked |
| Life Cover | Yes | No | No | No |
| Tax Benefits | 80C + 10(10D) | 80C (Partial) | 80C + Tax-Free Maturity | 80C (ELSS Only) |
| Loan Facility | Yes | Yes | Yes | Yes (via SWP) |
| Government Backing | Yes | Yes | Yes | No |
Who Should Consider This LIC Investment Plan?
This LIC strategy is ideal for:
- Risk-Averse Investors: Individuals seeking low-risk investments with moderate returns.
- Salaried Professionals: Those looking to build a secure retirement corpus.
- Parents: Parents planning to save for their children’s education or future needs.
- Anyone Seeking Dual Benefits: If you’re looking for both insurance and investment benefits in one plan.
Policyholder Eligibility and Other Details
| Eligibility Criteria | Details |
|---|---|
| Minimum Entry Age | 8 Years |
| Maximum Entry Age | 55 Years |
| Minimum Sum Assured | ₹1 Lakh |
| Policy Term | 12 to 35 Years |
| Premium Payment Term | Same as Policy Term |
| Premium Payment Modes | Monthly/Quarterly/Half-Yearly/Yearly |
| Maturity Benefit | Sum Assured + Bonuses |
Tax Implications of Investing in LIC
LIC policies provide valuable tax-saving benefits:
- Section 80C: Premiums paid up to ₹1.5 lakh per year qualify for tax deductions.
- Section 10(10D): Maturity proceeds are tax-free, provided the premium-to-sum assured ratio is within prescribed limits.
Is It the Right Time to Invest?
Given the current financial uncertainty and market volatility, investing in a guaranteed return plan like LIC’s endowment policies offers peace of mind and long-term stability. Starting early ensures lower premiums and a higher maturity value due to compounded bonuses.
For conservative investors who prefer safety over market-linked risks, LIC’s endowment policies present an excellent opportunity for reliable wealth creation.
While returns from LIC plans may not be as high as market-based options like mutual funds, the dual benefits of insurance and investment, along with the guaranteed returns, make LIC an excellent choice for those planning for future milestones like retirement, children’s education, or other life goals.
FAQs
How much can I accumulate by investing ₹72,000 annually in LIC?
By investing ₹72,000 annually in LIC’s endowment plan for 25 years, you can accumulate a maturity amount of around ₹28 lakh, including bonuses.
Can I withdraw the maturity amount before the policy term?
LIC’s endowment policies do not allow early withdrawals. However, you can avail of a loan against the policy after a few years of paying premiums.
Are the premiums paid towards LIC policies eligible for tax deductions?
Yes, premiums paid up to ₹1.5 lakh are eligible for tax deductions under Section 80C of the Income Tax Act.
Will the maturity proceeds be taxed?
No, maturity proceeds are tax-free under Section 10(10D), provided the premium-to-sum assured ratio meets the required guidelines.
What is the minimum entry age for investing in LIC policies?
The minimum entry age for LIC’s endowment plan is 8 years.