LIC Jeevan Labh: A Comprehensive Guide The Life Insurance Corporation of India (LIC) is known for its wide range of life insurance plans catering to diverse financial needs. Among its popular offerings is the LIC Jeevan Labh plan, a limited premium, non-linked, participating endowment plan that offers a perfect blend of savings and protection. It is designed to provide financial security to the policyholder’s family in case of an untimely demise during the policy term, while also acting as a savings tool, providing a lump sum at maturity if the policyholder survives the policy tenure. This article provides an in-depth understanding of LIC Jeevan Labh, its features, benefits, eligibility criteria, and why it’s a suitable option for individuals seeking life coverage along with wealth creation.

What is LIC Jeevan Labh?

LIC Jeevan Labh is a limited premium paying endowment plan that offers life insurance coverage along with a savings element. The policyholder is required to pay premiums for a limited number of years, but the life coverage continues throughout the chosen policy term. On surviving the policy term, the policyholder receives a lump sum maturity benefit, which includes the basic sum assured and accrued bonuses. In case of the policyholder’s death during the policy term, the nominee receives a death benefit, providing financial support to the family during difficult times. Additionally, the plan participates in LIC’s profit-sharing mechanism, meaning the policyholder is entitled to receive bonuses declared by the corporation.

Key Features of LIC Jeevan Labh

1. Limited Premium Payment: Unlike traditional endowment plans, LIC Jeevan Labh allows the policyholder to pay premiums for a shorter period while enjoying coverage for the entire policy term. This makes it a flexible and convenient plan for those who don’t want a long premium-paying commitment.
2. Life Cover + Savings: The plan offers dual benefits – life coverage in case of the policyholder’s death and a savings component with lump sum payout on survival. This makes it an ideal choice for individuals looking to secure their family’s future while accumulating savings for long-term goals like children's education, marriage, or retirement.
3. Participating Plan: As a participating policy, LIC Jeevan Labh is eligible for bonuses declared by LIC based on its performance. These bonuses are added to the sum assured, enhancing the policyholder’s overall returns.
4. Loan Facility: Once the policy acquires a surrender value, the policyholder can avail of a loan against the policy. This feature provides liquidity and can be useful during financial emergencies.
5. Tax Benefits: The policyholder can avail of tax benefits on the premiums paid under Section 80C of the Income Tax Act. Additionally, the maturity and death proceeds are exempt from tax under Section 10(10D), provided the sum assured is at least 10 times the annual premium.
6. Flexible Premium Payment Modes: Policyholders can choose to pay premiums on a yearly, half-yearly, quarterly, or monthly basis, making it easier to align premium payments with their financial capabilities.

Eligibility Criteria for LIC Jeevan Labh

• Minimum Entry Age: 8 years
• Maximum Entry Age: 59 years
• Policy Term Options: 16 years, 21 years, 25 years
• Premium Payment Term: For 16-year policy term, the premium payment term is 10 years; for 21-year policy term, it is 15 years; and for 25-year policy term, it is 16 years.
• Minimum Basic Sum Assured: ₹2,00,000
• Maximum Basic Sum Assured: No upper limit (subject to underwriting approval)
• Maximum Maturity Age: 75 years

Maturity Benefit

On surviving the policy term, the policyholder is eligible to receive the maturity benefit, which is a combination of:

1. Basic Sum Assured: This is the amount chosen by the policyholder at the time of purchasing the policy.
2. Accrued Bonuses: This includes the simple reversionary bonus and any final additional bonus that may be declared by LIC.

The maturity benefit is a lump sum payout that can be used to achieve long-term financial goals such as funding children’s education, purchasing a house, or planning for retirement.

Death Benefit

In the unfortunate event of the policyholder’s death during the policy term, the nominee is entitled to receive the death benefit. The death benefit is calculated as the higher of:

1. 7 times the annual premium (excluding taxes and rider premiums).
2. 125% of the Basic Sum Assured.

In addition to this, the nominee will also receive any accrued bonuses up to the date of death. The death benefit ensures that the policyholder’s family is financially supported in case of an unexpected demise, helping them cope with the financial loss.

Bonus Structure

Being a participating plan, LIC Jeevan Labh is eligible for bonuses declared by LIC. These bonuses are added to the policy and are payable either on maturity or death.

1. Simple Reversionary Bonus: This is the bonus declared annually by LIC and is added to the sum assured. The bonus depends on LIC’s performance and is payable either on maturity or death.
2. Final Additional Bonus (FAB): This is an additional bonus that may be declared by LIC and is usually paid for long-term policies that have been in force for a significant period.

Optional Riders

LIC Jeevan Labh provides an option to enhance the coverage by adding riders to the base policy. These riders are available at an additional premium and provide extra protection. The available riders include:

1. LIC Accidental Death and Disability Benefit Rider: This rider provides an additional sum assured in case of accidental death or disability. In the event of disability, future premiums are waived, and the policyholder receives regular payouts.
2. LIC New Term Assurance Rider: This rider provides additional death cover during the policy term, ensuring that the policyholder’s family receives a larger sum in case of death.
3. LIC Critical Illness Rider: This rider offers financial protection against critical illnesses like cancer, heart attack, or stroke. Upon diagnosis of a covered illness, a lump sum amount is paid to the policyholder.

Advantages of LIC Jeevan Labh

1. Limited Premium Payment: The biggest advantage of LIC Jeevan Labh is the limited premium payment term, which means the policyholder doesn’t have to pay premiums for the entire policy duration. This feature makes it a convenient option for those looking for life insurance without a long-term premium commitment.
2. Wealth Creation: The policy not only offers life cover but also helps in wealth creation through regular bonuses and a lump sum maturity benefit. It’s a great way to accumulate savings for future financial needs.
3. Bonus Payouts: Being a participating policy, Jeevan Labh allows policyholders to benefit from LIC’s profit-sharing mechanism through bonuses. This significantly increases the returns on the policy.
4. Loan Facility: The option to avail of a loan against the policy adds liquidity, ensuring the policyholder can access funds in times of need.
5. Tax Benefits: The premiums paid are eligible for tax deductions under Section 80C, and the maturity and death proceeds are tax-free under Section 10(10D).
6. Customizable Coverage: The availability of optional riders allows policyholders to enhance their coverage and protect against risks like accidental death, disability, and critical illness.

Limitations of LIC Jeevan Labh

1. Moderate Returns: While LIC Jeevan Labh provides decent returns, they may not be as high as those offered by pure investment products like mutual funds or stocks. This policy is primarily designed for insurance and savings, not aggressive wealth creation.
2. Limited Liquidity: While the policy offers a loan facility, early surrender of the policy may result in lower-than-expected returns. It’s essential to stay committed to the policy term to enjoy maximum benefits.
3. Long-Term Commitment: Despite the limited premium payment feature, LIC Jeevan Labh is a long-term investment plan, and surrendering the policy before completion of the term could lead to financial loss.

Who Should Buy LIC Jeevan Labh?

LIC Jeevan Labh is suitable for individuals looking for a life insurance plan that also helps in building savings. It is ideal for those who:

• Want life cover along with a savings component to meet future financial needs.
• Prefer a limited premium payment option.
• Seek participation in LIC’s bonus structure to enhance returns.
• Require flexibility with premium payment modes and a loan facility.

Conclusion

LIC Jeevan Labh is an excellent life insurance plan for individuals looking for comprehensive protection and savings. With its limited premium payment feature, attractive bonuses, and flexibility, it offers a great balance between risk coverage and wealth accumulation. However, like any financial product, it’s essential to evaluate personal financial goals, risk tolerance, and long-term commitments before opting for this policy. Overall, LIC Jeevan Labh is a reliable and robust financial tool that ensures life cover while enabling long-term savings for future financial goals.