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LIC Jeevan Labh Plan

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Life insurance plans are critical instruments to secure the future of one's dependents. It provides a shield against the risk of the demise of the breadwinner of the household, leaving his/her family financially crippled. Having a life insurance policy can ensure that his/her family take care of their daily and monthly expenses without having to endure the burden of income loss due to the earning member's unfortunate demise.

There are many kinds of insurance policies available in the public and private sectors. Life insurance plans vastly vary as per the cover amount, tenure, premium payment, maturity benefits, etc. Such multiple options allow the policyholder the flexibility to decide upon the policy that suits his/her financial situation best. However, buying insurance at the right time is as critical as buying the right policy.  Analysing one's current and future needs is the first step towards acquiring the right protection for self and family.

These plans can be bought for self and children in which case the maturity amount can be used for their higher education and/or marriage.  However, starting at the right time and choosing the right plan is critical to reaping the most fruitful benefits of the life insurance policy.

LIC Jeevan Labh is one such endowment plan which provides the right kind of security and financial support on maturity to fulfil the dreams of higher education for one’s children and a safe financial future for the family in case of the unfortunate demise of the policyholder.

LIC Jeevan Labh II- An overview

LIC Jeevan Labh (Table no. -936) is an upgraded and revised version of LIC Jeevan Labh (Table no. – 836). It is a Non-market linked profit endowment plan. A traditional endowment plan, LIC Jeevan Labh 936 was launched on 01st February 2020 with the withdrawal of LIC Jeevan Labh 836.

It offers insurance cover as protection along with a savings element, which allows the policy owner to stay insured while his savings keep building over time. It also provides an umbrella cover ensuring the family of the policyholder do not face any financial crisis in case of the unfortunate demise of the policy owner. People between the age group of 8-59 years can avail this plan. This means that one can also insure his/her child with this endowment plan, with considerable savings building over time since this plan allows the insured life to be a minor.

Insurance provider

Life Insurance Corporation of India

Policy Name

LIC Jeevan Labh 936

Policy type

Traditional Endowment Policy

Policy details

Table No. 936

Date of launch

01st February 2020

UIN number

512N304V02

What is LIC Jeevan Labh?

LIC Jeevan Labh policy, non-linked with profit and a limited premium paying endowment plan,  provides dual benefits of insurance cum savings. This protection cum savings combination offers financial protection to beneficiaries in case of death of the policy owner within the insurance term, and also a lump-sum amount on maturity of the plan if the policyholder survives the tenure.  

LIC Jeevan Labh also takes care of the liquidity needs of the policy owner through its loan facility.

Key Features of LIC Jeevan Labh

The salient features of LIC Jeevan Labh policy are:

Age of Entry

The age of entry under LIC Jeevan Labh is 8-59 years of age.

Policy Tenure

The plan offers flexibility to the policyholder to decide the policy tenure between 16 years, 21 years, or 25 years.

Premium Paying Term

This plan has a limited premium paying period. The policy owner need not pay premium throughout the term of the plan, although the coverage of the insurance and savings scheme continue. Depending upon the policy duration, the premium paying period is 10, 15,& 16 years.

Moreover, the premium payment frequency is also flexible as the policy owner may choose to pay premiums yearly, half-yearly, quarterly, or monthly.

Returns

Being a non-link plan, the returns on the policyholder's investment, i.e. premiums, are not subject to market fluctuations and volatility unlike ULIP (Unit Linked Insurance plan).

Sum Assured plus Bonus

Since LIC Jeevan Labh is a participating plan, the policyholder is entitled to receive the bonus above the guaranteed sum upon maturity.

As the plan is a combination of security and returns, the policyholder gets to not only secure the financials of the family in case of any unfortunate event but also receive returns upon maturity of the policy.

Loan Facility

If funds are needed for emergency or some important occasion, the plan also allows the policyholder to avail a loan facility after having paid all premiums continuously for three years.

Death and Maturity Benefits

The plan offers unmatched comprehensive protection to the policyholder in the unfortunate event of death and handsome returns upon policy maturity.  The non-linking of the plan to market also ensures much stability in returns.

Rider Options

The plan also offers attractive and economical riders, which can help you in case of any emergency.  These riders include disability benefit rider and term assurance rider subject to reasonable additional payment.

Tax benefits *

The investor also gets to save more money in the form of Income-tax benefit as the plan also provide income tax benefit under section 80C of the Indian Income Tax Act. The maturity proceeds of the investment are also eligible for income tax benefit under section 10 (10D) of the Indian Income Tax Act.

*Tax benefits are subject to changes in tax laws

Suicide Exclusion

If the policy owner commits suicide in a year of buying the policy, then no returns shall be disbursed to him/her under the policy. If the suicide is committed after a year, then 80% or the premium amount paid is returned to the nominee of the policyholder without any interests or bonus thereof.

Grace Period

LIC Jeevan Labh provides a grace period of 30 days from the due date of the unpaid premium to the policyholder to make such payment. However, in the case of a monthly premium payment plan, the grace period is 15 days.

Free-look Period

The free-look period is 15 days since the date of issue of policy. This enables the policyholder to terminate the insurance policy and reclaim the premium paid if he/she is not satisfied with the term or condition of the policy within 15 days of buying.

Policy Revival

If the policyholder makes a default in the payment of premium, then he/she is allotted 2 years to revive the policy from the date of the first unpaid premium. Such revival only takes effect if the policy owner has paid all the outstanding arrears, interest, or other necessary expenses.

Benefits of LIC Jeevan Labh

 LIC Jeevan Labh policy offers a gamut of benefits to its policy owner. They are:

Death Benefits

In case of the death of the policyholder, the respective nominee gets the sum assured, a simple reversionary bonus and final additional bonus (if any). The sum assured is the highest of the basic sum assured or 7 times the annualized premium. Death benefits under LIC Jeevan Labh cannot be less than 105% of the total premiums paid till the date of death of the policyholder.

Maturity Benefit

The policy also provides maturity benefit if the policyholder survives the policy term. This sum assured on maturity shall be more than 105% of the annualized premium and is also accompanied by simple reversionary bonuses along with final additional bonus that has been accrued during the policy years.

Participation in Profits

LIC Jeevan Labh policy shall participate in the profits of the Corporation. As such, the policy owner is entitled to receive a simple reversionary bonus as per the Corporation, provided that the policy is still in force. Final additional bonuses may be announced in the year under which the policy is claimed, either by death or the policyholder or maturity of the policy. Final additional bonuses will not be paid under paid-up policies.

Rebate

One of the most striking features of LIC Jeevan Labh is the rebate offered by the insurance provider. Rebate is allotted based on premium payment frequency and the amount of sum assured. The life insured can avail a rebate up to a maximum of 3.75% of the total premiums paid.

Option to Receive Benefits in Instalments

The policy offers the option of receiving death benefits either as a lump-sum or in instalments for a period of 10, 15, or 20 years. Such instalments can be annual, half-yearly, quarterly, or monthly, as chosen by the policy owner during the issuance of the policy.

Loan Facility

Once the policy completes 3 years since it's coming into force where all the premiums for that period have been paid, and a surrender value is generated, the policyholder becomes eligible to apply for a loan. Such a loan is granted against the amount of surrender value. The loan can be taken up to a maximum of 80% of the policy surrender value, as decided by the LIC of India. This depends on the number of premium payments that have been made by the policyholder. The interest of the loan against this policy will also be the sole discretion of the Corporation, decided on a case-to-case basis.

Risk-free Death and Maturity Benefits

LIC Jeevan Labh policy is a non-linked plan, which means that the sum assured under the same is not subject to fluctuate to market risks and volatility. Thus, it provides the dual benefit of a safe investment unaffected by market risks while offering a share in the surplus earned by the corporation, making it a sure investment cum savings instrument.

Tax Benefits

The tax benefits that policy owners enjoy under life insurance schemes make them one of the most fruitful investment options. Under Section 80C of Indian Income Tax Act, 1961, tax deductions apply for all premiums paid towards a LIC Jeevan Labh policy, while Section 10(10D) exempts the income received on maturity and death benefits. This makes this policy a viable investment choice where the investor or policyholder can enjoy tax-free returns on his expenditure.

Long-term Corpus

LIC Jeevan Labh is well suited for long-term financial goals like planning for a new house, children’s marriage or their education expenses. Since this plan comes with maturity benefits, the policy owner can create a long term corpus for savings for meeting ends, all the while ensuring the financial stability of his family members in the unforeseeable future.

Exclusions under LIC Jeevan Labh Policy

Under the LIC Jeevan Labh plan, the policy will be void if:

  • If the insured commits suicide in 12 months of the date of issuance of the policy, the Corporation will not be liable for any payment except 80% of total premiums paid till the date of the death of the life insured with the policy still being in force*
  • If the life assured commits suicide within 12 months of the revival of the policy, then the Corporation shall pay the amount which is the higher of 80% of total premiums paid or the accrued surrender value that is available on the date of death of the life insured*

In case the policy has lapsed, and no surrender value has been accumulated, then nothing shall be paid to the nominees of the life insured.

*Premiums referred above do not include any taxes, extra amount and rider premium(s) other than Term Assurance rider.

Eligibility Criteria for LIC Jeevan Labh

The eligibility criteria and other restrictions under LIC Jeevan Labh are as follows:

Age of Entry

The minimum age of entry is 8 years. The maximum entry age depends upon the policy term. The maximum age of entry for a 16-year policy is 59 years. For policy tenure of 21 years, the maximum age of entry is lowered to 54, while for 25-year policy tenure, it is 50 years.

Sum Assured

The minimum sum assured is Rs. 2 lakh while there is no upper limit for the same.

Maximum Maturity Age

The maximum maturity age of the policy is 75 years.

Vesting of the Plan

The policy will automatically vest in the life assured as soon as he/she attains the age of 18 years.

Sum Assured

Minimum: INR 2 lakh

Maximum: No upper limit

Age of entry

Minimum: 8 years

Maximum: i) 59 years ( for a policy term of 16 years)

ii) 54 years ( for a policy term of 21 years)

iii) 50 years(for a policy term of 25 years

Maximum age at maturity

75 years (completed)

Policy term

16/21/25 years

Premium paying term

10/15/16 years

Premium payment frequency

Annual/Half Yearly/Quarterly/Monthly

Documents required under LIC Jeevan Labh Plan

To purchase the LIC Jeevan Labh plan, the applicant must furnish the following documents:

Proof of Age

Birth certificate, driving licence, passport, school/college certificate or PAN card can be submitted as legal proof of age

Proof of Identity

Passport, Aadhar Card, PAN Card, Voter ID or driving licence can be submitted as legal proof of identity

Proof of Address

  • Utility Bills, Aadhar Card, bank account statement and passbook can be submitted as legal proof of address
  • Duly filled application form
  • Self-attested copies of the specified KYC documents

LIC Jeevan Labh Plan: How does it Work?

When applying for LIC Jeevan Labh policy, the applicant needs to decide on the following:

  • Sum assured: The amount of coverage to be provided; and
  • Policy term: Total period of the insurance plan

The premium paying term depends upon the tenure of the policy, as chosen by the policyholder during the issuance of the plan. The premium paying years for the various policy terms are as follows:

  • If the policy term is 16 years, then the premium paying term will be 10 years
  • If the policy term is 21 years, then the premium paying term will be 15 years
  • If the policy term is 25 years, then the premium paying term will be 16 years

The rate of the premium will depend upon the two factors above, and the age of the life insured during which he/she enters the policy coverage.

The death or maturity benefit also includes a simple reversionary bonus in addition to final additional bonuses, apart from the basic sum assured. This bonus is calculated and declared in the sole discretion of LIC of India.

Option to take Death Benefit in Instalments under LIC Jeevan Labh

The policyholder has the flexibility to choose between a lump-sum amount as a death benefit or in instalments over the chosen period - 5/10/15 years during the tenure of a fully paid-up policy. The policy owner can exercise this option during the minority of the life assured or by the life assured after he/she attains 18 years of age or above.

Moreover, this benefit can be availed by the policyholder or life assured during his/her lifetime; for the whole or part of death benefits payable under the LIC Jeevan Labh policy. The net claim amount (amount opted by the life assured) can be absolute or as a percentage of the total claim payable by the Corporation. The instalments shall be paid in advance at yearly or half-yearly or quarterly or monthly intervals, as opted for.

The minimum instalment amount for different modes of payments being as under:

Mode of payment

Minimum instalment amount

Monthly

Rs. 5,000/-

Quarterly

Rs. 15,000/-

Half-yearly

Rs. 25,000/-

Yearly

Rs. 50,000/-

If the Net Claim Amount is less than the aforementioned minimum instalment amount as per the option exercised by the policyholder/life assured, the death benefits shall be paid as a lump-sum amount only. The Corporation will fix the interest rates that are applicable for arriving at instalment payments in this option.

If the life assured is a minor, the policyholder can specify the period of instalment payment, and the net claim amount during the minority of life assured. The net claim amount shall then be paid to the nominee of the policy owner as per the option exercised by the policyholder during the commencement of the risk. No alteration can be made once the policyholder exercises his option.

Premium Payment under LIC Jeevan Labh

The policy owner can pay the premium amount regularly at yearly, half-yearly, quarterly or monthly mode. The illustrative sample premium for a sum assured of Rs. 2 Lakh for a non-smoker male individual is illustrated as follows:

Age

                                   Policy term/premium paying term

 

16(10)

                 21(15)

                   25(16)

20

Rs. 16,699/-

Rs. 10,682/-

Rs. 9,006/-

30

Rs. 16,758/-

Rs. 10,770/-

Rs. 9,134/-

40

Rs. 17,013/-

Rs. 11,133/-

Rs. 9,584/-

50

Rs. 17,826/-

Rs. 12,123/-

Rs. 10,581/-

Riders available under LIC Jeevan Labh Policy

LIC Jeevan Labh comes with five riders.  These can be availed at a nominal additional premium.  The policyholder must choose between accidental death and disability benefit/Accident Benefit rider.  So, in total, a maximum of four riders are available to an individual under one policy:

LIC’s Accidental Death and Disability Benefit Rider

The accidental death benefit rider enables the policyholder to get a lump-sum of Accident Benefit along with the death benefit as per the base policy plan. The rider can opt anytime during the premium paying term provided the outstanding premium paying term of is a minimum of 5 years.  The benefit of the rider will continue during the policy term or till the policyholder attains an age of 70, whichever is earlier.

In case of accidental disability due to an accident, a lump-sum for Accident Benefit will be paid in instalments for 10 years, and any future premiums under the base policy will be waived off.

LIC’s Accident Benefit Rider

The policy owner can opt for an accident benefit rider, which ensures a lump-sum amount as accident benefits to be paid to policyholder's nominees along with the basic sum assured on death. This rider can also opt for any time with the only condition that outstanding premium paying term of the base plan is at least 5 years. This rider's benefits are available only during the premium paying term.

LIC’s New Term Assurance Rider

New term Assurance Rider for LIC Jeevan Labh is available for purchase only at the time of the inception of the policy.  The cover under this rider is available till the policy lasts. Upon opting for this rider, an additional amount will be payable, apart from the sum assured under the base plan upon the death of the policyholder during the policy term.

LIC’s New Critical Illness Benefit Rider

This rider ensures additional benefits in case the policy owner suffers from a critical illness. New Critical Illness benefit rider is also available only at the time of policy inception. The cover is also available only toll the policy term.

When this rider is opted for, on the diagnosis of any of the 15 specified critical illnesses covered under this rider, critical illness sum assured will be paid to the policyholder.

LIC’s Premium Waiver Benefit Rider

The Premium Waiver Benefit Rider ensures that on the event of the death of the policyholder during the premium paying years, all outstanding future premiums would be waived off. At the same time, the cover of the insurance continues till it's original tenure. However, the outstanding premium paying term of the base policy should be at least 5 years in such a situation.

Also, the rider can be taken only if the life assured is a minor at the time of opting for this rider. The term of the rider should not exceed 25 minus the age of the minor Life Assured when the rider is opted for.

The premium of Accident Benefit rider, Accidental death and disability benefit rider and New Critical illness benefit rider shall not be more than 100% of the premium of the base plan.  The premium of other life insurance riders in total shall not exceed 30% of premiums under the base plan. Also, the sum assured under any of the riders cannot exceed the basic sum assured under the base plan.

Premium and Sum assured rebates under LIC Jeevan Labh Policy

As mentioned earlier, the LIC Jeevan Labh plan offers rebates on the premium paid and sum assured.

Premium rebate

Rebate is offered to the policy owner as per the mode of premium payment frequency:

  • Yearly – 2% of the tabular premium
  • Half-yearly – 1% of the tabular premium
  • Quarterly/Monthly – Nil
  • Sum assured rebate

The policy owner may choose between a three-tier slab model for sum assured rebate:

Basic Sum Assured

Rebate as a percentage of basic assured*

Rs. 2,00,000 -  4,90,000

Nil

Rs. 5,00,000 - Rs. 9,90,000

1.25%

Rs. 10,00,000 - Rs. 14,90,000

1.50%

Rs. 15,00,000 and above

1.75%

*Standard T&C apply

Grace Period under LIC Jeevan Labh

A grace period of 30 days since the first unpaid premium will be allotted for payment of yearly, half-yearly, and quarterly mode of premium payment. In case of monthly premium payments, such a grace period shall be 15 days from the date of first unpaid premium. During this period, the policy shall be considered in effect.

If premiums are not paid ahead of the expiry of the grace period, the policy will lapse. Such a grace period will apply to rider premiums that are payable along with a premium for the base policy.

The Revival of LIC Jeevan Labh Policy

If the policyholder has not paid the premium within the grace period, the policy will lapse. Thereon, interests compounding half-yearly begins to accumulate until five years from the date of the first unpaid premium. The policyholder can still revive such a lapsed policy within 5 years from the date of the first unpaid premium. However, the policy owner needs to pay all the arrears of premium and the interests at a rate that the insurance company (LIC) determines from time to time. Additionally, in case the policyholder had opted for waiver of premium benefit, he/she needs to show proof of insurability and/or other documents as required by LIC.

The policy may be revived with the original terms, or modified terms as determined by the Corporation. It also holds the right to cancel the request altogether.

Paid-up Value under LIC Jeevan Labh

If less than two years of premium paying years have passed and the policyholder has not duly paid the premium, the insurance policy will cease to be in effect after the expiry of the grace period. Under this circumstance, nothing is payable to the policyholder or his/her nominees.

If the premiums have been paid in whole by the policyholder for more than 2 years, then the policy will subsist as a paid-up policy until its original tenure. As such, the policy will valid in part, and the benefits will be paid to the policyholder or his/her nominees based on the following:

Death Benefits under a Paid-up Policy

Death benefits under a paid-up policy shall be the basic sum assured under the original policy multiplied by the ratio of the total period for which the premiums have been paid by the maximum period for which the premiums were payable. Apart from this sum, the vested simple reversionary bonus will also be payable.

Maturity Benefits under a Paid-up Policy

Maturity benefits under a paid-up policy shall be the basic sum assured under the original policy multiplied by the ratio of the total period for which the premiums have been paid by the maximum period for which the premiums were payable. Apart from this sum, the vested simple reversionary bonus will also be payable.

However, a paid-up policy is not entitled to participate in the profits of LIC of India. Only the simple reversionary bonus will be applicable. The riders do not acquire any paid-up value and hence stand void if the policy is in a lapsed condition.

LIC Jeevan Labh: Surrender of policy

In LIC Jeevan Labh, surrender value is accumulated when the policyholder has paid premiums in whole for at least 2 years. There are two kinds of surrender value:

Guaranteed Surrender Value

Guaranteed surrender value is decided as per the number of years for which the premium has been paid, year of surrender and total policy tenure. This percentage is multiplied by the total premiums paid, and the resulting sum is guaranteed surrender value.For any policy term chosen, the percentage is 30% from the second year of the policy, and in the last year of the policy, this percentage rises to 90%*. Rider premiums are exempted from the calculation of this percentage, while the vested simple reversionary bonus is taken into account.

*Disclaimer: Standard T&C apply

Special Surrender Value

This is calculated by subtracting the total of vested bonuses and maturity paid-up sum assured by an appropriate discounting rate. This rate is determined by the Corporation.

The surrender value of a policy is the higher amount of guaranteed surrender value or special surrender value.

Free Look Period under LIC Jeevan Labh

If the policyholder is not satisfied with the terms of the policy, then he/she can return the policy within 15 days from the date of receipt of the policy document. The original policy document has to be returned by the policyholder and subsequently, the policy cannot be revived or reinstated. On receipt of the policy bond stating reasons of objections, the Corporation will cancel the policy and return the premium amount after deducting the proportionate risk premium for the period of cover and expenses incurred on medical examination, special reports and stamp duty charges.

Should one buy LIC Jeevan Labh?*

LIC Jeevan Labh is a comprehensive insurance instrument which provides extensive coverage of life and disability risks along with being an efficient investment cum savings tool. As the policy term can be up to 25 years, it provides a lucrative option to those who are looking for long-term savings without the risk of market volatility. Being a non-linked, participating plan, it ensures better & tax-free returns to the investment made along with the peace of mind of being insured. Additionally, the availability of 5 riders (4 of which can be chosen at most) covers every kind of risk aspect that the policyholder's beneficiaries may face financially.

One of the downsides of LIC Jeevan Labh is that the policy is only available offline, which makes it a tedious and cumbersome process for the applicant to buy life insurance through agents. The rate of premiums is high as well, relative to plans that are available online and offered by private insurance companies.

However, the umbrella of benefits that can be availed under LIC Jeevan Labh makes it a fruitful investment decision. Individuals with multiple dependants or those looking for long-term savings as a sure shot provision for future expenses may consider buying this plan*.

*Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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Written By: Paisawiki - Updated: 12 April 2021