If you're looking for a long-term, low-risk way to build a substantial lump sum-say, around ₹ 26 lakh for your child-LIC's Jeevan Labh (Plan 936) could be a very suitable option. Here's a detailed breakdown of how it works, what makes it attractive, and what to watch out for.
Type of Plan: Non-linked, with-profits (participating) endowment assurance.
Policy Term Options: 16, 21, or 25 years.
Premium Payment Term (PPT):
For 16-year policy: pay for 10 years
For 21-year policy: pay for 15 years
For 25-year policy: pay for 16 years
Premium Payment Frequency: Yearly, half-yearly, quarterly, or monthly (via ECS / NACH).
Entry Age: Minimum 8 years (completed)
Maximum Entry Age:
59 years (nearest birthday) for 16-year term
54 years for 21-year term
50 years for 25-year term
Maximum Maturity Age: 75 years.
Sum Assured (Basic): Minimum ₹ 2,00,000. No upper limit (depends on underwriting).
Using your example:
Premium: ~₹ 47,000 per year
Duration of Premium Payment: 16 years
Policy Term: 25 years
Total Premium Paid: ₹ 47,000 × 16 = ₹ 7,52,000
Maturity: After 25 years, you receive a lump sum (Basic Sum Assured + bonuses) which, in this case, is around ₹ 26 lakh (as per your illustration)
(Note: Actual maturity value depends on the Basic Sum Assured chosen, bonus rates, and LIC's performance.)
Minimum Entry Age: 8 years
Maximum Entry Age:
59 years (for 16-year policy term)
54 years (for 21-year policy term)
50 years (for 25-year policy term)
Maximum Maturity Age: 75 years
Minimum Sum Assured: ₹2,00,000
No Upper Limit (subject to underwriting)
To apply offline at an LIC Branch or through an LIC agent, you typically need:
Filled Proposal Form
Age Proof (Birth Certificate, Passport, Aadhaar, etc.)
Address Proof
Identity Proof (PAN, Aadhaar, Voter ID)
Income Proof (for higher sum assured cases)
Passport-size Photographs
Most customers buy Jeevan Labh offline, though LIC may update online availability from time to time.
Maturity Benefit
On surviving the policy term, you get: Basic Sum Assured + vested Simple Reversionary Bonuses + Final Additional Bonus (if declared).
This is paid in lump sum.
Death Benefit
On death during the policy term, the nominee receives:
Basic Sum Assured, or
7× annualized premium, or
105% of total premiums paid as of death - whichever is higher.
Plus, vested bonuses + Final Additional Bonus, if any.
Bonus Participation
Simple Reversionary Bonuses: Declared annually by LIC based on its profits.
Final Additional Bonus (FAB): Might be declared on maturity or on death, depending on LIC's experience.
Surrender Value
You can surrender once you have paid at least 2 full years' premiums.
LIC pays the higher of:
Guaranteed Surrender Value (GSV), or
Special Surrender Value (SSV) (which takes into account vested bonuses).
For paid-up policies (if you stop paying further premiums), the "Maturity Paid-up Sum Assured" is reduced proportionally.
Loan Facility
After at least 2 full years of premium payments, you can take a loan against the policy.
For in-force policies: up to ~90% of surrender value; for paid-up: up to ~80%.
Tax Advantages
Premiums paid qualify for a deduction under Section 80C of the Income Tax Act.
Maturity proceeds (if policy matures) and death benefits are tax-free under Section 10(10D) (subject to the prevailing tax laws).
Rebates
LIC offers premium rebates depending on payment frequency and the Basic Sum Assured.
E.g., 2% rebate if you pay annually, 1% if half-yearly.
"High Sum Assured Rebate": If Basic Sum Assured is high (e.g., ₹15 lakh and above), LIC gives a rebate (1.75% for every ₹10,000, per some sources).
Free-Look & Grace Period
Free-Look Period: 15 days from policy receipt - you can cancel and get a refund (minus certain costs).
Grace Period: 30 days for annual / half-yearly / quarterly premium modes; 15 days for monthly mode.
Low liquidity in early years: If you surrender very early (say, just after 2-3 years), the surrender value may be quite limited. As some users note, surrendering can lead to a significant loss.
Bonus uncertainty: Returns depend heavily on LIC's bonus declarations. These are not fixed or guaranteed like in market-linked investments.
Long horizon required: To realize the full benefit (like ₹ 26 lakh in your example), you need to stay invested for the entire 25-year term.
Opportunity cost: The money locked into LIC may yield lower returns compared to equity / mutual funds (especially over a long period), depending on market conditions.
Paid-up policy downside: If you stop paying premiums and make the policy paid-up, you'll lose out on future profit participation; only the vested bonuses / paid-up sum assured remain.
Inflation risk: Over 25 years, inflation could erode the real value of the lump sum you receive, unless the bonuses are sufficiently high.
Risk-averse investors who prefer guaranteed-ish long-term savings rather than exposure to market volatility.
Those who want a child-focused corpus, e.g., for education or marriage.
Investors looking for tax-efficient, long-term, disciplined saving.
People who want an insurance + savings combo in one policy - since there's both life cover and a maturity payout.
Use LIC's Benefit Calculator: Plug in the premium, sum assured, term, etc., to get an illustration of maturity value (with current bonus assumptions).
Talk to LIC Agent / Branch: Confirm current bonus rates, surrender value chart, and other charges.
Compare Alternatives: Balance this against other long-term investment vehicles - e.g., PPF, mutual funds (SIP), ULIPs - based on your risk tolerance.
Check Your Cash Flow: Make sure you can commit ₹ 47,000 per year (or whatever premium) for 16 years - it's a long-term commitment.
Review Policy Document Carefully: Look at terms for paid-up value, surrender, loan, and exclusions (if any).
LIC's Jeevan Labh (Plan 936) is a classic, well-trusted life-insurance cum savings product that's particularly suited for long-term goals such as building a corpus for your child's future. Your example of investing ₹ 47,000/year to get ~₹ 26 lakh after 25 years is reasonable (if bonus rates play out favorably), and the plan offers strong features like tax benefits, loan facility, and death cover.