If you are looking for a LIC policy that offers both life insurance and savings, the LIC Micro Bachat Plan could be worth considering.
With a premium of around ₹1,000 per month, you can get life insurance coverage of up to ₹2 lakh and also receive a maturity amount at the end of the policy term.
The plan also offers Loyalty Additions, which can increase your final payout. However, it comes with certain limits, including a maximum sum assured of ₹2 lakh.
Key Features of LIC Micro Bachat Plan
LIC Micro Bachat Plan is a non-linked, participating, individual life micro-insurance savings plan.
People between 18 and 55 years of age can buy this policy with a sum assured ranging from ₹1 lakh to ₹2 lakh.
The premium payment term can be 10 to 15 years. Once the premium payment period is completed, the policyholder receives the maturity amount.
The final maturity value depends on the Loyalty Additions earned during the policy term.
These additions start only after the policy completes five years. If the policy is surrendered before five years, no Loyalty Additions are paid.
Death Benefit and Tax Benefits
If the policyholder dies within the first five years, the nominee receives the sum assured.
If the policyholder dies after completing five years, the nominee gets the sum assured along with the applicable Loyalty Addition.
The sum assured is calculated as the higher of the basic sum assured or seven times the annual premium.
The plan also provides tax benefits. Premiums paid qualify for deduction under Section 80C of the old tax regime, while the maturity amount is tax-free under Section 10(10D), subject to applicable tax rules.
The policy also offers optional riders such as Accidental Death and Disability Benefit (ADDB) and other accident benefit options for additional protection.
How Much Return Can You Get?
Suppose a 55-year-old buys a policy with a ₹2 lakh sum assured.
The annual premium will be around ₹12,066, while the monthly premium comes to about ₹1,027.
After paying premiums for 15 years, the policyholder can receive around ₹2.65 lakh at maturity based on the current Loyalty Addition rates.
At present, LIC is offering a Loyalty Addition of ₹325 for every ₹1,000 of sum assured. Based on this, the estimated annual return works out to around 5.1%. This example includes the ADDB rider.
Now consider an 18-year-old buying the same policy with the ADDB rider.
The annual premium would be around ₹10,360, or about ₹882 per month. After paying premiums for 15 years, the estimated maturity amount remains around ₹2.65 lakh based on current Loyalty Addition rates.
In this case, the estimated annual return can be as high as 6.7%, mainly because the premium is lower for younger policyholders.
Things to Keep in Mind
The LIC Micro Bachat Plan is suitable for those who want a combination of life insurance and guaranteed savings with a relatively low premium.
However, the maximum insurance cover is limited to ₹2 lakh, so it may not be enough for people looking for higher life cover. Before investing, compare the plan with your financial goals and protection needs.
