Here’s a common problem many people face: you want life insurance that builds savings, but paying premiums for 20 or 25 years straight feels like a huge commitment. What if your income situation changes? What if you want to retire early and not have insurance premiums eating into your retirement budget?
LIC Jeevan Labh solves this beautifully. It’s a plan where you pay premiums for a shorter period, but your insurance coverage continues for much longer. Think of it as “pay for 10, stay covered for 16” – or similar combinations that give you financial breathing room.
What Exactly Is LIC Jeevan Labh?
LIC Jeevan Labh (Plan 736/936) is a traditional endowment plan with a smart twist. Unlike regular endowment plans where you pay premiums throughout the policy term, here you finish paying much earlier while the coverage and bonus accumulation continue.
It’s a “with-profits” plan, which means LIC shares its profits with you through bonuses that get added to your basic sum assured. Over time, these bonuses can significantly boost your final payout – whether that’s at maturity or as a death benefit to your family.
The Magic of Limited Premium Payment
Let’s understand what makes this plan special with a real example:
The Traditional Way (Regular Endowment): 25-year policy = You pay premiums for all 25 years
The Jeevan Labh Way: 25-year policy = You pay premiums for only 16 years, then stop Your coverage? Continues for the full 25 years.
This means for the last 9 years, you’re not paying anything but you’re still fully covered and your policy is still earning bonuses. That’s a game-changer for financial planning.
Your Three Options to Choose From
LIC Jeevan Labh gives you three different combinations of policy term and premium payment term:
Option 1: The Short-Term Plan
16-year policy / 10-year premium payment
Perfect for younger individuals or those planning for medium-term goals like a child’s higher secondary education or building an emergency fund. You pay for 10 years, stay covered for 16.
Option 2: The Balanced Plan
21-year policy / 15-year premium payment
The most popular choice. Great for parents planning for their child’s college education or professionals building a retirement corpus. Pay for 15 years, covered for 21 years – a full 6 years of premium-free coverage.
Option 3: The Long-Term Plan
25-year policy / 16-year premium payment
Ideal for comprehensive retirement planning or long-term wealth creation. Pay for 16 years, enjoy coverage for 25 years. Those last 9 premium-free years can be golden if they align with your retirement phase.
How It Works in Real Life
Meet Priya, a 35-year-old marketing manager. She chooses LIC Jeevan Labh with the 21-year term and ₹10 lakh sum assured.
What she does:
- Pays premiums from age 35 to 50 (15 years)
- After age 50, she stops paying – no more premiums
What happens:
- Her life cover of ₹10 lakh (plus bonuses) continues till age 56
- Every year, LIC declares bonuses that get added to her policy
- At age 56, if all goes well, she receives ₹10 lakh plus all accumulated bonuses
The bonus: Those last 6 years (age 50-56) are completely premium-free. Her policy keeps growing with bonuses while she pays nothing. If she’s planning retirement at 55-60, she doesn’t have insurance premiums competing with her retirement needs.
Understanding the Benefits
If You Survive the Policy Term (Maturity Benefit)
When your policy completes its full term, you receive:
Your basic sum assured (the guaranteed amount you chose, minimum ₹2 lakhs)
Plus all simple reversionary bonuses that LIC declared and added to your policy over the years
Plus final additional bonus (if LIC declares one at maturity)
This lump sum can fund your child’s wedding, kickstart your retirement, clear a home loan, or achieve whatever goal you had in mind when you started.
If Something Happens to You (Death Benefit)
If you pass away during the policy term (even during those premium-free years), your family receives:
Sum Assured on Death – which is the higher of:
- 10 times your annual premium, or
- Your basic sum assured
Plus all accumulated bonuses
Plus final additional bonus (if applicable)
The minimum your family gets is 105% of all premiums you’ve paid, ensuring they never receive less than what you put in.
The Installment Option – A Hidden Gem
Here’s something many people don’t know about: you can choose to receive the benefit in monthly installments instead of a lump sum.
Why would you do this?
- For maturity: Helps those who aren’t good at managing large sums – you get steady income for 5, 10, or 15 years
- For death benefit: Protects your family from mismanaging a large inheritance – they get reliable monthly income
This is especially valuable if you’re worried about financial discipline or want to ensure long-term financial security.
The Bonus System Explained Simply
Since this is a “with-profits” plan, you participate in LIC’s profits through bonuses. Here’s how it works:
Simple Reversionary Bonuses: LIC declares these regularly (usually annually). Once declared and added to your policy, they’re guaranteed – they can’t be taken away. They keep accumulating year after year.
Final Additional Bonus: This is a one-time bonus that LIC may declare at maturity or claim time, based on the plan’s overall performance. Think of it as a final reward for staying the course.
While bonuses aren’t guaranteed in advance, LIC has a long track record of declaring them consistently for this plan.
Who Should Seriously Consider LIC Jeevan Labh?
Parents planning for children’s education or marriage – especially if you want premiums to stop before these expenses hit. The 21 or 25-year options align perfectly with a child’s educational timeline.
Professionals in their 30s-40s who want a retirement corpus but don’t want to pay premiums into their 50s and 60s. Pay during your peak earning years, receive benefits when you need them.
Conservative savers who prefer guaranteed returns with bonuses over the volatility of market-linked products. If watching your mutual fund NAV bounce around stresses you out, this traditional plan offers peace of mind.
Those who value LIC’s reputation – if you trust LIC’s claim settlement record and want the comfort of dealing with India’s largest insurer, this plan delivers.
People who need forced savings discipline – monthly/yearly premium payments create a commitment that helps you save systematically rather than relying on leftover money at month-end.
Making Your Money Work Harder
Choosing the Right Term
Go for 16/10 if:
- You’re younger and want a shorter commitment
- You have a specific medium-term goal in 15-16 years
- You prefer higher premium payments for a shorter time
Go for 21/15 if:
- You’re balancing child education planning with retirement
- You want a good mix of premium payment period and coverage
- You’re in your 30s-40s with stable income
Go for 25/16 if:
- You’re planning seriously for retirement
- You want maximum coverage duration
- You can commit to 16 years of premium payment comfortably
Adding Riders for Complete Protection
While the base plan is solid, you can enhance it with optional riders:
Accidental Death Benefit Rider – Extra payout if death is due to accident
Critical Illness Rider – Lump sum if you’re diagnosed with specified critical illnesses like cancer, heart attack, kidney failure
Premium Waiver Rider – If you become disabled and can’t work, LIC waives your future premiums while your policy continues
Term Rider – Additional pure term coverage at low cost for higher protection
These riders cost extra but can significantly strengthen your safety net.
What If Life Changes?
Need Money Urgently?
After you’ve paid premiums for a few years and your policy acquires surrender value:
Take a policy loan – Borrow against your policy while keeping it active. You pay interest on the loan, but your policy continues earning bonuses.
Surrender the policy – Get the surrender value in cash. Not ideal since you’ll lose future bonuses and the full benefit, but it provides liquidity in emergencies.
Can’t Continue Paying Premiums?
If you’ve paid at least a few years’ premiums (usually 2-3 years), your policy becomes “paid-up” with reduced benefits. You don’t pay anymore, but you still get a reduced sum assured plus accumulated bonuses at maturity.
The Practical Numbers
Minimum Coverage
₹2 lakhs is the minimum, but realistically, considering inflation and life’s financial needs, most people opt for ₹10 lakhs or more.
Who Can Join?
- Minimum age: 8 years (yes, you can start this for your child!)
- Maximum entry age varies by term:
- 59 years for 16-year term
- 54 years for 21-year term
- 50 years for 25-year term
- Maximum maturity age: 75 years
Tax Benefits
Premiums generally qualify for deduction under Section 80C (up to ₹1.5 lakhs per year), and maturity proceeds are typically tax-free under Section 10(10D), subject to conditions. Tax laws change, so consult a tax advisor for your specific situation.
Common Questions Answered
“Why not just buy term insurance and invest the difference?”
Valid question. Term insurance is cheaper and investing separately might give higher returns. But Jeevan Labh offers:
- Forced savings discipline many people need
- Guaranteed sum assured plus bonuses (no market risk)
- The comfort of a single product for protection + savings
- LIC’s claim settlement reputation
It depends on your financial personality and needs.
“What returns can I expect?”
Returns depend on bonuses LIC declares, which vary based on the plan’s performance. Historically, LIC’s traditional plans have delivered around 5-6% returns. Not the highest, but stable and tax-free. Always get a detailed illustration from an LIC agent showing projected payouts.
“Can I surrender after 5 years if I need the money?”
Yes, once your policy has surrender value. But you’ll lose out on:
- The full sum assured
- Future bonuses
- The premium-free years of coverage
- Tax benefits might also be affected
Surrender is an emergency option, not a plan.
Making Your Decision
Before you commit to LIC Jeevan Labh, ask yourself:
- Can I comfortably pay premiums for 10/15/16 years without straining my budget?
- Does the policy term align with when I’ll need the money (child’s education, retirement, etc.)?
- Am I comfortable with traditional bonus-based returns vs. market-linked returns?
- Do I value the premium-free years of continued coverage?
- Would the installment option benefit my family if something happens to me?
If you answered yes to most of these, Jeevan Labh could be an excellent fit.
Next Steps
- Meet a licensed LIC agent – Get a detailed illustration with exact premiums and projected payouts based on your age and sum assured
- Compare the three options – See which term and premium payment combination fits your financial timeline
- Consider riders – Evaluate if you need additional protection like critical illness or accident cover
- Review the official documents – Read the LIC Jeevan Labh sales brochure, Customer Information Sheet, and policy document for complete terms
- Don’t rush – This is a long-term commitment. Take time to ensure it fits your overall financial plan
Important Disclaimer: This guide helps you understand LIC Jeevan Labh better, but insurance is a personal financial decision. For accurate premium quotes, current bonus rates, complete terms and conditions, exclusions, and personalized advice, please refer to LIC’s official documentation and speak with a licensed LIC advisor. Product features and bonus declarations may change over time.
The right insurance plan is one that you can maintain consistently and that aligns with your life goals. Choose wisely, commit fully, and let LIC Jeevan Labh work its magic over time.