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Can the LIC Bima Lakshmi Plan truly provide the financial security and savings benefits it promises, or is it just another traditional insurance plan with limited growth potential?
Does the LIC Bima Lakshmi Plan offer the right balance between life protection and savings, or are there better alternatives available?
Is the LIC Bima Lakshmi Plan a smart choice for long-term financial planning, or do its benefits come at the cost of better return opportunities?
This article explores its key features and analyses whether the plan is suitable for your financial needs.
Table of Contents:
What are the features of the LIC Bima Lakshmi?
Who is eligible for the LIC Bima Lakshmi?
What are the benefits of the LIC Bima Lakshmi?
Grace Period, Discontinuance and Revival of the LIC Bima Lakshmi
Free Look Period for the LIC Bima Lakshmi
Surrendering the LIC Bima Lakshmi
What are the advantages of the LIC Bima Lakshmi?
What are the disadvantages of the LIC Bima Lakshmi?
Research Methodology of LIC Bima Lakshmi
Benefit Illustration – IRR Analysis of LIC Bima Lakshmi
LIC Bima Lakshmi Vs. Other Investments
LIC Bima Lakshmi Vs. Pure-term + Equity Mutual Fund
Final Verdict on LIC Bima Lakshmi
What is the LIC Bima Lakshmi?
LIC Bima Lakshmi is a Non-Par, Non-Linked, Life, Individual, Savings Plan designed exclusively for females.
This plan is a Limited Premium Payment plan with Guaranteed Additions and provides life cover, savings and survival benefits as per the Option chosen.
What are the features of the LIC Bima Lakshmi?
- Guaranteed Additions based on the Total Tabular Annual Premium paid during the policy term.
- Choice of three Survival Benefit options to suit your financial needs.
- Flexibility to defer Survival Benefits if required.
- Choice of Premium Paying Term between 7 and 15 years.
- Option to receive the Maturity or Death Benefit in instalments.
- Auto Cover facility after completing three full years of premium payments.
- Higher Sum Assured incentives for larger insurance coverage.
- Option to enhance protection through riders by paying an additional premium.
Who is eligible for the LIC Bima Lakshmi?
| Minimum Age at entry | 18 years (Last birthday) |
| Maximum Age at entry | 50 years (nearer birthday) |
| Policy Term | 25 years |
| Premium Paying Term | 7 years to 15 years |
| Minimum Basic Sum Assured | Rs. 200,000 |
| Maximum Basic Sum Assured | No Limit, subject to Board-approved Underwriting Policy. |
| Basic Sum Assured Multiples | The Basic Sum Assured shall be in multiples of ₹ 10,000 |
What are the benefits of the LIC Bima Lakshmi?
1. Death Benefit
Death benefit payable in case of death of the Life Assured during the policy term, provided the LIC Bima Lakshmi Plan policy is in force, i.e. all due premiums have been paid, shall be “Sum Assured on Death” along with accrued Guaranteed Additions.
“Sum Assured on Death” is defined as the higher of
- ‘Basic Sum Assured’ or
- 10 times of (‘Tabular Annual Premium’ multiplied by Modal adjustment factor).
This Death Benefit shall not be less than 105% of total premiums paid up to the date of death.
2. Maturity Benefit
On the Life Assured surviving to the stipulated Date of Maturity, provided the LIC Bima Lakshmi Plan policy is in force, “Sum Assured on Maturity” along with accrued Guaranteed Additions shall be payable, where “Sum Assured on Maturity” is equal to Basic Sum Assured.
3. Survival Benefits
On the Life Assured surviving to the end of each of the specified durations during the policy term, provided all due premiums have been paid, Survival Benefit in lumpsum or a specified percentage of Basic Sum Assured shall be payable to the Life Assured at periodic intervals depending on the Option chosen at the proposal stage.
This Option, once chosen, cannot be changed later.
Option A
50 % of Basic Sum Assured shall be payable as Survival Benefit at the end of the Premium Paying Term.
Option B and Option C
A specified percentage of the Basic Sum Assured shall be payable as Survival Benefit as per the chosen Option.
The following table gives the details of frequency of payment of Survival Benefits and the percentage of Survival Benefit payable for the chosen option.
| End of the Policy Year | Survival Benefit as a % of Basic Sum Assured | |
| Option B | Option C | |
| 2 | 7.50% | — |
| 4 | 7.50% | 15% |
| 6 | 7.50% | — |
| 8 | 7.50% | 15% |
| 10 | 7.50% | — |
| 12 | 7.50% | 15% |
| 14 | 7.50% | — |
| 16 | 7.50% | 15% |
| 18 | 7.50% | — |
| 20 | 7.50% | 15% |
| 22 | 7.50% | — |
| 24 | 7.50% | 15% |
4. Guaranteed Additions
Under an in-force policy (in which all the due premiums have been paid), the Guaranteed Additions during the LIC Bima Lakshmi Plan Policy Term shall accrue at the end of each policy year.
The Rate of Guaranteed Additions for an in-force policy shall be 7% of the Total Tabular Annual Premium in respect of Premiums Paid.
Auto Cover
If at least three full years’ but less than five full years’ premiums have been paid under a policy and any subsequent premium is not duly paid: Auto Cover Period of six months shall be available.
If at least five full years’ premiums have been paid under a policy and any subsequent premium is not duly paid: Auto Cover Period of two years shall be available.
Grace Period, Discontinuance and Revival of the LIC Bima Lakshmi
Grace Period
A grace period of 30 days shall be allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums from the date of First Unpaid Premium.
Discontinuance
If less than one full year’s premium(s) has been paid in respect of the policy and any subsequent premium is not duly paid, all the benefits under the policy shall cease after the expiry of the grace period from the date of First Unpaid Premium, and nothing shall be payable.
If after at least one full year’s premium(s) has been paid and any subsequent premiums are not duly paid, on completion of the first policy year, the LIC Bima Lakshmi Plan policy shall not be wholly void, but shall subsist as a paid-up policy.
Revival
A lapsed policy can be revived within a period of 5 consecutive complete years from the date of First Unpaid Premium and before the Date of Maturity, as the case may be.
Free Look Period for the LIC Bima Lakshmi
If the Policyholder is not satisfied with the “Terms and Conditions” of the policy, the policy may be returned to the Corporation within 30 days from the date of receipt of the electronic or physical mode of the Policy Document, whichever is earlier.
Surrendering the LIC Bima Lakshmi
The policy can be surrendered by the policyholder after completion of the first policy year provided one full year’s premium(s) has been paid.
However, the LIC Bima Lakshmi Plan policy shall acquire Guaranteed Surrender Value on payment of at least two full policy years’ premiums and Special Surrender Value after completion of the first policy year provided one full year’s premium(s) has been paid.
On surrender of an in-force or paid-up policy, the Corporation shall pay the Surrender Value, higher of a) Guaranteed Surrender Value and Surrender Value of any accrued Guaranteed Additions, or b) Special Surrender Value
What are the advantages of the LIC Bima Lakshmi?
- Riders provide additional benefits and help enhance life insurance coverage.
- Settlement Option allows the Maturity or Death Benefit to be received in instalments over 5, 10, or 15 years, instead of as a lump sum.
- Survival Benefits can be deferred for up to 5 years, offering greater flexibility in receiving the payout.
- Policy Loan is available against the policy’s Surrender Value, providing access to funds when needed.
What are the disadvantages of the LIC Bima Lakshmi?
- The policy term is fixed at 25 years, offering limited flexibility to match different financial goals.
- The returns may be less attractive compared with alternative investment options.
- The Sum Assured may be inadequate to provide sufficient financial protection for the family.
Research Methodology of LIC Bima Lakshmi
The key feature of the LIC Bima Lakshmi Plan is its guaranteed benefits.
At maturity, you receive the Sum Assured along with accrued Guaranteed Additions (GA) and regular survival benefit based on the chosen option.
However, these benefits should be evaluated based on the actual returns they generate.
Benefit Illustration – IRR Analysis of LIC Bima Lakshmi
Let’s analyse the Internal Rate of Return (IRR) using the benefit illustration in the policy brochure. Consider a 35-year-old female who opts for a ₹2 lakh Base Sum Assured and a ₹3,44,800 Death Sum Assured, with a 25-year policy term, 10-year premium-paying term, and an annual premium of ₹34,480 under Plan Option A.
| Female | 35 years |
| Sum Assured | ₹ 3,44,800 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 34,480 |
She receives a ₹1 lakh Survival Benefit at the end of the premium-paying term.
At maturity, she receives ₹6.94 lakh (Basic Sum Assured along with accrued Guaranteed Additions).
Based on these cash flows, the IRR works out to 4.71% as per the LIC Bima Lakshmi Plan maturity calculator.
| Age | Year | Annualised premium / Maturity benefit | Death benefit |
| 35 | 1 | -34,480 | 3,47,214 |
| 36 | 2 | -34,480 | 3,52,041 |
| 37 | 3 | -34,480 | 3,59,282 |
| 38 | 4 | -34,480 | 3,68,936 |
| 39 | 5 | -34,480 | 3,81,004 |
| 40 | 6 | -34,480 | 3,95,486 |
| 41 | 7 | -34,480 | 4,12,381 |
| 42 | 8 | -34,480 | 4,31,690 |
| 43 | 9 | -34,480 | 4,53,412 |
| 44 | 10 | -34,480 | 4,77,548 |
| 45 | 11 | 1,00,000 | 5,01,684 |
| 46 | 12 | 0 | 5,25,820 |
| 47 | 13 | 0 | 5,49,956 |
| 48 | 14 | 0 | 5,74,092 |
| 49 | 15 | 0 | 5,98,228 |
| 50 | 16 | 0 | 6,22,364 |
| 51 | 17 | 0 | 6,46,500 |
| 52 | 18 | 0 | 6,70,636 |
| 53 | 19 | 0 | 6,94,772 |
| 54 | 20 | 0 | 7,18,908 |
| 55 | 21 | 0 | 7,43,044 |
| 56 | 22 | 0 | 7,67,180 |
| 57 | 23 | 0 | 7,91,316 |
| 58 | 24 | 0 | 8,15,452 |
| 59 | 25 | 0 | 8,39,588 |
| 60 | 6,94,788 | ||
| IRR | 4.71% |
For a 25-year investment horizon, this return is relatively low. Over time, inflation can significantly reduce the purchasing power of the maturity benefit, making it difficult to keep pace with rising financial goals.
Moreover, the insurance coverage is inadequate to provide meaningful financial protection to the family.
Overall, while the guaranteed benefits may appear attractive, the LIC Bima Lakshmi Plan offers moderate returns and inadequate life cover, making it less suitable for long-term wealth creation and comprehensive financial protection.
LIC Bima Lakshmi Vs. Other Investments
The LIC Bima Lakshmi Plan offers low investment returns and inadequate life cover because it combines insurance and investment in a single product.
A standard pure-term insurance plan, such as Saral Jeevan Bima, offers a minimum Sum Assured of ₹5 lakh.
In the earlier illustration, the Base Sum Assured was only ₹2 lakh, while the death benefit increased over time with Guaranteed Additions.
For a fair comparison, we consider a ₹8.5 lakh life cover, the maximum death benefit in the illustration.
LIC Bima Lakshmi Vs. Pure-term + Equity Mutual Fund
A pure-term policy with ₹8.5 lakh cover costs an annual premium of ₹8,400 for a 25-year policy term with a 10-year premium-paying term.
This leaves ₹26,080 per year for investment. This amount is invested in an equity mutual fund.
To replicate the Survival Benefits of the LIC Bima Lakshmi Plan, a similar amount is withdrawn from the investment at the end of the premium-paying period.
| Pure Term Life Insurance Policy | |
| Sum Assured | ₹ 8,50,000 |
| Policy Term | 25 years |
| Premium Paying Term | 10 years |
| Annualised Premium | ₹ 8,400 |
| Investment | ₹ 26,080 |
At the end of 25 years, the investment is fully redeemed to compare it with the maturity benefit of the LIC Bima Lakshmi Plan.
Capital gains are considered only at final redemption, while the earlier withdrawal is assumed to fall within the annual ₹1.25 lakh LTCG exemption.
| Term insurance + Equity Mutual Fund | |||
| Age | Year | Term Insurance premium + Equity Mutual Fund | Death benefit |
| 35 | 1 | -34,480 | 8,50,000 |
| 36 | 2 | -34,480 | 8,50,000 |
| 37 | 3 | -34,480 | 8,50,000 |
| 38 | 4 | -34,480 | 8,50,000 |
| 39 | 5 | -34,480 | 8,50,000 |
| 40 | 6 | -34,480 | 8,50,000 |
| 41 | 7 | -34,480 | 8,50,000 |
| 42 | 8 | -34,480 | 8,50,000 |
| 43 | 9 | -34,480 | 8,50,000 |
| 44 | 10 | -34,480 | 8,50,000 |
| 45 | 11 | 1,00,000 | 8,50,000 |
| 46 | 12 | 0 | 8,50,000 |
| 47 | 13 | 0 | 8,50,000 |
| 48 | 14 | 0 | 8,50,000 |
| 49 | 15 | 0 | 8,50,000 |
| 50 | 16 | 0 | 8,50,000 |
| 51 | 17 | 0 | 8,50,000 |
| 52 | 18 | 0 | 8,50,000 |
| 53 | 19 | 0 | 8,50,000 |
| 54 | 20 | 0 | 8,50,000 |
| 55 | 21 | 0 | 8,50,000 |
| 56 | 22 | 0 | 8,50,000 |
| 57 | 23 | 0 | 8,50,000 |
| 58 | 24 | 0 | 8,50,000 |
| 59 | 25 | 0 | 8,50,000 |
| 60 | 20,24,279 | ||
| IRR | 9.80% | ||
This combination of term insurance and equity mutual fund investment generates a post-tax IRR of 9.80%, significantly higher than the LIC Bima Lakshmi illustration.
| Equity Mutual Fund Tax Calculation | |
| Maturity value after 25 years | 22,58,347 |
| Purchase price | 2,60,800 |
| Long-Term Capital Gains | 19,97,547 |
| Exemption limit | 1,25,000 |
| Taxable LTCG | 18,72,547 |
| Tax paid on LTCG | 2,34,068 |
| Maturity value after tax | 20,24,279 |
It also provides greater flexibility, as the investment can be accessed when required rather than being locked into the policy structure.
Low returns, inadequate life cover and limited flexibility make the LIC Bima Lakshmi Plan less attractive.
Final Verdict on LIC Bima Lakshmi
The LIC Bima Lakshmi Plan is designed to provide women with both life insurance and savings benefits, addressing the need for greater financial participation among women.
However, beyond its women-centric positioning, it is essentially a traditional endowment plan where premiums are paid for a limited period, and benefits are received either periodically or at maturity, depending on the chosen option.
Our IRR analysis shows that the plan generates modest returns, making it difficult to build a substantial corpus over the long term and it also has a high agent commission.
The Sum Assured is also inadequate to provide meaningful financial protection. Therefore, the plan falls short of effectively addressing both life insurance and investment needs.
Guaranteed returns may seem attractive, but they should not be the sole factor when choosing a financial product. Your investments should align with your financial goals, risk tolerance, and investment horizon.
For life insurance, a pure-term policy can provide significantly higher coverage at a lower premium, offering better financial protection for your family.
For wealth creation, a well-diversified investment portfolio can help manage risk while improving the potential for long-term growth.
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