What is LIC Index Plus?
LIC Index Plus is a unit‑linked Insurance Plan (ULIP). This plan offers investors a dual benefit of insurance as well as the opportunity to invest in a market-linked scheme. Investors’ money gets invested in the share market, which gives them good returns. Obviously, investors return depending upon the performance of the share market and the plans chosen by the investor. This plan was launched by LIC in February 2024 (Plan No. 873, UIN 512L354V01).
Under this policy, the investor has options to invest in two index-based funds.
- Flexi Growth Fund. (This scheme follows Nifty 100 index)
- Flexi Smart Growth Fund. (The scheme follows Nifty 50 index)
| Fund Type | Gov.Securities / Corporate Debt | Short Term Money Market | Listed Equity Shares | Associated Risk with Fund |
| Flexi Growth Fund | 0 to 20% | 0 to 40% | 40% to 100% selected stocks of Nifty 100 | Very High |
| Flexi Smart Growth Fund | 0 to 20% | 0 to 40% | 40% to 100% selected stocks of Nifty 50 | Moderate |
Flexi Growth Fund. (Nifty 100 index) :-Investors’ money gets invested in the top 100 companies of Nifty 100. This is suitable for investors having long term goal and a high risk tolerance. Since the money gets invested from 40% to 100% in the share market. Returns are very fluctuating and sometimes disturbing. But in the long run, you will get good returns. This fund is more suitable for an aggressive investor looking for long-term capital appreciation from the market.
Flexi Smart Growth Fund ( Nifty 50 index ):- Investor’s money gets invested in the top 50 companies of the Nifty 50. This fund is comparatively more stable than the Flexi Growth fund. This fund is suitable for investors having a moderate risk appetite and long term goal.
LIC INDEX PLUS NAV
Highlights of LIC Index Plus-
Death Benefit: Higher of sum assured or unit fund value
Maturity Benefit: Unit fund value
Tax Benefits: Premiums paid are eligible for tax deductions under Section 80C, and maturity proceeds are tax-free under Section 10(10D)
Eligibility Criteria– Entry Age: 90 days to 60 years
Policy Term: 10-25 years
Minimum Premium: ₹30,000 per annum
Maximum Premium: No limit (subject to underwriting)
Charges-
Premium Allocation Charge: 8% (1st year), 5.5% (2-5 years), 4% (6th year+)
Mortality Charge: Deducted monthly based on the sum at risk
Policy Administration Charge: NIL for first 5 years, then ₹125/month (max ₹500/month)
How Does the Plan Work?
Premium Payment –
Investor chooses a regular premium (minimum ₹ 30,000 per yr) and the mode of payment ( monthly / Quarterly / Half yearly / Yearly). After deducting Premium Allocation Charge (e.g., 8 % first yr offline, 3 % online), the balance is used to buy units in the chosen fund.
2. Fund Allocation –
The allotment of funds is as below depending upon the scheme chosen.
Flexi Growth Fund: Invests 40‑100 % in NIFTY 100 stocks.
Flexi Smart Growth Fund: Invests 40‑100 % in NIFTY 50 stocks.
Both allow 0‑20 % in government securities and 0‑40 % in short‑term instruments,
3.. Guaranteed Additions –
A percentage of your annual premium is added to the unit fund at the end of specific policy years.
| For premium < ₹ 48,000 | 3 % (6 yr), | 6 % (10 yr), | 12 % (15 yr). |
| For premium ≥ ₹ 48,000 | 5 % (6 yr) | 10 % (10 yr), | 20 % (15 yr). |
For 20 Years and 25 Years:- Additional percentage applies
These additions purchase extra units.
4. Charges Deduction –
Fund Management Charge: 1.35 % p.a. of fund value.
Policy Admin Charge: From 6th year (min ₹ 125 / month, escalates 5 % p.a., max ₹ 500).
Mortality Charge: Monthly, based on Sum at Risk; refunded on maturity if all premiums paid.
5. Partial Withdrawals – Partial withdrawal is allowed after a 5‑year lock‑in. Maximum withdrawal % increases with policy year.
| 20 % for 6‑10 yr | 25 % for 11‑15 yr | 30 % for 16‑20 yr | 35 % for 21‑25 yr |
₹ 100 fee is charged per withdrawal.
6. Death Benefit –
If the policyholder dies before the risk coverage starts, then the beneficiaries receive the unit value of the fund.
If the policyholder dies after the risk coverage begins. The following death benefits apply to him.
Beneficiaries will receive the higher of the three.
(i) Basic Sum Assured – partial withdrawals (last 2 yr),
(ii) Unit Fund Value,
(iii) 105 % of total premiums – partial withdrawals (last 2 years).
If the rider opted, the Accidental Death benefit ( ADB ) Sum Assured is added.
7. Maturity Benefit –
Unit Fund Value + Refund of Mortality Charges (if all dues paid).
Risks & Considerations-
- Market Risk: Fund value moves with NIFTY 50/100 performance, so no guaranteed returns.
- Lock‑in period is 5 years. The policyholder cannot surrender or withdraw fully before 5 years.
- Charges: Allocation, admin, mortality, fund management – all impact net returns.
- Rider Cost: The ADB rider adds an extra charge.
Who Should Invest in LIC Index Plus
- Young Investors aged between 30‑45 yr who can tolerate high equity risk.
- The investors those wants dual benefit of Insurance and market exposure.
- Investors who are comfortable with a 5‑year lock‑in and partial withdrawal flexibility.
Frequently Asked Questions (FAQ)
Q. 1. What is the lock‑in period in LCI Index Plus?
A: 5 years from policy commencement.
Q2. When are guaranteed additions added?
A: At the end of 6th, 10th, 15th, 20th, 25th policy years as a % of Annualised Premium.
| For premium < Rs. 48,000 | 3 % (6 yr), | 6 % (10 yr), | 12 % (15 yr). |
| For premium ≥ Rs. 48,000 | 5 % (6 yr) | 10 % (10 yr), | 20 % (15 yr). |
For 20 Years and 25 Years:- Additional percentage applies
Q3 : How many free switches are allowed in the LIC Index Plus Plan?
A: 4 switches per policy year; thereafter ₹ 100 per switch.
Q4: Is there a refund of mortality charges?
A: Yes, on maturity if all premiums are paid.
Q.5: What are the fund options?
A: LIC Index Plus schemes have 2 options.
1. Flexi Growth Fund (NIFTY 100)
2. Flexi Smart Growth Fund (NIFTY 50).
Q.6: What tax benefits apply?
A: Premium under Sec 80C, maturity proceeds under Sec 10(10D) – subject to limits.
Conclusion:-
The LIC Index Plus plan offers a unique combination of personal insurance and stock market exposure. It has 2 options for fund selection. 1. Flexi Growth Fund (NIFTY 100) & 2. Flexi Smart Growth Fund (NIFTY 50). It is an attractive option for those investors who don’t want just plain insurance. They want to add some more attractive returns with regular insurance. Suitable for progressive and high-risk tolerance investors.
Readers will also like to read blogs on the following topics
3. Basics of the Future and options
4. PE Ratio
6. Bull vs Bear Phase in the Stock Market
7. XIRR vs CAGR vs Absolute Return
8. Home