How will you benefit from investing early in mutual funds?

Life Insurance Corporation of India’s Jeevan Labh Plan provides various benefits like protection and bonus. If a 20-year-old individual invests Rs 100 in it daily for 16 years, a corpus of Rs 21.60 lakh will be built in 25 years. In case of death of the policyholder, the nominee gets the benefits of sum assured and bonus. The tax benefit is also attached to this plan.

Here’s all you need to know about the plan

LIC has designed the Jeevan Labh Plan with the intention of achieving long-term goals. One can opt for this plan for goals like children’s education, marriage, or buying a property. This is a non-linked policy, that has no relation with the share market. Whether the market goes up or down, it will not affect your money at all. This is a limited premium plan.

LIC Jeevan Labh policy can be bought by people between the age group of 8 to 59 years. You can take the policy term from 16 to 25 years. You have to take a minimum sum assured of Rs 2 lakh and there is no limit on the maximum amount. You can increase it in multiples of Rs 10,000.

The loan facility is available on payment of premium for 2 years in LIC Jeevan Labh policy. An option of a grace period of 30 days is also there. During this time you can return the policy if you do not like it.

Benefit

You will get the sum assured of Rs 20 lakh. The insurance company will give you a bonus of Rs 23.50 lakh and a final bonus of Rs 9 lakh will be included.

Taxation

Tax exemption is available on premium. If you fall in the 30% slab, then on paying a premium of Rs 90,000 annually, you will get a profit of Rs 28,351 i.e. in 16 years you can get a total tax benefit of Rs 4.53 lakh.

Death benefit

If the policyholder dies during the policy term and has paid all premiums till death, then the nominee gets the sum assured, simple reversionary bonus and final addition bonus as death benefit. That is, the nominee will get an additional sum insured.

Returns

If you choose a term tenure of 16 years and pay a premium for 10 years, your maturity benefit shows a return of 5.81%. This return is the internal rate of return (IRR). If you choose a term of 25 years, then after repayment of the premium for 16 years, you get a 7.15% return.

It is necessary for any person to have basic life insurance of a sufficient amount. Experts agree that insurance and investment should not be combined. First of all, fulfill your insurance requirement and then proceed with the investment. If you are ready to invest for more than 10 years then investing in the equity market directly or through mutual funds can give manifold returns.