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LIC’s Index Plus (Plan 873): Complete Guide, Benefits,
Charges, Returns & Should You Invest?
Introduction
When it comes to long-term financial planning in India, the
Life Insurance Corporation of India (LIC) remains one of the most trusted
names. Among its Unit Linked Insurance Plans (ULIPs), LIC’s Index Plus –
Plan 873 has gained attention due to its combination of life insurance
protection and market-linked investment opportunities.
LIC Index Plus 873 is designed for individuals who want to
participate in the growth potential of the equity market while also ensuring
financial security for their family. Unlike traditional LIC policies, this plan
links a portion of your premium to market indices, offering the possibility of
higher returns over the long term.
In this detailed guide, we will cover everything you need
to know about LIC’s Index Plus 873, including features, benefits,
eligibility, charges, fund options, returns, risks, tax benefits, and whether
this plan is suitable for you.
What is LIC’s Index Plus (Plan 873)?
LIC’s Index Plus (Plan 873) is a Unit Linked
Insurance Plan (ULIP) that combines:
- Life
insurance coverage
- Investment
linked to market indices
- Flexibility
to choose between equity-oriented and debt-oriented funds
Under this plan, part of your premium goes towards providing
life insurance cover, while the remaining portion is invested in selected funds
that track market indices or debt instruments.
This plan is suitable for investors who:
- Have
a long-term investment horizon
- Can
tolerate market fluctuations
- Want
insurance + investment in one product
Key Features of LIC’s Index Plus 873
1. Market-Linked Returns
Returns are linked to the performance of underlying funds,
which may include equity index-based funds and debt funds.
2. Life Insurance Protection
The plan provides a sum assured that offers financial
security to your family in case of the policyholder’s untimely death.
3. Choice of Funds
Policyholders can choose from different fund options based
on their risk appetite.
4. Flexibility
- Multiple
premium payment terms
- Switching
between funds (subject to policy terms)
5. Transparency
ULIPs like Index Plus clearly disclose charges, fund value,
and NAV (Net Asset Value).
Eligibility Criteria
Minimum & Maximum Entry Age
- Minimum
Age: 90 days
- Maximum
Age: 60 years
Maturity Age
- Maximum
maturity age is generally 75 years (policy term dependent)
Policy Term
- Available
in different terms such as 10, 15, 20, or 25 years
Premium Payment Term
- Regular
premium or limited premium options (as per LIC guidelines)
Premium Details
Minimum Premium
The minimum premium depends on:
- Policy
term
- Premium
payment frequency
Premiums can usually be paid:
- Yearly
- Half-yearly
- Quarterly
- Monthly
(via ECS)
Sum Assured Structure
The Sum Assured under LIC Index Plus 873 is
generally:
- A
multiple of the annual premium
- Subject
to minimum and maximum limits defined by LIC
This ensures compliance with insurance regulations and
eligibility for tax benefits.
Fund Options Available in LIC Index Plus 873
LIC Index Plus offers multiple fund choices so that
investors can align investments with their risk profile.
1. Nifty 50 Index Fund
- Invests
in stocks forming part of the Nifty 50 index
- Suitable
for long-term investors seeking equity growth
2. Bond Fund
- Invests
in government securities and high-quality bonds
- Lower
risk compared to equity funds
3. Secured Fund
- Balanced
exposure to equity and debt
- Suitable
for moderate risk investors
Note: Fund availability may change based on LIC
updates. Always verify the latest fund options before investing.
Fund Switching Facility
LIC Index Plus allows fund switching, enabling
policyholders to:
- Shift
from equity to debt during volatile markets
- Move
to equity during growth phases
This flexibility helps in risk management over the
policy term.
Charges Under LIC’s Index Plus 873
Understanding charges is crucial for realistic return
expectations.
1. Premium Allocation Charge
A portion of the premium is deducted before investment.
2. Policy Administration Charge
Charged monthly to manage the policy.
3. Fund Management Charge (FMC)
Charged as a percentage of fund value for managing
investments.
4. Mortality Charge
Cost of life insurance cover, depends on age and sum
assured.
5. Fund Switching Charge
Usually free for a limited number of switches per year.
Benefits of LIC Index Plus 873
1. Death Benefit
In case of death during the policy term, the nominee
receives:
- Higher
of Sum Assured or Fund Value (as per policy terms)
2. Maturity Benefit
On policy maturity, the policyholder receives:
- Total
Fund Value based on NAV at maturity
3. Investment Growth Potential
Equity exposure offers potential for higher long-term
returns.
4. Financial Discipline
Regular premium payments encourage systematic savings.
5. Trust of LIC
LIC’s long-standing credibility adds confidence for
conservative investors.
Partial Withdrawal Facility
After completion of a lock-in period (usually 5
years):
- Partial
withdrawals may be allowed
- Subject
to minimum fund balance conditions
This provides liquidity during financial emergencies.
Tax Benefits
Tax Deduction Under Section 80C
Premiums paid may be eligible for deduction up to ₹1.5 lakh
per year under Section 80C of the Income Tax Act.
Tax-Free Maturity Under Section 10(10D)
Maturity and death benefits are generally tax-free, subject
to prevailing tax laws and conditions.
Disclaimer: Tax rules may change. Consult a tax
advisor before investing.
Risks Involved in LIC Index Plus 873
1. Market Risk
Returns depend on market performance; there is no guaranteed
return.
2. Charges Impact Returns
ULIP charges may reduce overall returns, especially in the
early years.
3. Long-Term Commitment
Best suited for long-term investors; early exit may not be
beneficial.
LIC Index Plus 873 vs Traditional LIC Policies
|
Feature |
LIC Index Plus 873 |
Traditional LIC Plan |
|
Returns |
Market-linked |
Fixed / Guaranteed |
|
Risk |
Moderate to High |
Low |
|
Transparency |
High |
Moderate |
|
Flexibility |
High |
Low |
Who Should Invest in LIC Index Plus 873?
This plan is suitable for:
- Salaried
individuals with long-term goals
- Investors
seeking insurance + investment
- Those
comfortable with market volatility
Not suitable for:
- Investors
seeking guaranteed returns
- Short-term
investment needs
Expected Returns from LIC Index Plus 873
Returns depend on:
- Fund
selection
- Market
conditions
- Policy
duration
Historically, equity-oriented ULIPs have delivered 8%–12%
annualized returns over long periods, though this is not guaranteed.
Important Points to Consider Before Buying
- Compare
with mutual funds + term insurance
- Understand
all charges
- Choose
funds based on risk appetite
- Stay
invested for the full term
Frequently Asked Questions (FAQs)
Is LIC Index Plus 873 safe?
It carries market risk but is regulated by IRDAI and managed
by LIC.
Can I switch funds anytime?
Yes, fund switching is allowed as per policy conditions.
Is there a lock-in period?
Yes, ULIPs generally have a 5-year lock-in period.
Is this plan better than mutual funds?
It offers insurance + investment, but mutual funds may offer
higher flexibility and lower costs.
Final Verdict: Should You Buy LIC’s Index Plus 873?
LIC’s Index Plus (Plan 873) is a well-structured ULIP
for investors who want life cover along with market-linked growth. It is
best suited for long-term financial goals such as retirement planning,
child education, or wealth creation.
However, investors must clearly understand the charges,
risks, and market dependency before investing. If you value LIC’s trust,
want disciplined investing, and are comfortable with market fluctuations, Index
Plus 873 can be a suitable option.
Disclaimer
This article is for educational and informational
purposes only. It does not constitute financial advice. Policy features,
charges, and tax benefits are subject to change as per LIC and government
regulations. Always consult a licensed insurance advisor or financial planner
before making any investment decision.