LIC Plan 814 Maturity Calculator: Know Your Exact Returns
Are you considering LIC’s Plan 814 or already investing in it? If so, you’ve probably wondered about the exact maturity amount you’ll receive at the end of the policy term. Calculating this manually can be confusing, with factors like sum assured, bonuses, and final additional bonuses to consider.
That’s why we’ve created this comprehensive guide along with an easy-to-use LIC Plan 814 Maturity Calculator. In this article, we’ll walk you through everything you need to know about this popular LIC plan and help you calculate your potential returns with precision.
Understanding LIC’s Plan 814
LIC’s Plan 814, officially known as the “LIC’s New Endowment Plan,” is a traditional participating endowment plan that offers both protection and savings. Launched by Life Insurance Corporation of India, this plan has gained popularity among individuals looking for a disciplined savings approach with life cover.
What makes Plan 814 particularly attractive is its dual benefit structure. It provides financial security to your family in case of your unfortunate demise during the policy term, while also serving as a solid savings instrument that pays out a lump sum amount on maturity.
Key Point: Unlike pure term insurance plans that only provide a death benefit, LIC Plan 814 ensures you receive a maturity benefit if you survive the policy term, making it a combination of insurance and investment.
How Does LIC Plan 814 Work?
When you purchase LIC Plan 814, you commit to paying regular premiums for a chosen policy term. The minimum term is 12 years, while the maximum can go up to 25 years. The plan offers flexibility in premium payment frequency—you can pay annually, half-yearly, quarterly, or even monthly.
Throughout the policy term, your premiums participate in LIC’s profits through annual bonuses. These bonuses are declared annually and get added to your policy. At maturity, you receive the Sum Assured along with all accumulated bonuses and a Final Additional Bonus.
In the unfortunate event of the policyholder’s death during the term, the nominee receives the Sum Assured along with all bonuses accrued until the date of death. This ensures your family’s financial security even in your absence.
Key Features of LIC Plan 814
Let’s break down the standout features that make LIC Plan 814 a preferred choice for many Indians:
- Dual Advantage: Combines life insurance coverage with a savings component
- Bonus Participation: Eligible for yearly bonuses declared by LIC
- Loan Facility: You can avail a loan against your policy after paying premiums for 3 years
- Tax Benefits: Premiums qualify for tax deductions under Section 80C, and maturity benefits under Section 10(10D)
- Surrender Value: Option to surrender the policy after 3 years for a guaranteed surrender value
- Riders Available: Additional covers like Accident Benefit Rider can be attached for enhanced protection
Breaking Down the Maturity Calculation
Understanding how your maturity amount is calculated can seem complex at first, but it’s actually straightforward once you know the components. Your final maturity value consists of three main parts:
| Component | Description | How It’s Calculated |
|---|---|---|
| Basic Sum Assured | The guaranteed amount you chose at policy inception | Fixed amount based on your premium and policy term |
| Accumulated Bonuses | Yearly bonuses declared by LIC based on performance | Bonus rate × Sum Assured × Policy years |
| Final Additional Bonus | One-time bonus paid at maturity | Fixed amount per ₹1,000 Sum Assured |
Understanding Bonuses in LIC Plans
Bonuses are a crucial part of your returns in LIC’s participating plans like Plan 814. LIC declares bonuses annually based on its financial performance and the profits from its participating fund.
There are typically two types of bonuses in such plans:
- Simple Reversionary Bonuses: These are declared per ₹1,000 Sum Assured and added to your policy each year. Once added, they become guaranteed.
- Final Additional Bonus: This is a one-time bonus paid at maturity or on death, over and above the reversionary bonuses.
Historical data shows that LIC has maintained a consistent bonus declaration pattern over the years, though future bonuses cannot be guaranteed. Our calculator uses current bonus rates to give you a realistic estimate of your maturity value.
Who Should Consider LIC Plan 814?
LIC Plan 814 isn’t for everyone, but it can be an excellent fit for certain financial profiles:
- Conservative Investors: If you prefer guaranteed returns over market-linked volatility
- First-time Insurance Buyers: Looking for a simple combination of insurance and savings
- Parents Planning for Children’s Future: The maturity amount can fund education or marriage expenses
- Individuals Seeking Financial Discipline: The regular premium payments enforce a savings habit
- Those Looking for Tax Efficiency: Who want to maximize Section 80C benefits with an insurance product
Comparing LIC Plan 814 with Other Options
How does LIC Plan 814 stack up against other financial instruments? Let’s look at a quick comparison:
| Investment Option | Returns Potential | Risk Level | Insurance Cover | Liquidity |
|---|---|---|---|---|
| LIC Plan 814 | Moderate (5-6%) | Low | Yes | Medium |
| PPF | Moderate (7-8%) | Nil | No | Low |
| Equity Mutual Funds | High (10-12%) | High | No | High |
| FDs | Low (5-7%) | Low | No | Medium |
| Pure Term Insurance + MF | High (10-12%) | Medium | Yes | High |
As you can see, LIC Plan 814 offers a balanced approach with moderate returns, low risk, and built-in insurance coverage. It might not give the highest returns, but it provides certainty and peace of mind.
Maximizing Your Returns with LIC Plan 814
If you’ve decided that LIC Plan 814 aligns with your financial goals, here are some tips to make the most of your investment:
- Start Early: The younger you are when you start, the lower your premiums will be for the same sum assured
- Choose an Appropriate Term: Align your policy term with your financial goals—education, retirement, etc.
- Opt for Yearly Premiums: Annual payments usually have lower charges compared to more frequent payment modes
- Don’t Surrender Early: The surrender value in initial years is typically low, so try to continue for the full term
- Review Periodically: While it’s a long-term commitment, do review if it still aligns with your changing financial situation
Common Mistakes to Avoid
Many policyholders make these common errors that reduce the effectiveness of their LIC Plan 814:
- Underinsuring: Choosing a low sum assured that doesn’t adequately cover your family’s needs
- Lapsing Policies: Missing premium payments and letting the policy lapse, losing all benefits
- Not Nominating: Failing to update nominee details can create complications for your family
- Ignoring Riders: Not considering additional riders that could enhance your coverage at minimal extra cost
- Mismatched Goals: Using a long-term instrument for short-term goals, leading to early surrender and losses
Pro Tip: Always calculate the internal rate of return (IRR) of your insurance-cum-investment plans. This helps you compare them with other investment options more accurately. Our calculator provides an approximate IRR to help with this comparison.
Frequently Asked Questions About LIC Plan 814
LIC provides a grace period of 30 days for yearly, half-yearly, and quarterly premiums, and 15 days for monthly premiums. If you fail to pay within this grace period, your policy may lapse. However, LIC offers a revival period (typically 2 years) during which you can reinstate your lapsed policy by paying all outstanding premiums with interest.
Yes, after paying premiums for at least 3 years, you become eligible for a loan against your LIC Plan 814 policy. The loan amount is typically up to 90% of the surrender value. The current interest rate on LIC policy loans is competitive, and you can repay the loan in installments or as a lump sum.
Bonuses in LIC Plan 814 are declared annually by LIC based on the performance of its participating fund. They are calculated as a rate per ₹1,000 Sum Assured. For example, if the declared bonus rate is ₹40 per ₹1,000 Sum Assured, and your Sum Assured is ₹5,00,000, your annual bonus would be (5,00,000/1,000) × 40 = ₹20,000. These bonuses accumulate over the policy term and are paid at maturity or on death.
LIC Plan 814 offers tax benefits under multiple sections:
- Section 80C: Premiums paid are eligible for deduction up to ₹1.5 lakh annually
- Section 10(10D): Maturity proceeds and death benefits are tax-free, provided premium doesn’t exceed 10% of Sum Assured for policies issued after April 1, 2012
- Section 80D: If you’ve taken critical illness riders, those premiums may be eligible for deduction
Always consult with a tax advisor for the most current information based on your specific situation.
Yes, you can surrender your LIC Plan 814 policy after it has acquired a surrender value, which typically happens after paying premiums for at least 3 years. The surrender value consists of:
- Guaranteed Surrender Value: A percentage of premiums paid as specified in the policy document
- Special Surrender Value: Includes bonuses accrued until the date of surrender
Surrendering early generally yields lower returns than continuing until maturity, so it’s advisable only in financial emergencies.
Making an Informed Decision
Before committing to LIC Plan 814 or any other financial product, it’s crucial to evaluate how it fits into your overall financial plan. Consider your risk appetite, investment horizon, liquidity needs, and insurance requirements.
Use our calculator multiple times with different scenarios to understand how changing the sum assured, policy term, or premium amount affects your maturity value. This will help you choose the combination that best meets your financial goals.
Final Thoughts
LIC Plan 814 can be a valuable component of a balanced financial portfolio, especially for those seeking the dual benefits of insurance and savings with minimal risk. While it may not offer the highest returns compared to market-linked options, its guaranteed benefits and bonus structure provide a safety net that’s hard to find elsewhere.
Remember that insurance should primarily be about protection, and investment should be a secondary benefit. If you need higher life cover, consider supplementing with a pure term plan. Use our calculator, understand the numbers, and make an informed decision that aligns with your financial journey.
Disclaimer: The calculator provides estimates based on current bonus rates and assumptions. Actual maturity values may vary based on LIC’s future bonus declarations. This article is for informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making investment decisions.