Life Insurance Corporation of India (LIC) offers many insurance and investment products, among which the LIC Profit Plus Plan 188 has been a popular choice for many policyholders.

Introduction to LIC Profit Plus Plan 188

LIC Profit Plus Plan 188 is a popular unit-linked insurance plan (ULIP) launched by LIC. It combines the benefits of life insurance and investment in market-linked funds. Policyholders can invest in different funds based on their risk appetite and financial goals.

Launch Date and Withdrawal Date

• Launch Date: The plan was launched on August 23, 2007.
• Date of Withdrawal: The plan was withdrawn on September 1, 2010. However, existing policyholders may continue under earlier terms, while new sales have been discontinued since withdrawal.

What is LIC Profit Plus Plan 188?

LIC Profit Plus Plan is a ULIP where premiums paid are invested in funds with the dual benefit of insurance coverage and wealth accumulation. The plan provides life cover along with the facility to switch funds and partial withdrawals after certain conditions.

Key Features

• Type of Plan: Unit Linked Insurance Plan (ULIP)
• Premium Payment Options: Single premium or limited premium for 3, 4, or 5 years
• Policy Term: Ranges from 5 to 20 years
• Sum Assured: Varies based on premium and age, in multiples of Rs. 5,000
• Fund Options: Multiple funds like Bond Fund, Secured Fund, Balanced Fund, and Growth Fund
• Partial Withdrawals: Allowed after the third policy year with a minimum balance in the fund
• Policy Revival: Can revive within 2 years of first missed premium payment

Benefits of LIC Profit Plus Plan 188

The plan offers several benefits to policyholders:

• Life Cover: In case of death during the policy term, the nominee gets the higher of the sum assured or the fund value.
• Maturity Benefit: On maturity, the fund value accumulated is paid to the policyholder.
• Partial Withdrawal: Allowed after completion of 3 years to meet liquidity needs.
• Switching Facility: Policyholders can switch their investment between funds subject to charges.
• Loan Facility: Available after 2 policy years against the surrender value.
• Tax Benefits: Premium paid and maturity proceeds may qualify for tax benefits under Indian tax laws (subject to prevailing tax rules).

How Does LIC Profit Plus Plan 188 Work?

1. Premium Payment: The policyholder pays the premium either as a single lump sum or in limited installments over 3-5 years.
2. Investment in Funds: Premium is invested in funds chosen by the policyholder. Fund options range from low risk (Bond Fund) to high growth potential (Growth Fund).
3. Unit Allocation: The premium is used to buy units in the chosen fund(s). Unit prices change daily based on NAV (Net Asset Value).
4. Fund Value Movement: Fund value fluctuates with NAV, reflecting investment performance.
5. Maturity or Death: At maturity, fund value is credited to the policyholder. In death, nominee receives higher of sum assured or fund value.
6. Partial Withdrawals and Switches: Allowed based on terms after certain years to offer flexibility.

LIC Profit Plus Plan 188 Calculator

The LIC Profit Plus Plan 188 calculator is an online tool that helps policyholders estimate the potential returns on their investment in the plan. Since it is a ULIP, returns depend on the fund performances, premium amount, fund allocation, policy term, and charges.

Purpose of the Calculator

• Estimate maturity value based on premium, term, and fund NAV.
• Help in financial planning by projecting future benefits.
• Understand the impact of fund switches or partial withdrawals.
• Calculate surrender values and death benefits.

How to Use the Calculator

1. Enter Premium Amount: Input your annual or single premium.
2. Select Policy Term: Enter the duration of the policy.
3. Choose Fund Allocation: Decide percentage allocation among Bond, Secured, Balanced, and Growth funds.
4. Provide Age at Entry: Age of the insured when the policy started.
5. Switching and Withdrawal (Optional): Input any fund switches or partial withdrawals.
6. Calculate: The tool computes maturity fund value, estimated returns, and death benefits.

Factors Affecting Calculator Outputs

• NAV Fluctuations: Fund NAV changes daily, impacting fund value.
• Charges: Allocation charges, fund management, mortality, and rider charges reduce returns.
• Premium Payment Frequency: Single vs limited premium payments affect the calculation.
• Market Performance: Higher-risk funds may yield better returns but with higher volatility.
• Policy Term: Longer terms generally accumulate more funds.
• Partial Withdrawals: Reduce fund value and future returns.

Example Calculation

Suppose a policyholder pays an annual premium of Rs. 50,000 for 5 years, allocating 40% in Growth Fund, 30% in Balanced, 20% in Bond, and 10% in Secured Funds. Entering this into the calculator with age 30 and term 15 years would give:

• Expected maturity fund value (depending on market performance assumptions)
• Death benefit estimation
• Surrender value after specified years

This helps plan maturity needs and risk assessments.

Charges in LIC Profit Plus Plan 188

Charges applicable under this plan include:

• Premium Allocation Charges: Deducted upfront, varies by premium amount and term.
• Fund Management Charges: Annual charges based on fund type (e.g., 0.75% p.a. for Bond Fund to 1.50% p.a. for Growth Fund).
• Mortality Charges: For life cover, deducted from fund value.
• Policy Administration Charges: Applicable annually or as specified.
• Switching Charges: For fund switches beyond free limits.

These charges affect the net returns, so the calculator incorporates these to project realistic maturity values.

Fund Options and Their Risk Profile

LIC Profit Plus Plan 188 offers multiple funds:

• Bond Fund: Low risk with steady income, suitable for conservative investors.
• Secured Fund: Slightly higher risk than bond fund, balanced between safety and growth.
• Balanced Fund: Medium risk and balanced growth with income features.
• Growth Fund: Higher risk with potential for higher returns, suited for aggressive investors.

Policyholders can opt for a single fund or mix based on preferences and can switch funds during the policy term.

Partial Withdrawals and Policy Surrender

• Partial withdrawals are permitted after the third policy year.
• A minimum fund value of Rs. 10,000 should be maintained post withdrawal.
• Withdrawals can be either fixed amount or fixed units.
• Surrender value is payable after completion of 3 policy years and is equal to the policyholder’s fund value.
• Settlement options are also available at maturity allowing payout in installments.

Eligibility Criteria

• Entry Age: Minimum 18 years completed, maximum 65 years nearest birthday.
• Policy Term: Between 5 to 20 years.
• Minimum Premium: Rs. 10,000 per annum for limited premium payments, Rs. 20,000 for single premium.
• Maximum Sum Assured: No upper limit defined but subject to sum assured rules.
• Renewal and Revival: Policy can be revived within two years of first unpaid premium.

Tax Benefits

Payments made under LIC Profit Plus Plan 188 are eligible for tax deductions under Section 80C of the Income Tax Act (conditions apply). Maturity proceeds and death benefits are typically exempt from tax under Section 10(10D), subject to prevailing tax laws.

How to Get the LIC Profit Plus Plan 188 Calculator?

Many financial websites and LIC’s official website offer online calculators for this plan. These tools are free to use and can help in quick estimates.

• One can visit LIC India Official Website for fund NAV updates and plan details.
• Popular financial portals like BankBazaar, PolicyBazaar, and MoneyControl offer calculators and expert insights.
• Use mobile apps or Excel sheets with formulas if preferred.

Why Use a LIC Profit Plus Plan 188 Calculator?

• To estimate returns before purchasing the policy.
• To plan premium amounts and policy terms based on maturity goals.
• To understand fund allocation impacts on returns.
• To compare with other ULIPs and investment options.
• To review expected death and surrender benefits.

Important Tips for Policyholders

• Understand the ULIP nature: NAV-based returns are market-linked and not guaranteed.
• Review fund performance regularly and switch funds if needed.
• Keep track of charges and fees.
• Utilize partial withdrawals for emergencies, but mind the impact on maturity.
• Use the online calculator regularly for updated estimates with current NAVs.
• Consult LIC agents or financial advisors for personalized advice.

Frequently Asked Questions

Conclusion

The LIC Profit Plus Plan 188 calculator is a valuable tool for anyone invested or interested in this unit-linked insurance plan. By considering premium amounts, policy term, fund allocation, and charges, it helps you estimate maturity values and plan your finances efficiently. Although the plan was withdrawn in 2010, it still remains relevant for continuing policyholders.