LIC Bima Account II (Plan 806)

Life Insurance Corporation of India (LIC) has been a trusted name in the Indian insurance market for decades. Among its many plans, the LIC Bima Account II Plan 806 stands out as a simple, transparent, and effective insurance-cum-savings product. It offers guaranteed returns and risk cover in a straightforward manner, making it suitable for individuals looking for a hassle-free insurance plan.

What is LIC Bima Account II Plan 806?

LIC Bima Account II (Plan No. 806) is a non-linked, without-profit insurance plan introduced by LIC. It was launched on 2nd February 2011 and later withdrawn from sale on 24th November 2013. Although withdrawn, this plan was popular for its simplicity and financial security.

The plan offers two main advantages:

• Guaranteed minimum return of 6% per annum on the premiums paid (with potential for additional returns based on experience)
• Life cover or risk cover, which provides a sum assured plus the fund balance to the nominee in case of the policyholder’s death.

Key Features of LIC Bima Account II Plan 806

Simple and Transparent

This plan is designed to be easy to understand. The premiums you pay after deduction of charges are credited to a policyholder’s account. The policyholder’s account earns interest at a guaranteed rate.

Guaranteed and Additional Returns

• The account earns a guaranteed 6% interest annually for in-force policies.
• If the policy is paid-up (meaning premiums are stopped but the policy continues with reduced benefits), it earns a guaranteed 5% interest.
• There might be additional bonuses or returns depending on LIC’s experience under the plan.

Risk Cover

• LIC deducts mortality charges from the policy account for providing life risk cover.
• On death, the nominee receives the sum assured plus the balance in the policyholder’s account.

Loan Facility

• Loan facility is available immediately after the first policy anniversary, allowing liquidity if you need funds in emergencies.

Policy Term and Premium Payment

• The policy term is flexible, ranging from 10 to 15 years.
• Premiums can be paid yearly, half-yearly, quarterly, or monthly.

Top-up Premium Option

• You can pay additional top-up premiums without increasing the risk cover, further increasing your policyholder account balance.

Eligibility Criteria

How Does the LIC Bima Account II Calculator Work?

The LIC Bima Account II calculator helps you estimate the maturity value, premiums, and benefits you can expect from the plan. Using this calculator, you enter your:

• Age
• Policy term (10 to 15 years)
• Sum assured amount
• Premium payment mode (yearly, half-yearly, quarterly, or monthly)

The calculator then applies the retention charges (like mortality and expense charges), calculates the guaranteed 6% interest on the policyholder’s account, and projects the value of the sum assured and final maturity amount.

What the Calculator Shows You

• Yearly premium amount for your selected sum assured and age
• Total premiums paid over policy term
• Guaranteed returns accrued in the policyholder’s account
• Potential additional bonuses, if any (subject to LIC’s discretion)
• Death benefit amount payable to nominee
• Loan amount available after one year
• Surrender value if you discontinue the policy after 3 years

This calculator is particularly helpful because it shows how charges and risk deductions impact your returns, making the process transparent.

Benefits of LIC Bima Account II Plan 806

Guaranteed Returns

Unlike many market-linked policies, LIC promises a minimum 6% annual return on your premiums which is quite attractive compared to traditional fixed-income products.

Transparency in Charges

Charges such as expenses and mortality are deducted every month transparently from your account, unlike some other complicated plans where charges are hidden.

Life Cover for Security

Besides savings, you get the benefit of life cover which provides financial protection for your family in case of an unfortunate event.

Flexibility in Premium Payment and Term

You can select policy duration and premium payment mode that suits your budget and goals.

Loan Facility

A loan can be availed against your policy, providing liquidity without surrendering the plan

Tax Benefits

Premiums paid under this plan are eligible for tax deduction under Section 80C of the Income Tax Act, and maturity proceeds are tax-free under Section 10(10D), subject to prevailing tax laws.

Important Dates: Launch and Withdrawal

• Launch Date: 2nd February 2011
• Withdrawal Date: 24th November 2013 (the plan is no longer available for purchase after this date)

Even though it is withdrawn, many people still hold policies and benefit from maturity or surrender proceeds.

How to Use the LIC Bima Account II Calculator

To make the most of the LIC Bima Account II plan, use the calculator by following these simple steps:

1. Visit an LIC calculator website or use LIC’s official tools. There are also third-party tools like LICCalculator.info which offer user-friendly calculators for LIC plans.
2. Input your age at the time of policy commencement.
3. Select the term length you prefer, usually between 10 to 15 years.
4. Enter the sum assured amount you want based on your protection needs.
5. Choose the premium payment mode (yearly, half-yearly, quarterly, or monthly).
6. Calculate the premium you need to pay annually or in the selected mode.
7. The calculator will estimate maturity benefits, death benefits, and surrender value based on your inputs.

This tool allows you to plan your finances better by knowing what to expect from your Bima Account II policy.

Example Calculation

Suppose you are 30 years old and choose a policy term of 15 years with a sum assured of ₹150,000. The yearly premium may be approximately ₹15,000.

• The premiums paid after deducting charges will be credited to your account.
• Your account earns a guaranteed 6% annual return.
• Interest is compounded yearly.
• Additional returns may be declared by LIC based on plan performance.
• On maturity, you will receive the balance accumulated in your policy account.
• In event of death during policy term, your nominee will receive the sum assured plus the balance in the policyholder account.

This simple example helps you visualize the savings and protection lifecycle of the plan.

Who Should Consider LIC Bima Account II Plan 806?

This plan is suitable for individuals who:

• Want a simple and transparent insurance plan without complicated features
• Prefer guaranteed returns rather than market-linked risks
• Seek regular insurance coverage with an option to pay premiums monthly or yearly
• Desire flexibility in choosing policy term from 10 to 15 years
• Want the assurance of liquidity through loan availability after one year
• Desire tax-efficient savings under Section 80C and tax-free maturity proceeds
• Are okay with a long-term commitment to savings and insurance combined

Limitations of LIC Bima Account II Plan 806

• The plan is withdrawn and no longer available for new customers since 2013. However, existing policyholders continue with their contracts.
• The returns are fixed and may not keep up with inflation or higher returns offered by unit-linked plans.
• The sum assured is limited relative to premium, and risk cover might be lower than standalone term insurance plans.
• Surrender value is available only after 3 years, so short-term liquidity is limited.
• No loyalty additions or bonuses like other traditional plans; it’s a not-for-profit plan focused on simplicity.

FAQs on LIC Bima Account II Plan 806

Conclusion

LIC Bima Account II Plan 806 was an easy-to-understand, low-risk insurance product offering guaranteed returns and insurance benefits. Though withdrawn now, it served many policyholders who valued transparency, guaranteed growth, and life cover in one package.

The LIC Bima Account II calculator helps existing and prospective policyholders understand their premiums, maturity benefits, and loan/surrender options effectively, making financial planning a breeze.