Last Updated: 11 Oct 2025 | By Keyur Tirgar, LIC Agent Code: 04699-102
Introduction
Are you looking for an insurance plan that offers both life protection and wealth creation opportunities? LIC Index Plus Plan 873 might be exactly what you need. Launched in February 2024, this Unit Linked Insurance Plan (ULIP) from Life Insurance Corporation of India combines the security of life insurance with the growth potential of market-linked investments.
In this comprehensive guide, I'll walk you through everything you need to know about LIC Index Plus - from its unique features and benefits to charges, eligibility, and whether it's the right choice for your financial goals.
Note: LIC Index Plus was launched on February 6, 2024, and was withdrawn from sale on October 1, 2024. However, existing policyholders continue to enjoy all policy benefits, and this guide remains valuable for understanding ULIP products.
What is LIC Index Plus Plan 873?
LIC Index Plus Plan 873 is a Regular Premium, Non-Participating, Unit Linked, Individual Life Insurance Plan designed to provide both insurance protection and wealth creation over the long term. Think of it as a financial product that wears two hats - it protects your family with life insurance while simultaneously investing your money in market-linked funds.
The ULIP Advantage
Unlike traditional insurance plans that offer guaranteed returns, ULIPs like Index Plus invest your premiums in equity and debt markets. This means your returns depend on market performance, offering potentially higher growth compared to traditional plans. At the same time, you get comprehensive life insurance coverage.
Key Features of LIC Index Plus Plan 873
1. Dual Benefit Structure
The plan offers a death benefit to ensure financial security for your family in case of your untimely demise, with the nominee receiving the higher sum assured or the fund value. Simultaneously, your premiums are invested in market-linked funds, allowing your wealth to grow over time.
2. Unique Mortality Charge Refund
One of the standout features of LIC Index Plus is the mortality charge refund at maturity. On survival till maturity, the policyholder will receive a refund of mortality charges for life cover. This means the cost you pay for life insurance coverage is returned to you when you survive the policy term - a feature not commonly found in ULIPs.
3. Guaranteed Additions
The plan offers guaranteed additions as a percentage of premiums paid during the premium payment term. These additions enhance the death benefit and provide additional wealth accumulation beyond market-linked returns.
4. Flexible Premium Payment Options
The minimum premium varies based on the chosen payment frequency, with amounts set at Rs 30,000 (Yearly), Rs 15,000 (Half-Yearly), Rs 7,500 (Quarterly), and Rs 2,500 (Monthly through NACH). There is no maximum limit on the premium, subject to underwriting decisions.
5. Multiple Fund Options
LIC Index Plus allows you to choose from various fund options based on your risk appetite:
- Flexi Growth Fund - Focus on long-term capital appreciation through equity investments
- Flexi Balanced Fund - Balanced mix of equity and debt instruments
- Flexi Debt Fund - Conservative option with debt securities for stable returns
You can switch between funds up to 4 times per year free of cost, with subsequent switches charged at ₹100 each.
6. Five-Year Lock-in Period
Like all ULIPs, Index Plus comes with a mandatory 5-year lock-in period. During this time, you cannot surrender the policy or make partial withdrawals (except in specific circumstances). This encourages long-term wealth creation and disciplined investing.
How Does LIC Index Plus Work?
Understanding how your premiums are utilized is crucial. Here's the journey of your money in LIC Index Plus:
Step 1: Premium Allocation
When you pay your premium, not all of it goes into investment. First, various charges are deducted.
Step 2: Unit Allocation
After deducting charges, the remaining amount is used to purchase units in your chosen fund. The number of units allocated depends on the Net Asset Value (NAV) on the date of premium receipt.
Example:
- Premium Paid: ₹30,000
- Premium Allocation Charge (First Year): 8% = ₹2,400
- Amount Invested: ₹27,600
- If NAV is ₹10, you get: 2,760 units
Step 3: Fund Growth
Your units grow (or decline) based on the performance of the underlying fund. If you've chosen the Flexi Growth Fund, the returns depend on equity market performance.
Step 4: Ongoing Charges
Throughout the policy term, certain charges continue to be deducted monthly from your fund value:
- Mortality charges (cost of life insurance)
- Policy administration charges (from 6th year)
- Fund management charges
Step 5: Maturity or Death Benefit
On Maturity: You receive the accumulated fund value plus a refund of mortality charges deducted during the policy term.
On Death: Your nominee receives the higher of:
- Sum Assured (10 times annual premium)
- Fund Value
- 105% of premiums paid (if death occurs within first 5 years)
Understanding Charges in LIC Index Plus
One of the most important aspects of any ULIP is understanding the charges. Transparency is key to making an informed decision.
1. Premium Allocation Charge (PAC)
Premium Allocation Charge (PAC) varies by purchase mode: Offline charges are 8% in the 1st year, 5.5% for years 2-5, and 4% from the 6th year onward. Online charges are lower at 3% in the 1st year, 2% for years 2-5, and 1.5% from the 6th year.
This is the percentage deducted from your premium before investment. Buying online saves you significantly on this charge.
2. Mortality Charge
Mortality Charge is deducted monthly based on Sum at Risk. This is the cost of providing life insurance coverage. The good news? You get this refunded at maturity!
Sum at Risk = (Sum Assured - Fund Value)
As your fund value grows, the sum at risk decreases, leading to lower mortality charges over time.
3. Policy Administration Charge
Policy Administration Charge is NIL for first 5 years. From the 6th year onwards, it's the minimum of (3.25% of Annual Premium/12 or Rs 85 per month), increasing by 3% each year.
This covers the administrative costs of managing your policy.
4. Fund Management Charge
This charge is embedded in the NAV calculation and is not separately visible. It covers the cost of managing the investment fund.
5. Other Charges
- Partial Withdrawal Charge: ₹100 per withdrawal
- Fund Switching Charge: First 4 switches per year are free; ₹100 for each subsequent switch
- GST: 18% GST is applicable on all charges
Eligibility Criteria for LIC Index Plus
Before applying, ensure you meet these eligibility requirements:
| Parameter | Details |
|---|---|
| Minimum Entry Age | 18 years (age last birthday) |
| Maximum Entry Age | 65 years |
| Minimum Sum Assured | 10 times Annual Premium |
| Policy Term | 15, 20, 25, 30 years |
| Premium Payment Term | 5, 7, 10, 12, 15 years |
| Minimum Annual Premium | ₹30,000 |
| Premium Payment Modes | Yearly, Half-yearly, Quarterly, Monthly (NACH) |
Important Conditions:
- Policy Term - Premium Payment Term ≥ 5 years
- Premium Payment Term cannot exceed Policy Term
- Medical examination may be required based on sum assured and age
Benefits of LIC Index Plus Plan 873
1. Life Insurance Coverage
Your family receives financial protection throughout the policy term. The death benefit is the higher of sum assured, fund value, or 105% of premiums (in early years).
2. Wealth Creation Through Market Participation
Investment in Equity Markets means returns are linked to the performance of selected stock markets, offering growth potential that can beat inflation over the long term.
3. Mortality Charge Refund - Unique Feature
Unlike most ULIPs where life insurance costs are gone forever, LIC Index Plus refunds mortality charges at maturity. This significantly improves your effective returns.
4. Tax Benefits
Under Section 80C: Premiums paid are eligible for deduction up to ₹1.5 lakh per financial year.
Under Section 10(10D): Maturity proceeds are tax-free if the annual premium doesn't exceed ₹2.5 lakh (for policies issued after February 1, 2021).
5. Flexibility in Investment
- Choose from three fund options
- Switch funds based on market conditions
- Top-up facility to invest additional amounts
6. Partial Withdrawal Facility
After 5 years, you can make partial withdrawals (subject to conditions) for emergencies or financial goals.
7. Guaranteed Additions
Guaranteed additions provide an element of certainty in an otherwise market-linked product, enhancing the death benefit.
Who Should Consider LIC Index Plus?
Ideal Candidates:
✓ Long-term Investors: Those comfortable staying invested for 15+ years
✓ Risk-Takers: Individuals willing to accept market volatility for higher returns
✓ Tax Planners: People looking to optimize tax deductions under Section 80C
✓ Young Professionals: Those in their 30s-40s with stable income and long investment horizon
✓ Dual Goal Seekers: Those wanting life protection and wealth creation in one product
May Not Be Suitable For:
✗ Conservative investors seeking guaranteed returns
✗ Those needing liquidity within 5 years
✗ Senior citizens (due to age restrictions)
✗ Risk-averse individuals uncomfortable with market fluctuations
✗ Those looking for pure investment (better mutual fund options available)
LIC Index Plus vs Traditional Life Insurance
| Feature | LIC Index Plus (ULIP) | Traditional Plan |
|---|---|---|
| Returns | Market-linked (variable) | Guaranteed |
| Risk | Moderate to High | Low |
| Premium | Higher | Lower |
| Flexibility | High (fund switching) | Limited |
| Transparency | High (daily NAV) | Moderate |
| Lock-in Period | 5 years | Till maturity |
| Liquidity | Partial withdrawal after 5 years | Policy loan available |
How to Apply for LIC Index Plus (If Available)
Although the plan is currently withdrawn, here's the general process for ULIP applications:
Step 1: Assess Your Needs
Calculate how much coverage you need and what premium you can afford.
Step 2: Contact an Authorized LIC Agent
Work with a certified adviser (like me!) who can explain the plan in detail and help you make an informed decision.
Contact Keyur Tirgar:
- Phone/WhatsApp: +91 9784309640
- Email: tirgarkuriya@gmail.com
- LIC Agent Code: 04699-102
Step 3: Submit Application
Fill out the proposal form with accurate information. Remember, insurance is a contract of utmost good faith - disclose all material facts.
Step 4: Medical Examination
Depending on your age and sum assured, you may need to undergo medical tests.
Step 5: Premium Payment
Pay the first premium through any convenient mode (online, cheque, NEFT).
Step 6: Policy Issuance
Once approved, you'll receive your policy document within 15-30 days.
Important Points to Remember
⚠️ Market Risk Warning
ULIPs are subject to market risks. There's no guarantee of returns. Your fund value can go up or down based on market performance. Past performance is not indicative of future results.
🔒 Five-Year Lock-in
You cannot surrender the policy or access funds (except specific withdrawals) for the first 5 years. Ensure you can commit to the premium payments.
💰 Charges Impact Returns
While LIC Index Plus has competitive charges, they do reduce your effective returns. Online purchase significantly reduces premium allocation charges.
📄 Free Look Period
All insurance policies come with a 15-30 day free-look period. If you're not satisfied with the policy terms after receiving the document, you can return it for a refund.
🔄 Policy Revival
If you miss premium payments and the policy lapses, you can revive it within 5 years by paying outstanding premiums with interest.
Tax Implications
Tax Benefits:
- Section 80C: Premium deduction up to ₹1.5 lakh annually
- Section 10(10D): Tax-free maturity proceeds (if premium ≤ ₹2.5 lakh/year)
Tax Liability:
- If annual premium exceeds ₹2.5 lakh, maturity proceeds become taxable
- Fund switches within the policy are tax-free
- Partial withdrawals after 5 years are tax-free
Consult a tax advisor for personalized advice based on your situation.
Alternatives to LIC Index Plus
If LIC Index Plus isn't available or doesn't suit your needs, consider these alternatives:
Other LIC ULIPs:
- Check for new ULIP launches from LIC
Private Insurer ULIPs:
- HDFC Life Click 2 Wealth
- ICICI Prudential Wealth Builder II
- SBI Life eWealth Insurance
- Max Life Smart Wealth Plan
Traditional LIC Plans:
- LIC Jeevan Anand (Whole Life with Maturity)
- LIC Jeevan Umang (Whole Life with Income)
- LIC New Endowment Plan (Guaranteed Returns)
Pure Investment + Term Insurance:
- Buy pure term insurance for life cover
- Invest remaining amount in mutual funds
- Often more cost-effective for focused investors
Frequently Asked Questions
Q1: Is LIC Index Plus still available for purchase?
LIC Index Plus was withdrawn from sale on October 1, 2024. However, existing policies continue with all benefits intact. Contact me for information on currently available LIC plans.
Q2: What happens to my money if the market crashes?
Your fund value may decrease temporarily. However, ULIPs are long-term investments (15+ years). Markets historically recover and grow over long periods. Stay invested for the full term.
Q3: Can I surrender the policy before 5 years?
No, ULIPs have a mandatory 5-year lock-in. Early surrender is not permitted except in specific cases like terminal illness or death.
Q4: How is this different from mutual funds?
ULIPs combine life insurance with investment, have a 5-year lock-in, and charge mortality costs. Mutual funds are pure investments with higher flexibility but no life cover.
Q5: Will I get guaranteed returns?
No. Returns depend on fund performance. However, you get guaranteed additions and mortality charge refund at maturity, which provides some certainty.
Expert Opinion: Should You Consider ULIPs Like Index Plus?
As an insurance adviser with 5+ years of experience, here's my honest take:
ULIPs Make Sense If:
✓ You want life insurance and are comfortable with market-linked returns
✓ You need tax-saving investment options
✓ You have a long investment horizon (15+ years)
✓ You want disciplined investment through insurance
✓ You prefer single-product simplicity over managing separate term plan + mutual funds
Better Alternatives Might Be:
✗ For Pure Protection: Buy term insurance (10x coverage at 1/3rd cost)
✗ For Investment: Mutual funds offer lower costs and higher flexibility
✗ For Guaranteed Returns: Traditional insurance or fixed deposits
The Hybrid Approach (My Recommendation):
- Buy adequate term insurance (10-15x annual income)
- Invest remaining amount in mutual funds or diversified portfolio
- Consider traditional insurance for guaranteed savings component
However, if you strongly prefer a single product combining both benefits and can commit long-term, ULIPs like Index Plus can work well.
Conclusion
LIC Index Plus Plan 873 represented an interesting evolution in LIC's product portfolio, combining the trust of LIC with modern ULIP features. Its unique mortality charge refund feature made it stand out from typical ULIPs.
While the plan is no longer available for new purchases, understanding its structure helps you evaluate similar products. The key takeaway is this: ULIPs are neither universally good nor bad - they're suitable for specific financial situations and investor profiles.
Key Takeaways:
- ✅ ULIPs offer dual benefits of insurance and investment
- ✅ Five-year lock-in requires long-term commitment
- ✅ Market risks mean variable returns
- ✅ Charges impact overall returns
- ✅ Tax benefits make them attractive for tax planning
- ✅ Mortality charge refund was a unique feature of Index Plus
Need Personalized Advice?
Choosing the right insurance and investment products requires understanding your unique situation. As a certified LIC agent and multi-company insurance adviser, I can help you:
- Assess your insurance needs scientifically
- Compare products across LIC and private insurers
- Understand complex terms in simple language
- Make informed decisions without pressure
Contact Keyur Tirgar
📞 Phone/WhatsApp: +91 9784309640
📧 Email: tirgarkuriya@gmail.com
🏢 LIC Agent Code: 04699-102
📍 Service Area: All Over Rajasthan
💼 Services: Free consultation | Multi-company comparison | Lifetime policy support | Claims assistance
Related Articles You May Like
- Understanding ULIPs: Complete Guide for Indian Investors
- LIC vs Private Insurance: Which is Better in 2024?
- Top 10 LIC Plans for Different Life Stages
- Tax-Saving Insurance Plans: Section 80C Guide
- How Much Life Insurance Do You Really Need?
Disclaimer: This article provides general information about LIC Index Plus Plan 873 for educational purposes. Insurance products are subject to terms and conditions of the insurance company. ULIPs are subject to market risks. Please read all policy documents carefully before making investment decisions. For personalized advice, consult a certified insurance adviser.
Author: Keyur Tirgar | IRDA Certified Insurance Adviser | LIC Agent Code: 04699-102 | Serving All Over Rajasthan
Last Updated: October 2024
Have questions about LIC Index Plus or looking for alternative plans? Leave a comment below or contact me directly. I respond to all queries within 24 hours!
