What is CAGR?
CAGR (Compound Annual Growth Rate) represents the annualised rate of return on your LIC investment. It considers the total premium paid and the maturity amount received to calculate the effective annual return.
CAGR = [(Maturity Amount / Total Premium Paid)^(1/Term) − 1] × 100
LIC traditional plans typically offer CAGR of 4.5% to 6.5% depending on the plan, term, and bonus rates. While not the highest returns compared to equity investments, LIC plans offer guaranteed safety, life cover, and tax benefits.
Which LIC Plan Gives Highest Return?
- Jeevan Labh (736) — Often gives the best CAGR among traditional plans due to limited premium paying terms. You pay premiums for fewer years but benefits accrue for the full term.
- Jeevan Anand (715) — Good returns plus the unique benefit of lifetime cover even after maturity payout.
- Jeevan Lakshya (733) — Competitive returns with additional death benefit features (annual income to family).
- New Endowment (714) — Moderate returns with simplicity and flexibility in term options.
LIC vs Other Investments
- LIC vs FD — LIC offers slightly better post-tax returns than bank FDs for long terms, plus life cover and Section 80C benefits.
- LIC vs PPF — PPF currently offers 7.1% returns (tax-free). LIC offers 4.5-6.5% CAGR but includes life cover worth Sum Assured.
- LIC vs Mutual Funds — Equity mutual funds give 10-12% long-term returns but with market risk. LIC returns are guaranteed and safe.
Note: LIC plans are primarily insurance products with savings component. They should not be compared purely on returns with investment-only products.