The idea of earning a steady, guaranteed monthly income is appealing to everyone — especially when advertisements claim that a ₹2 Lakh investment in LIC can give you ₹6,736 every month. But is it truly that simple? The short answer: not exactly.
Insurance plans are built on detailed structures and long-term commitments, not overnight gains. In this guide, let’s break down how LIC’s monthly income plans actually work, what’s realistic, and how you can truly build a lifelong income stream with safety and discipline.
Understanding the Concept: LIC is Not a Mutual Fund — It’s a Life Policy
Before diving in, it’s important to understand that LIC (Life Insurance Corporation of India) is primarily an insurance provider, not an investment fund. When you buy an LIC plan, you’re purchasing life cover with savings and income benefits attached.
That viral ₹6,736/month claim usually refers to monthly payouts from a Single Premium Annuity Plan, not a quick investment return.
Here’s how it works in principle:
- Single Premium: You pay a lump sum (for example, ₹2,00,000) once.
- Annuity: LIC then pays you a regular fixed income — monthly, quarterly, or yearly — for a specified term or for life.
The exact monthly amount depends on the plan type, your age, annuity rate, and the interest rate at the time of purchase.
The ₹6,736 Claim — What’s the Reality?
To understand this, let’s see what a real LIC annuity might look like.
| Example Calculation | Details |
|---|---|
| Single Premium | ₹2,00,000 |
| Approx. Annuity Rate | 7.5% per annum |
| Annual Payout | ₹15,000 |
| Monthly Payout | ₹1,250 per month |
So, realistically, a ₹2 Lakh single-premium annuity plan from LIC would give you around ₹1,250/month, not ₹6,736.
Then where does that higher figure come from? It’s typically a long-term maturity benefit from an endowment or money-back plan that eventually builds a large corpus — which is later used to buy an annuity that generates ₹6,736/month.
How to Actually Earn ₹6,736/Month: The Real Math
To receive ₹6,736 every month (₹80,832 annually) from an annuity yielding ~7.5%, you’d need a retirement corpus of around ₹10.78 Lakhs.
| Target Monthly Income | ₹6,736 |
| Annual Income Needed | ₹80,832 |
| Expected Annuity Yield | 7.5% |
| Required Corpus | ₹10,77,760 (~₹10.8 Lakhs) |
So, you don’t invest ₹2 Lakh once — you build a ₹10-12 Lakh corpus through consistent savings or premiums over time.
Example: Building Your Retirement Fund Through LIC
Let’s assume you choose a 20-year Participating Endowment Plan (e.g., LIC Jeevan Labh):
| Plan Example | Details |
|---|---|
| Policy Term | 20 years |
| Annual Premium | ₹20,000 |
| Total Paid Over 20 Years | ₹4,00,000 |
| Expected Maturity (with Bonus) | ₹10–12 Lakhs |
At maturity, you can reinvest this corpus into LIC’s Jeevan Akshay VII (Immediate Annuity Plan) and receive a monthly income of around ₹6,736 for life.
Best LIC Plans for Monthly Income
| Plan Name | Type | Key Features |
|---|---|---|
| Jeevan Akshay VII (Plan 858) | Immediate Annuity | Pay once, get lifetime monthly income starting immediately. Multiple options like single life, joint life, or with return of purchase price. |
| Jeevan Shanti (Plan 850) | Deferred/Immediate Annuity | Start income after a few years. Higher payout than immediate annuities. Option to add lump-sum benefit. |
| Jeevan Umang (Plan 845) | Money-Back Plan | Get 15% of the Sum Assured every few years + full maturity benefit at term end. Regular income plus insurance. |
| Jeevan Labh (Plan 836) | Endowment | Build long-term corpus with guaranteed returns and bonuses. Ideal for creating an annuity fund at maturity. |
Important Things to Know Before You Invest
- Inflation Impact: ₹6,736 today may not hold the same value 20 years later — inflation erodes real purchasing power.
- No Liquidity: Once you buy an annuity, you cannot withdraw your principal. You only receive monthly payments.
- Tax Rules:
- Premiums are eligible for 80C tax deductions.
- Maturity proceeds from endowment plans are tax-free under Section 10(10D).
- However, monthly annuity income is fully taxable as “Income from Other Sources.”
- Returns Are Moderate: Expect 5–7% effective annual returns — these are safe, not high-growth products.
Safer or Smarter Alternatives to Combine with LIC
To balance stability and growth, you can complement LIC with other income strategies:
- Systematic Withdrawal Plans (SWP): Withdraw a fixed monthly income from mutual funds while keeping your corpus invested.
- Senior Citizens’ Saving Scheme (SCSS): For retirees over 60, offers high, fixed quarterly interest payouts.
- Post Office Monthly Income Scheme (POMIS): Safe government-backed plan with predictable monthly income.
- Dividend Stocks or ETFs: For risk-tolerant investors, dividend-paying companies can provide higher returns and flexibility.
The Real Truth Behind LIC’s Monthly Income Promise
The popular claim that a ₹2 Lakh investment in LIC gives ₹6,736/month is a misleading oversimplification. In reality, to enjoy such a monthly income, you must build a ₹10–12 Lakh corpus over years through LIC’s endowment or money-back plans, and then convert it into an annuity.
LIC’s strength lies in safety, guaranteed income, and lifelong protection — perfect for conservative investors seeking peace of mind. However, for long-term wealth creation and inflation-adjusted returns, diversifying with mutual funds or equities is essential.
Bottom line: LIC is a strong foundation for financial security — but a complete strategy needs balance, planning, and patience.
Disclaimer: This article is for educational and informational purposes only. Figures such as ₹2 Lakh and ₹6,736 are illustrative examples. Actual payouts depend on current LIC plan terms, annuity rates, and bonuses. Always read official LIC brochures or consult a licensed financial advisor before making any investment decisions.
