LIC Nav Jeevan Shree 911 Calculation: We Calculated the Real Returns and Found a Nasty Tax Trap

When markets feel uncertain, many turn to trusted names like LIC for a sense of security. Plans like the LIC Nav Jeevan Shree 911 promise guaranteed returns and life coverage in a single package. But how much do you really earn after all is said and done? Most articles highlight features but shy away from revealing the crucial number: the true rate of return, or IRR. In this post, we cut through the marketing hype and crunch the real numbers. 

Before diving into the numbers, it’s essential to understand what this plan offers. LIC Nav Jeevan Shree 911 is a single-premium endowment policy. Simply put, you pay a lump sum upfront, and your money grows over a fixed period, providing a guaranteed payout at maturity. It’s not linked to the stock market, so the returns are predictable and fixed. Here are some of its key features:

To understand what you will actually receive at the end, let’s do some quick math. The basic formula for maturity value is straightforward:

Maturity Value = Basic Sum Assured (BSA) + Total Guaranteed Additions (GA)

Let’s consider an example to make this clearer:

Step 1: Calculate the annual Guaranteed Additions:

₹85 for every ₹1,000 of BSA per year

Calculation: (₹10,00,000 / 1000) × 85 = ₹85,000 per year

Step 2: Total GA over 20 years:

₹85,000 × 20 = ₹17,00,000

Step 3: Final maturity payout:

₹10,00,000 (BSA) + ₹17,00,000 (Total GA) = ₹27,00,000

While receiving ₹27 lakh from an ₹8.5 lakh investment sounds attractive, it’s essential to understand the annualized return—known as the Internal Rate of Return (IRR). This metric allows us to compare different investments on a like-for-like basis.

Using financial calculators or spreadsheet functions (like Excel’s RATE), we find that the pre-tax IRR for this plan is approximately 5.98%. This means your money effectively grows at just under 6% per year—guaranteed, yes, but not particularly impressive in the long run.

Taxes can significantly impact your returns. Normally, LIC maturity payouts are tax-free under Section 10(10D) of the Income Tax Act. However, there’s a catch: if the premium paid exceeds 10% of the sum assured, the maturity amount becomes taxable.

In simple terms, for your payout to be tax-free, your premium must be less than or equal to 10% of the sum assured. For a single premium policy, this means your premium should be no more than 10% of your sum assured. Otherwise, the entire payout gets taxed as income.

Let’s see how this applies to Mr. Sharma’s case:

If Mr. Sharma chooses Option II, the death benefit is 10 times his premium, aligning perfectly with the 10% rule. This means his maturity payout remains tax-free.

This is the ideal setup for avoiding taxes on the maturity amount.

Many buyers opt for a higher Basic Sum Assured (like ₹10 lakh) and choose Option I, which offers a death benefit of 1.25 times the premium or the BSA. But this can backfire.

In Mr. Sharma’s case, his premium is ₹8,50,160, which is about 85% of his BSA — far exceeding the 10% limit. This violates the tax rule, making the entire maturity payout taxable.

The consequence? A hefty tax bill that can wipe out a significant portion of his gains.

Assuming Mr. Sharma is in the 30% tax bracket (plus 4% cess, totaling around 31.2%), his tax liability on the maturity proceeds would be:

₹18,49,840 (profit) × 31.2% = ₹5,77,150

This tax reduces his net payout to approximately ₹21,22,850 after tax, lowering his effective IRR to about 4.71%.

Let’s see how LIC Nav Jeevan Shree 911 stacks up against other popular tax-saving investments:

As seen here, the taxable version of LIC’s plan offers a post-tax IRR lower than many safe alternatives like PPF or even a fixed deposit. The tax-free option improves the IRR but still lags behind other market-linked or equity-based options.

Based on the numbers, this plan is suitable only for a very specific group:

• Individuals who prioritize safety and simplicity above all else.
• Those who want a guaranteed, tax-free return close to 6% and are comfortable with long lock-in periods.
• People who trust LIC’s brand and prefer bundled insurance-investment solutions.

Conversely, it’s best avoided by:

• Investors seeking returns that outpace inflation or grow wealth significantly.
• Those who prefer to keep insurance and investments separate for better flexibility and returns.
• Anyone unaware of the tax trap that can turn their payout taxable and reduce their gains drastically.

In summary, LIC Nav Jeevan Shree 911 delivers on its promise of guaranteed additions, but the actual returns are modest—around 6% pre-tax. The real catch is the potential tax trap: choosing a high sum assured with a lower premium can make your entire payout taxable, slashing your net gains to below 5%.

When compared to other safe, tax-efficient options like PPF or fixed deposits, this plan falls short. For most investors, separating insurance and investment—using term plans, PPF, or equity mutual funds—will yield better long-term results.

Always run your numbers before committing. Use our official LIC Nav Jeevan Shree 911 Maturity & IRR Calculator to get a personalized projection and make an informed decision. Don’t guess—calculate!