Consult a licensed life insurance advisor to evaluate how LIC Protection Plus Plan 886 fits your startup’s risk management and personal wealth creation needs. For general discussion and educational queries on life insurance strategies for founders, contact +91‑76510-32666.
LIC Protection Plus Plan 886 (UIN: 512L361V01), launched December 2025, is a unit-linked insurance plan (ULIP) suitable for founders seeking combined life protection and wealth creation.
Key features: 7-30x premium coverage multiples, six fund options (conservative to aggressive), unique mortality charge refund at maturity, flexible 5-15 year premium terms, and top-up facilities.
Best for: Founders needing ₹50 lakh-₹2 crore structured coverage with market-linked growth potential.
Recommendation: Combine with high-coverage pure term insurance for optimal founder protection strategy.
Startup founders face concentrated risk that most salaried professionals never encounter. Your personal financial security, your family’s future, and your company’s survival are often intertwined through personal guarantees, founder-centric client relationships, and business models built around your unique expertise. One unexpected event can trigger cascading failures across all three domains.
LIC Protection Plus Plan 886 offers a tool to address this concentration risk while building disciplined, long-term wealth. This unit-linked insurance plan combines substantial life cover with market-linked investing and a unique mortality charge refund feature; creating a framework that serves both immediate protection needs and multi-year wealth creation goals.
Why Life Insurance Must Be Structured
Many founders accumulate life insurance haphazardly; a ₹10 lakh policy from a college recruiter, another ₹5 lakh bundled with a home loan, perhaps ₹15 lakh from an employer group scheme. When crisis strikes, this unstructured approach fails catastrophically.
A structured approach means:
- Coverage sized to actual exposure: For key-person needs, 5–10 times annual remuneration plus critical business obligations; for family protection, 10–15 times annual income plus all liabilities and major financial goals
- Clear purpose separation: Personal cover (family income replacement)
- Milestone alignment: Policy terms aligned with business trajectory; expected exit timelines, ESOP vesting schedules, major loan tenures
LIC Protection Plus 886: Core Features
LIC Protection Plus is a non-participating, unit-linked insurance plan that combines life cover with market-linked investment.
Eligibility and Coverage
| Parameter | Details |
|---|---|
| Entry Age | 18-50 years (5-year PPT) 18-65 years (7/10/15-year PPT) |
| Minimum Basic Sum Assured | 7x annual premium (age <50) 5x annual premium (age 50+) |
| Maximum Basic Sum Assured Multiple | Varies by age, PPT, and premium amount: Up to 20x for younger ages (18-30) with lower premiums Down to 7x for older ages (see brochure underwriting tables for precise multiples) |
| Premium Paying Terms (PPT) | 5, 7, 10, or 15 years |
| Policy Terms | 10, 15, 20, or 25 years (corresponding to PPT) |
| Maximum Maturity Age | 90 years |
Six Fund Options
| Fund | Risk Profile | Allocation (Approximate) |
|---|---|---|
| Bond Fund | Very Low | Government/Secured Debt ≥60%, Corporate Debt/Short-term ≤40%, Equity 0% |
| Secured Fund | Low | Government/Secured 45-85%, Short-term/Equity 15-55% |
| Balanced Fund | Moderate | Government/Secured/Short-term/Equity 30-70% each |
| Growth Fund | High | Government/Secured 20-60%, Equity 40-80% |
| Flexi Growth Fund | High | Government/Secured 0-20%, Short-term 0-40%, Equity 40-100% (NIFTY100 index focus) |
| Flexi Smart Growth Fund | Very High | Government/Secured 0-20%, Short-term 0-40%, Equity 40-100% (NIFTY50 index focus) |
Note: Allocations are approximate ranges subject to LIC’s investment guidelines and may be adjusted within brochure parameters. Refer to official LIC Protection Plus brochure for detailed sub-category breakdowns and specific investment mandates.
Key Features
Top-Up Premiums: Make additional payments when cash flows improve (post-funding rounds, profitable quarters). Top-ups immediately increase life cover by 1.25x the top-up amount and boost investment corpus.
Partial Withdrawals: After 5 years, withdraw funds for business opportunities or emergencies without surrendering the entire policy. Withdrawals are subject to conditions including: withdrawals from top-up fund first (after each top-up’s 5-year lock-in), then from base fund; maximum percentage of fund value varies by policy year (e.g., 15% in years 6-10, up to 30% in years 21-25); minimum balance of 3-4 times annualized premium must be maintained post-withdrawal; ₹100 processing charge applies. Refer to policy documents for complete withdrawal conditions and restrictions.
Mortality Charge Refund: If you survive the full policy term, all mortality charges deducted during the policy period (excluding GST and charges for extras due to underwriting such as health loading) are refunded at maturity. This refund boosts maturity value beyond standard fund performance, though the refund amount itself is not guaranteed to exceed specific thresholds; it simply returns the actual mortality charges paid. This significantly reduces the effective cost of insurance for those maintaining the policy to term.
Fund Switching: Switch between funds as your risk appetite changes (four free switches per policy year; charges apply thereafter).
Online Purchase Advantage: Lower premium allocation charges (Year 1: 3% online vs. 8% offline), improving net returns.
Optional Rider
LIC’s Linked Accidental Death Benefit Rider (UIN: 512A211V02): Provides additional cover up to Basic Sum Assured for accidental death. Available at inception or policy anniversaries (only if base policy has at least 5 years of PPT remaining). Charges: ₹0.40 per ₹1,000 sum assured annually (higher for hazardous occupations). Rider premium is extra and cannot exceed age 70 at rider maturity.
Critical Limitations
No Policy Loans: Unlike some LIC plans, policy loans are NOT available; important consideration for founders needing liquidity options.
5-Year Lock-In: No partial/full surrender allowed until Year 6. Premature discontinuation results in charges and potential loss of principal.
Suicide Clause: If death by suicide within 12 months of commencement or revival, only Unit Fund Value is payable (no Sum Assured).
Death and Maturity Benefits
Death Benefit: If the life assured dies after commencement of risk and the policy is in force, beneficiaries receive the Death Benefit calculated as:
Higher of:
- Basic Sum Assured (reduced by partial withdrawals in last 2 years before death, if any), OR
- 105% of total premiums paid (excluding extra premium and rider premium), OR
- Unit Fund Value (with post-death mortality/accident charges added back)
Plus: Top-up Sum Assured (if any) + Top-up Fund Value
This ensures your family receives substantial financial protection, with the formula guaranteeing a minimum return even if fund performance is poor.
Income Replacement: A ₹1 crore sum assured can replace 10-15 years of a ₹7-10 lakh annual income (approximately ₹58,000-₹83,000 monthly), helping maintain family lifestyle. This is an approximate illustration; actual income replacement needs depend on individual lifestyle requirements, inflation rates, existing assets, and other financial factors.
Liability Clearing: Covers personal guarantees on business loans, home loans, education loans.
Goal Funding: Ensures children’s education, spouse’s financial independence, and retirement security aren’t compromised.
Flexible Settlement: Option to settle death benefits in installments (5, 10, or 15 years) creates pension-like income stream instead of lump sum.
Long‑Term Wealth Creation for Founders
Beyond protection, founders need disciplined mechanisms to convert volatile entrepreneurial income into long-term wealth.
Market-Linked Growth Potential
Allocate to equity-oriented funds (Growth, Flexi Growth, Flexi Smart Growth) early in your startup journey when you have longer time horizons and higher risk capacity. As you approach key milestones or de-risk post-exit, switch to conservative options (Bond, Secured, Balanced) without surrendering the policy.
Disciplined Top-Up Mechanism
When your startup generates surplus cash after funding rounds, profitable quarters, or exits, make top-up premium payments. This creates a forcing function to convert business success into personal wealth while simultaneously increasing life cover. The 5-year lock-in on top-ups discourages impulsive withdrawals for non-essential expenses.
Mortality Charge Refund Advantage
The refund of mortality charges at maturity (excluding GST and underwriting extras) effectively rewards long-term discipline. Unlike traditional term insurance where mortality charges are pure expenses, Protection Plus returns these costs if you survive to maturity, enhancing your corpus beyond normal fund growth. This significantly lowers the effective cost of insurance for those maintaining the policy to term.
Tax Efficiency
Section 80C: Premiums paid may qualify for deduction (subject to conditions and annual limits).
Section 10(10D): Maturity proceeds may be tax-exempt if conditions are met, including premium not exceeding 10% of sum assured as per tax laws applicable from FY 2023-24 onwards. Post-2023 tax law changes may apply to high-premium policies – specific rules govern policies issued after April 1, 2023.
These dual tax benefits can meaningfully improve effective post-tax returns. However, tax laws change frequently; consult a qualified tax advisor for your specific situation and the latest applicable provisions.
Risks and Suitability Considerations
Market Risk
As a ULIP, returns depend entirely on fund performance. Equity-oriented funds can experience 10-20% drawdowns during market corrections. Treat this as a 10-15 year strategy, not a 2-3 year cash management tool. Never invest working capital or near-term business obligations into market-linked funds.
Charges Impact Net Returns
Fund Management Fee: Typically 1.35% per annum
Policy Administration Charges: Vary by policy year and sum assured
Premium Allocation Charges: Higher in early years; significantly lower if purchased online (Year 1: 3% online vs. 8% offline). Charges reduce in subsequent years as per policy schedule (full details in brochure).
Mortality Charges: Deducted monthly based on age, sum assured, and health; refunded at maturity if you survive
While the mortality charge refund partly offsets costs, factor total charges when projecting returns.
Liquidity Constraints
The 5-year lock-in means no partial/full surrender until Year 6. Discontinuation before Year 5 results in charges and potential principal loss. If you need high liquidity for business opportunities, maintain separate emergency funds outside this policy.
Two-Pronged Strategy Recommendation
For many founders, combining approaches works better:
High-Coverage Pure Term Insurance: ₹2-5 crore for low-cost, massive protection of key-person and family needs (annual premium: ₹15,000-30,000)
Plus Targeted LIC Protection Plus Allocation: ₹50 lakh-₹1 crore for structured wealth building with mortality refund benefit (annual premium: ₹1-2 lakh)
This provides both adequate coverage and wealth accumulation without over-reliance on a single complex product.
Practical Implementation Framework
Step 1: Assess Total Protection Needs
Personal needs: 10-15x annual income + liabilities + major goals
Key-person needs: 5-10x annual remuneration + critical business obligations
Example: A founder earning ₹15 lakh annually with ₹50 lakh personal loans and ₹1 crore in business guarantees needs approximately ₹3-4 crore total coverage.
Step 2: Split Coverage Strategically
Case Study – 30-Year-Old Founder:
Profile: ₹10 lakh annual income, ₹50 lakh home loan, ₹75 lakh business guarantees, plans 10-year startup journey
Total need: ₹2.5 crore (15x income + loans + guarantees)
Strategy:
- ₹2 crore term insurance (₹20,000 annual premium)
- ₹50 lakh LIC Protection Plus, 10-year PPT/20-year policy term (₹1.2 lakh annual premium)
- Allocate to Flexi Growth Fund initially; switch to Balanced Fund post-exit
Result: Comprehensive protection + ₹24 lakh invested over 10 years with mortality refund at maturity
Step 3: Match Policy Term to Business Horizon
7-10 year exit expectation: Choose 10-15 year policy terms
Decades-long build: Consider 20-25 year terms for maximum mortality charge refund benefit
Step 4: Start Conservatively, Scale with Success
Begin with moderate premiums sustainable in lean quarters. Use top-up provisions after funding rounds or profitable years to scale coverage and investment without committing to unaffordable regular premiums.
Step 5: Annual Review and Adjustment
As your business evolves; hiring professional management, achieving profitability, reducing founder-dependency – reassess coverage needs annually and adjust sum assured, fund allocation, and top-up strategy.
Online vs. Offline Purchase Considerations
Online Advantages:
- Lower premium allocation charges (Year 1: 3% vs. 8%)
- Faster processing and policy issuance
- Immediate access to calculators and illustrations
Offline Advantages:
- Personalized advice for complex needs
- Assistance with underwriting and documentation
- Ongoing service relationship with agent
For founders comfortable with financial products, online purchase offers meaningful cost savings that compound over the policy term.
As of January 10, 2026: Current Status
LIC Protection Plus Plan 886 features remain unchanged since the December 3, 2025 launch. No charge revisions or IRDAI amendments have been reported. Always verify the latest details, charges, and conditions with LIC or refer to the official policy brochure and sales materials available at licindia.in (search for “Protection Plus Plan 886 sales brochure”) before purchasing.
Verified as of January 10, 2026 based on official LIC press releases, sales brochures, and regulatory filings.
Ready to structure your insurance strategy? Consult a licensed life insurance advisor or financial planner who understands both startup risk management and personal wealth creation. For general discussion and educational queries on life insurance strategies for founders, contact +91-76510-32666. Calculate your premium needs using LIC’s online calculator at licindia.in.
Download: Official LIC Protection Plus Plan 886 sales brochure for the PDF version)
This article is for informational and educational purposes only and does not constitute financial or insurance advice. ULIPs involve market risks; investment risk is borne by the policyholder. NAV may fluctuate. Past performance is not indicative of future results. LIC’s Protection Plus is the plan name and does not guarantee quality or returns. Policy features, eligibility, tax benefits, and charges are subject to change. No liquidity in first 5 years; partial/full surrender not allowed until Year 6. Read policy documents carefully and consult with qualified professionals before making insurance or investment decisions. Verified as of January 10, 2026 based on December 3, 2025 plan launch; verify latest details with LIC at licindia.in.
