Life Insurance Corporation (LIC) policies are a popular financial tool for securing the future of individuals and families. However, misconceptions about LIC policies often lead to confusion, preventing people from making well-informed financial decisions. In this blog, we will debunk common misunderstandings about LIC policies and provide clarity on how to avoid them.
Myth 1: LIC Policies Are Only for Life Coverage
The Truth:
While LIC policies do provide life coverage, they also offer additional benefits such as savings, investment growth, and retirement planning. Many policies come with maturity benefits, bonuses, and guaranteed returns, making them more than just life insurance.
Tip: Choose a policy that aligns with your financial goals, whether it’s protection, savings, or investment growth.
Myth 2: LIC Policies Are Expensive
The Truth:
The cost of an LIC policy depends on the type of plan, coverage amount, and policy tenure. LIC offers a wide range of affordable policies, including term insurance, which provides high coverage at a lower premium.
Tip: Compare different LIC policies and choose one that fits your budget while offering adequate coverage.
Myth 3: LIC Policies Do Not Offer Good Returns
The Truth:
Many LIC policies offer guaranteed returns, bonuses, and tax benefits that make them a valuable long-term investment. Policies like endowment plans and money-back plans provide financial security along with periodic payouts.
Tip: Understand the policy’s features, bonuses, and expected returns before investing.
Myth 4: LIC Policies Are Only for the Elderly
The Truth:
LIC policies are beneficial for individuals of all ages. Buying a policy at a younger age comes with lower premiums and better long-term benefits, while older individuals can secure financial stability for their dependents.
Tip: Invest in an LIC policy early to maximize benefits and secure lower premium rates.
Myth 5: Claim Settlement with LIC Is a Complicated Process
The Truth:
LIC has one of the highest claim settlement ratios in the industry. The process is straightforward if the necessary documentation is provided correctly.
Tip: Ensure that you disclose accurate information while purchasing the policy and keep nominee details updated to avoid claim rejection.
Myth 6: Once You Buy a Policy, You Cannot Modify It
The Truth:
LIC policies offer flexibility through options such as policy loans, top-ups, and surrender value. Policyholders can also opt for riders to enhance coverage.
Tip: Review your policy periodically and make modifications based on your financial needs.
Myth 7: LIC Policies Do Not Offer Tax Benefits
The Truth:
LIC policies provide tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, making them a tax-efficient investment.
Tip: Consult a financial advisor to understand how LIC policies can help with tax planning.
