Life Insurance Corporation of India (LIC) offers a wide range of insurance policies designed to provide financial security, savings, and investment opportunities. Before purchasing a LIC policy, it is essential to understand its features, benefits, and how it aligns with your financial goals. This guide will help you make an informed decision.
- Key Features of LIC Policies
- a) Variety of Policy Options
LIC offers different types of insurance policies, including:
- Term Insurance Plans – Pure protection with no maturity benefits.
- Endowment Plans – Life coverage with a savings component.
- Whole Life Policies – Coverage for the policyholder’s entire lifetime.
- Unit-Linked Insurance Plans (ULIPs) – Investment and insurance combined.
- Pension & Retirement Plans – Financial security post-retirement.
- b) Flexible Premium Payment Options
LIC policies come with various premium payment options:
- Single premium (one-time payment)
- Limited premium (pay for a fixed number of years)
- Regular premium (monthly, quarterly, half-yearly, or yearly payments)
- c) Loan Facility
Many LIC policies allow policyholders to avail of loans against their policy’s surrender value, providing financial flexibility in times of need.
- d) Tax Benefits
LIC policyholders can claim tax deductions under Section 80C and receive tax-free maturity benefits under Section 10(10D) of the Income Tax Act.
- e) Bonus and Additions
Participating LIC policies offer reversionary bonuses and final additional bonuses, enhancing the overall policy value.
- How to Choose the Right LIC Policy
- a) Assess Your Financial Needs
Determine whether you need pure protection, savings, retirement planning, or investment-linked insurance.
- b) Compare Policy Benefits
Look at coverage amount, premium affordability, maturity benefits, and additional riders such as accident cover, critical illness, or waiver of premium.
- c) Consider Claim Settlement Ratio
LIC has a high claim settlement ratio, which reflects its reliability in processing claims efficiently.
- d) Check Policy Terms and Conditions
Understand policy exclusions, surrender value, lock-in period, and renewal options before making a decision.
- Pros and Cons of LIC Policies
Pros:
✔ Trusted government-backed institution. ✔ Wide range of policy options. ✔ Tax benefits on premiums paid. ✔ High claim settlement ratio. ✔ Loan availability against policy.
Cons:
✖ Premiums can be higher compared to some private insurers. ✖ Investment returns on traditional policies may be lower than market-linked options. ✖ Some policies have long maturity periods with limited liquidity.
