Investing in a Life Insurance Corporation (LIC) policy is a smart financial decision, but to truly maximize its benefits, you need to understand how to manage and optimize it effectively. Whether you are a new policyholder or have held an LIC policy for years, these strategies will help you get the most out of your investment.
- Choose the Right LIC Policy for Your Needs
Not all LIC policies are the same. They cater to different financial goals such as wealth accumulation, retirement planning, and financial security for dependents. When selecting a policy, consider:
- Your long-term financial goals
- Your risk appetite
- The policy’s maturity benefits and coverage
- Pay Premiums on Time
Late or missed payments can lead to policy lapses, affecting your financial security. Ensure that you:
- Set up automatic payments or reminders
- Take advantage of LIC’s grace period for premium payments
- Consider annual premium payments for possible discounts
- Make Use of Policy Loans
LIC policies with savings and investment components allow policyholders to take loans against their policy’s surrender value. This can be a cost-effective alternative to other high-interest loans during financial emergencies.
- Reassess Your Policy Regularly
Your financial needs change over time, so it’s important to review your LIC policy periodically. Check whether:
- The sum assured is still adequate for your family’s needs
- You need to add riders for extra coverage
- You need to convert your policy to another LIC plan that better suits your goals
- Take Advantage of Riders for Enhanced Protection
LIC offers optional riders that enhance your policy’s coverage. Some valuable riders include:
- Accidental Death Benefit Rider: Provides additional financial support in case of accidental death
- Critical Illness Rider: Offers financial assistance if diagnosed with a severe illness
- Waiver of Premium Rider: Ensures that the policy continues even if you are unable to pay due to disability
- Maximize Tax Benefits
LIC policies provide attractive tax-saving benefits under the Income Tax Act:
- Section 80C: Deduction on premium payments (up to ₹1.5 lakh per year)
- Section 10(10D): Maturity and death benefits are tax-free under specific conditions
- Consider Partial Withdrawals in ULIPs
If you have a Unit Linked Insurance Plan (ULIP) from LIC, you may be eligible for partial withdrawals after the lock-in period. This can provide liquidity while keeping your policy active.
- Keep Your Nominee Details Updated
Ensuring that your nominee details are accurate will prevent complications for your family when claiming benefits. Regularly update nominee details in case of life events such as marriage or childbirth.
- Utilize Online Services for Convenience
LIC’s digital services allow policyholders to:
- Check policy status online
- Pay premiums through multiple channels
- Download policy documents
- Initiate claim processing
- Understand the Claim Process
To ensure a hassle-free claim settlement for your family, familiarize yourself with the documentation and claim process. Keep:
- Policy documents in a safe and accessible place
- Contact details of the LIC branch where the policy is registered
- A list of necessary documents required for claims
