Is LIC Policy a Good Investment?

LIC policies have been servicing the insurance needs of people for several decades now. Its long-standing commitment towards its customers has helped it grow to become the largest insurance provider in the country. LIC policies have remained consistent in their returns over the years. This article will include details about how LIC policy is a good investment.

Read more
LIC, Policybazaar join hands to
accelerate insurance growth
LIC investment
  • Buy LIC policy online
    hassle free

  • Guaranteed maturity with life
    cover for securing family's future

  • Tax saving under Sec 80C &
    10(10D)

  • Sovereign guarantee as per
    Sec 37 of LIC Act

Now Available on Policybazaar
Grow wealth through
100% Guaranteed Returns with LIC
+91
View Plans
Please wait. We Are Processing..
Plans available only for people of Indian origin By clicking on "View Plans", you agree to our Privacy Policy and Terms of Use #For a 55 year on investment of 20Lacs #Discount offered by insurance company Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp

LIC in Brief

The Life Insurance Corporation of India has been in the insurance space since 1956. It has a customer base of over 250 million. The company currently occupies over 60% of the market share in the insurance sector. 

LIC’s distribution network comprises over 1.5 lakh insurance agents, partnerships, and online sales channels. Its product offerings include endowment-based policies, ULIPs, term insurance plans, money-back schemes, and pension plans. 

Should You Purchase LIC Policies?

LIC policies have for long been the safest insurance scheme, given the backing of the Government of India. The company has also consistently reported a high claim settlement ratio over the years. 

The claim settlement ratio defines the total number of claims settled by LIC of the number of claims raised by beneficiaries. In FY 2020-21, it reported a CSR of 98.62%. This number indicates the reliability of the insurer in settling death and other claims. With LIC, you can rest assured that your family will receive the benefits that they are entitled to on your death. 

Is LIC Policy a Promising Investment Avenue?

If you are planning to maximize savings and get high returns on your investments, LIC policies may not serve your requirements. This is because the internal rate of return offered on traditional endowment policies is only around 4% to 5%, which may not cover inflation.

To counter this, LIC has also introduced ULIPs that offer the benefits of both insurance and investment. However, you can gain better returns through traditional investment avenues such as stocks, bonds, and mutual funds. You should only consider them if you have a high to medium risk appetite.

However, you can invest in insurance for direct policy benefits or debt funds for low-market risks but decent returns.

Life insurance in any form ensures that your dependents and their future financial needs are taken care of in the event of your unfortunate demise. You can add LIC policies into your financial portfolio as effective risk management.

Benefits of purchasing LIC Policy

LIC policies offer multiple benefits as mentioned below:

  • Government-owned - LIC comes with the sovereign guarantee of the Indian government, which makes its offerings a safe and reliable investment. 

  • Tax Benefits - Policyholders can enjoy tax deductions on the premium amount under Section 80C of the Income Tax Act, 1961. All the benefit proceeds are also subject to tax exemptions under Sections 10(10D). However, these tax benefits apply to insurance plans bought from any insurance provider and to savings schemes such as PPF and FD. 

  • Additional Returns - LIC pools the premiums collected from policyholders, invests a majority in government securities and earns profits. A percentage of the extra earnings is offered to its customers in the form of bonuses. 

  • Financial Security - The sole reason why people should invest in life insurance schemes from LIC is to financially protect their dependents and secure their future if any misfortune were to befall the policyholder. 

Where Do LIC Policies Fall Short?

The rate of return is significantly lower than most market-linked investment instruments. The amount that one receives on maturity is lower than what is possible under PPFs and FDs. This makes the latter options a better savings avenue. The low rate of return from LIC does not ensure protection against inflation. 

The Final Word!  

Insurance and investment should not be mixed. Both should be given equal importance during financial planning. While LIC policies offer enough benefits to secure your family’s finances after your death, they do not generate enough returns for wealth creation. Therefore, you should look to invest in different financial instruments serving individual purposes.

LIC of India articles

Recent Articles
Popular Articles
LIC Child Plans Are The Perfect Way To Celebrate Children’s Day

06 Oct 2022

Raising a child today requires significant time, effort, and...
Read more
LIC New Pension Plus Plan

21 Sep 2022

LIC New Pension Plus Plan The LIC New Pension Plus Plan is the...
Read more
LIC Linked Accidental Death Benefit Rider

06 Sep 2022

LIC Linked Accidental Death Benefit Rider LIC riders are an...
Read more
Is LIC Maturity Amount Taxable?

30 Aug 2022

Is LIC Maturity Amount Taxable? The maturity amount is the sum LIC...
Read more
LIC New Endowment Plan 914 Bonus Rate

26 Aug 2022

This is one of LIC’s insurance cum savings plans that offer...
Read more
Surrendering LIC Policy Before Maturity Time: Your Guide!
The Life Insurance Corporation of India is one of the most prominent insurance companies. It has an unparalleled...
Read more
12,000 Monthly Pension On One-Time Investment: Buy LIC Saral Pension Scheme
LIC Saral Pension Yojana make sure that investors get 12,000 monthly by paying a single premium. Life Insurance...
Read more
How to Check the Maturity Amount of LIC Policies?
Life Insurance Corporation of India is one of the leading public companies in the service of insurance plans. And...
Read more
LIC Jeevan Saral (With-Profit) Maturity Calculator
LIC Jeevan Saral has been withdrawn by LIC and is therefore not available for sale anymore. It is an endowment...
Read more
LIC Policy for Girl Child in India
A child insurance plan is a plan that acts as a blend of investment and savings while also providing the child...
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL