List of LIC Tax Saving Plans In 2026

What are LIC Tax Saving Plans?

Life Insurance Corporation of India (LIC) offers certain life insurance plans which can provide tax benefits under Section 80C of the Income Tax Act, these plans are called LIC Tax Saving Plans. Such life insurance plans can enable policyholders to reduce their tax burden and offer insurance protection against death while also offering investment returns.

Many individuals who want to save and invest in a disciplined manner are attracted by LIC Tax Savings Plans as these plans offer the twin benefits of tax saving and financial security.

Best LIC Tax Saving Plans

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer. The tax benefit is subject to changes in tax laws. *Standard T&C Apply

To choose the best LIC policy for tax saving, the buyers must compare the plans and thoroughly review the LIC policies. Here, we have elaborated on the top LIC plans in detail.

LIC Index Plus

LIC Index Plus 873 is a unit-linked life insurance plan offering market growth potential with guaranteed death benefits. Policyholders will have the option to invest in the funds of their choice and receive guaranteed additions. With this plan, they will have life coverage throughout the policy term and can enhance their coverage with a rider. Index Plus offers flexibility on premium payment options and coverage till age 85.

Features of LIC Index Plus

• The plan provides you with different funds to select from according to your risk-taking ability and financial objectives.

• The plan offers Annual guaranteed additions to the unit fund to help boost earnings and enhance savings over time.

• There are options of adding riders with this plan to enhance the insurance coverage. However, the premium amount increases if you add a rider to the policy.

• Partial withdrawals are possible to take care of liquidity needs.

Benefits of LIC Index Plus

• Death Benefit
  This policy promises death benefits to the beneficiaries giving them financial security in case of a policyholder's death. The amount that will be paid is the greatest of the following three options

  • Unit fund value, or

  • Basic Sum Assured (after deducting any Partial Withdrawals).

  • 105% of the total premiums received up to the date of death reduced by Partial Withdrawals, if any

• Maturity Benefit
  Policyholders receive the Unit Fund Value upon surviving to the maturity date, providing a lump-sum payout.

• Refund of Mortality Charges
  Survivor policyholders who pay all required premiums will also be reimbursed for mortality charges.

LIC Nivesh Plus

LIC Nivesh Plus is a Unit-Linked insurance plan by LIC of India, offering insurance coverage and wealth accumulation through a single premium payment. It provides policyholders with a choice of four investment funds based on risk appetite and options for fund switching and partial withdrawals after the fifth policy anniversary.
Features of LIC Nivesh Plus

• The plan offers four investment funds to suit varying risk appetites.

• You can switch funds and withdraw partially after the fifth policy anniversary.

• The plan provides guaranteed additions to the policy unit fund over specific policy durations.

• With the LIC Nivesh Plus policy, you can avail of additional protection through rider benefits such as Accidental Death Benefit Rider.

Benefits of LIC Nivesh Plus

• Death Benefit
  The nominee receives a death benefit if the policyholder dies during the term. This benefit is calculated as the amount higher of the following:

  • Unit fund value, or

  • Basic Sum Assured after deducting any Partial Withdrawals.

• Maturity Benefit
  If the policy survives to maturity, the policyholder will receive a sum equal to the Unit Fund Value.

• Guaranteed Additions
  The policy offers guaranteed additions to the Policy Unit Fund at specific intervals. These additions are based on a fixed percentage of the Single Premium amount paid and are added to the fund's value once the policy reaches certain milestones:

  • At the end of 6 years: 3%

  • At the end of 10 years: 4%

  • At the end of 15 years: 5%

  • At the end of 20 years: 6%

  • At the end of 25 years: 7%

LIC Jeevan Umang

LIC Jeeva Umang 745 offers the family whole-life insurance coverage and the combined benefit of income and protection. The plan offers annual survival benefits to the insured from the end of the premium-paying term until the policy's maturity.
Features of LIC Jeevan Umang

• The plan offers the option to receive a death benefit in installments.

• Different rider options can be availed to increase policy coverage.

• The plan offers the option to pay the policy's premium through regular premium payment or by salary deductions during the policy's PPT.

• Tax benefits can be availed U/S 80C and 10(10D) of the Income Tax Act.

• Offers the benefit of rebates on premiums for a higher sum assured amount.

Benefits of LIC Jeevan Umang Plan

• Death Benefit
  If the life insured dies during the policy's tenure, the death benefit is paid to the policy's beneficiary.
  On death before the commencement of risk
  If the insured dies before the commencement of risk, the return of the premium paid without interest is paid to the policy's beneficiary.
  On death after the commencement of risk
  In the case of the insured's demise after the commencement of risk, the death benefit is defined as the sum assured on death plus vested reversionary bonus, and a final additional bonus (if any) is paid to the beneficiary of the policy. The sum assured on death is defined as:

  • Higher of 7 times the annualized premium; or

  • 105% of the total premium paid to date.

• Survival Benefit
  If the life insured survives the premium-paying tenure of the policy, a survival benefit equal to 8% of the basic sum assured amount is paid annually until the policy maturity date.

• Maturity Benefit
  If the life insured survives the entire tenure of the policy, the maturity benefit is paid to the insured as the sum assured on maturity plus the vested reversionary bonus and final additional bonus (if any). The sum assured on maturity is equal to the basic sum assured amount.

LIC Jeevan Utsav

LIC Jeevan Utsav 771 is a whole life insurance plan the company offers. Initially, the company offers two options to tailor benefits to your preference. You can choose between Option I (Regular Income Benefits) and Option II (Flexible Income Benefits). This plan provides for complete financial expansion and security of finance through flexible premium payment, tax benefit, guaranteed addition and loan facility.
Features of LIC Jeevan Utsav

• Allows flexible premium payments based on individual financial capacity.

• It can be beneficial under the current tax laws and can offer tax advantages.

• Ensures that the maturity value will be increased over time.

• Offers a loan facility which gives access to liquidity based on the policy.

Benefits of LIC Jeevan Utsav

• Guaranteed Additions
  LIC Jeevan Utsav provides guaranteed additions at specified rates throughout the policy term, ensuring a predetermined boost to the policy's maturity value.

• Death Benefit
  If the person insured passes away, the Death Benefit is paid. This benefit includes the "Sum Assured on Death" and accrued Guaranteed Additions, ensuring the policy is active. The Death Benefit is not less than 105% of the total premiums paid until death. "Sum Assured on Death" is the higher value between the 'Basic Sum Assured' and '7 times the Annualized Premium.'
  If a minor is aged below 8 at entry and passes away before risk coverage starts, the benefit is a refund of premiums paid without interest.

• Survival Benefit
  For those policyholders who survive the policy term, there are two options:
  Option I - Regular Income Benefit:
  Receive a Regular Income Benefit equal to 10% of the Basic Sum Assured annually, starting from a specified year, provided all due premiums are paid.
  Option II - Flexi Income Benefit:
  On survival, policyholders can opt for the Flexi Income Benefit, receiving 10% of the Basic Sum Assured annually starting from a specified year as long as all due premiums are paid.

LIC New Jeevan Shanti

LIC New Jeevan Shanti 758 is a single premium deferred annuity plan in which the policyholder pays a lump sum premium to obtain coverage. The plan also offers the option between Joint life and Single life Deferred annuities.
Features of LIC Jeevan Umang

• The LIC New Jeevan Shanti also offers flexibility in choosing the monthly, quarterly, half-yearly, or annually payout frequency.

• Several riders available with this policy can be added for enhanced coverage.

• The policy has tax benefits under Section 80C and Section 10(10D) of the Income Tax Act

Benefits of LIC Jeevan Umang Plan

• Death Benefit
  Purchase Price and Accrued Additional Benefit on Death (as described below) less the total annuity amount paid up to the date of death, if any, equals 105% of the Purchase Price.

• Option to cover Dependant with Disability
  Suppose the policyholder has a disabled family member who is a dependent. In that case, he or she may acquire a Deferred Annuity for Single Life (Option 1) on their life for the benefit of a disabled nominee, provided the purchase price is at least Rs. 50,000.

• Loan Facility
  After three months of policy issuance or after the expiration of the free-look period, whichever comes first, the policyholder may apply for policy loans against their LIC New Jeevan Shanti plan.

What are LIC Tax Free Plans?

The term insurance plans offered by LIC are generally known as LIC tax free plans because there are no taxes applicable on the death payout received by the nominee, under Section 10(10D) of the Income Tax Act. The entire death benefit amount is 100% free from income tax with no maximum limit of death payout for any life insurance policy.

However, not all life insurance policies are tax free because there may be deductions on the maturity payout you receive after outliving your insurance policy. The deductions on a maturity payout are based on the amount received and are made as per the tax laws and also the specific policy terms.

Premiums for a term plan are not completely tax exempt, you can only claim tax deductions. Income Tax Act Section 80C allows maximum deductions of up to ₹1.5 lakhs every year on the premiums of your LIC term insurance plan.

Which is the Best Tax Free LIC Policy?

There is no one LIC policy that can be called the “best” tax-free policy. Whether an LIC policy qualifies for tax treatment is more about the amount than the type of policy or the name of the policy and depends on the requirements of the Income Tax Act.

If the conditions are met, the maturity proceeds from a life insurance policy may not be subject to taxation under Section 10(10D) of the Income Tax Act. In general, the premium should not be more than the specified percentage on the sum assured, for eligible policies.

Key Features of LIC Tax Saving Plans

• Tax Benefits: The premiums paid for these plans are tax deductible under Section 80C up to a certain limit (which is now Rs. 1.5 lakh per annum as of September 2021).

• Life Insurance Coverage: LIC Tax Saving Plans offer life insurance coverage for the policyholder that guarantees safety of their family in case of untimely demise or an unanticipated event such as a disability.

• Maturity Benefit: The policy holder gets a maturity payout as lump sum at the end of the policy but they can also get it as instalments. However, this option needs to be selected at the inception of the policy.

• Investment Component: Some LIC Tax Saving Plans like ULIPs can be used for investments. In such plans a portion of your premium is invested in various funds. You get profit through market-linked returns.

What are the Benefits of a Tax Saving LIC Policy?

There are three main areas where tax saving LIC plans stand out.

• All policyholders are eligible for a tax deduction of up to ₹1.5 lakh per financial year on the premiums they pay for themselves, their spouse or children. However, the policyholder must meet conditions of Section 80C of the Income Tax Act.

• The maturity proceeds, the survival benefits or the death benefits received from a life insurance policy can be made tax-free if they fall under the conditions outlined in Section 10(10D) of the Income Tax Act.

• If your LIC policy has a health-related rider that is eligible, the premium paid on the rider may be eligible for additional tax benefit as per tax rules and conditions of Section 80D.

Tax Benefits - LIC Maturity Money is Taxable or Not?

LIC maturity proceeds can be tax-free provided the policy meets the prescribed eligibility conditions. The taxability generally depends on the policy issue date, premium-to-sum-assured ratio and for certain newer policies, the total premium paid.

When Is LIC Maturity Amount Tax-Free?

LIC maturity proceeds including applicable bonuses and guaranteed additions, may be exempt from income tax if the policy satisfies the conditions under Section 10(10D). Key conditions include the following.

• Policies issued on or after April 1, 2012: The annual premium should not exceed 10% of the minimum sum assured.

• Policies issued before April 1, 2012: The annual premium should not exceed 20% of the sum assured.

• Policies covering persons with specified disabilities or illnesses: A 15% premium limit may apply only for eligible cases.

• Death benefits: Payout received on the death of the insured is exempt from tax (apart from rare exceptions) even when other maturity-related conditions do not meet.

When Does LIC Maturity Amount Become Taxable?

LIC maturity proceeds may become taxable if the policy does not meet the conditions required for exemption. Common situations include the following.

• Premium exceeding the prescribed limit: The maturity proceeds may not qualify for tax exemption if the premium exceeds the applicable percentage of the sum assured.

• High-premium policies: For certain traditional life insurance policies issued on or after April 1, 2023, maturity proceeds may be taxable if the aggregate annual premium exceeds ₹5 lakh.

• Tax treatment: Only a portion of your life insurance maturity proceeds is taxable. A portion of your life insurance maturity proceeds is taxable. This portion is actually the net profit calculated as the total maturity payout minus the total premiums paid. This net profit is taxed according to your income tax slab.

• TDS: Tax is deducted at source in some instances where proceeds can not be exempted due to TDS rules.

• Keyman insurance policies: The proceeds from a keyman insurance policy are taxable.

Summing It Up

Individuals can get tax benefits under Section 80C of the Income Tax Act by taking advantage of various tax saving plans offered by LIC. Such plans include unit linked insurance plans (ULIPs), traditional endowment plans and money back plans etc. where premiums paid are tax deductible and the proceeds on maturity are also exempt from taxation. It is important, however, to keep abreast of new products and tax laws as well as to make investments based on your own financial objectives and risk tolerance.

LIC Resources

FAQs