With around 29 crore policies in force and a history stretching back to 1956, LIC remains India’s largest life insurer by a wide margin. It is also one of the most confusing to research. This is because currently offers close to three dozen active plans across very different categories. This guide breaks down what LIC actually offers. Find out each type of plan is actually for, so you can figure out which category fits your goal before comparing individual policies within it.
Why Do So Many Indians Trust LIC?
A few structural factors explain LIC’s continued dominance, beyond just brand familiarity:
- Sovereign backing: LIC operates under the LIC Act, 1956. This means policyholder liabilities are backed by the Government of India. This is level of institutional backing no private insurer offers in the same form
- Massive scale: Around 29 crore policies in force, with a life fund running into tens of lakh crores of rupees
- Long claims track record: LIC’s claim settlement ratio has stayed above 98% in most recent years. However, the exact figure varies depending on the specific metric used, whether by number of claims or by amount, and the reporting period. IRDAI’s own annual report is the most authoritative current source if you want the precise figure for a given year, since third-party comparison sites sometimes report slightly different numbers depending on methodology.
- Deep agent network: Over 11 lakh agents, including a growing number of women agents through the recent Bima Sakhi initiative. This gives LIC a genuinely wide physical distribution network beyond digital sales
What Are the Main Categories of LIC Plans?
Rather than listing plans alphabetically, it helps to think about what you’re actually trying to achieve first. LIC’s offerings fall into a few clear categories:
Term Insurance Plans
Pure protection, no savings component, maximum life cover for the lowest premium. LIC’s current term plans include New Jeevan Amar, Saral Jeevan Bima (a standardised term plan every insurer offers under the same name and terms, making it easy to compare across insurers), and Digi Term. If your primary goal is protecting your family financially rather than building savings, this category deserves serious consideration before anything else on this list. This is because it delivers dramatically more cover per rupee than any savings-linked plan.
Endowment and Savings Plans
Combine a guaranteed or bonus-linked maturity payout with life cover. This is LIC’s largest and most popular category, and includes some of its best-known products:
- Jeevan Labh (Plan 736): A limited-premium endowment plan, widely cited as one of LIC’s strongest plans for maturity value relative to premium paid. This is due to its limited-pay structure and comparatively high bonus rate
- New Jeevan Anand (Plan 715): Combines endowment and whole life features, continuing a reduced life cover even after the maturity payout
- New Bima Jyoti (Plan 890): A non-participating plan offering guaranteed additions rather than variable bonuses, appealing if you want a fully predictable return
- Jeevan Lakshya (Plan 733): Built around providing annual income to your family in the event of your death during the policy term, alongside the standard maturity benefit
- Bima Shree (Plan 748): Aimed at higher sum assured buyers, with better bonus rates at larger cover amounts
Whole Life Plan
Jeevan Umang (Plan 745) stands somewhat apart from standard endowment plans. After your premium payment term ends, it pays 8% of your sum assured annually as a survival benefit, continuing for the rest of your life, alongside a death benefit whenever it occurs. This makes it more of an income-generating plan than a pure lump-sum endowment.
Money-Back Plans
Pay out portions of the sum assured at fixed intervals during the policy term, rather than everything at maturity. LIC’s Children’s Money Back Plan is a notable example here, structured around payouts at ages 18, 20, and 22, timed for a child’s education milestones.
ULIPs (Market-Linked Plans)
SIIP (Plan 752) and Index Plus (Plan 873) invest your premium in market-linked funds rather than offering a guaranteed return, similar in spirit to a mutual fund with a life cover attached. These suit buyers comfortable with market risk in exchange for potentially higher long-term growth.
Pension and Annuity Plans
Jeevan Shanti and New Jeevan Akshay convert a lump sum into a guaranteed income stream, either immediately or after a deferment period, aimed at retirees who want predictable regular income rather than continued market exposure.
What’s the GST on LIC Premiums?
This is genuinely one of the biggest recent changes affecting LIC premiums, and it’s worth knowing clearly. Following the 56th GST Council meeting, GST on all individual life insurance premiums was reduced to 0%, effective September 22, 2025. This applies across the board, term plans, endowment plans, and ULIPs alike. It replaces the earlier 18% rate that used to apply to term insurance specifically. The lower rates that applied to savings-linked plans.
In practical terms, if you buy or renew a policy on or after September 22, 2025, you pay only the base premium. There will be no GST added on top. This was a meaningful cost reduction, particularly for term insurance, where the earlier 18% GST added a real amount to every premium. Group insurance policies are not covered by this exemption and continue to attract GST. But this doesn’t affect individual LIC policies bought directly by retail customers.
How Do LIC’s Bonuses Actually Work?
Most of LIC’s participating (with-profit) plans, including Jeevan Labh, New Jeevan Anand, and Jeevan Umang, earn returns through two components declared periodically by LIC based on its financial performance:
- Simple Reversionary Bonus: Declared annually as a rate per ₹1,000 of sum assured, added to your policy each year and locked in once credited
- Final Additional Bonus (FAB): An extra bonus sometimes added at maturity or on death, on top of accumulated reversionary bonuses. However, this isn’t guaranteed and depends on the specific policy’s performance
Non-participating plans like Bima Jyoti work differently. They offer Guaranteed Additions at a fixed, pre-declared rate instead, trading potential upside for certainty.
What Are the Tax Benefits on LIC Policies?
- Section 80C: Premiums paid are eligible for deduction up to ₹1.5 lakh a year. This is within the overall Section 80C limit shared with other eligible investments
- Section 10(10D): Maturity and death benefits are generally tax-exempt, subject to conditions, including a cap on annual premium relative to sum assured, and an aggregate premium limit of ₹5 lakh a year across policies issued after April 1, 2023, beyond which maturity proceeds become taxable
How Do You Choose the Right LIC Plan?
A few questions narrow this down quickly:
- Is your priority protection or savings? If it’s protection, start with the term plans, not the savings-linked ones. This is because you’ll get far more cover for the same premium.
- Do you want a guaranteed return or are you comfortable with variability? Bima Jyoti’s guaranteed additions suit the former; Jeevan Labh or New Jeevan Anand’s bonus-linked structure suits the latter, generally with somewhat higher long-term potential in exchange for less certainty.
- Do you want a lump sum or ongoing income? Standard endowment plans pay a lump sum. Jeevan Umang and the pension plans are built around ongoing payouts instead.
- How long can you commit to premiums? Limited-pay plans like Jeevan Labh require shorter, higher commitments; longer-term plans spread the cost out but require a longer commitment.
Frequently Asked Questions
What are the best LIC plans in 2026?
This depends on your goal. For pure protection, Tech Term or Saral Jeevan Bima offer the most cover per rupee. For savings with bonus potential, Jeevan Labh is widely regarded as one of LIC’s strongest options. For a fully guaranteed return, Bima Jyoti is a common choice.
What is LIC’s claim settlement ratio?
LIC’s claim settlement ratio has generally stayed above 98% in recent years, though the exact figure varies depending on whether it’s measured by number of claims or by amount, and the specific reporting period. Check IRDAI’s official annual report for the precise current figure.
What is the difference between LIC Jeevan Labh and New Jeevan Anand?
Jeevan Labh is a limited-premium endowment plan generally offering a higher maturity value relative to premium paid. New Jeevan Anand combines endowment with a whole life feature, continuing reduced life cover even after the maturity payout, which Jeevan Labh does not offer.
Is GST charged on LIC premiums?
No, not anymore. Following the 56th GST Council meeting, GST on all individual life insurance premiums, including term, endowment, and ULIP plans, was reduced to 0% effective September 22, 2025. This replaced the earlier 18% rate on term plans and the lower rates that applied to savings plans.
What is the difference between LIC’s participating and non-participating plans?
Participating plans, like Jeevan Labh and New Jeevan Anand, earn variable bonuses declared periodically based on LIC’s performance. Non-participating plans, like Bima Jyoti, offer fixed Guaranteed Additions instead, trading potential upside for certainty.
Which LIC plan is best for a child’s education?
LIC’s Children’s Money Back Plan is specifically structured around payouts timed to typical education milestones, at ages 18, 20, and 22, rather than a single lump sum at maturity.
Last Updated on 15 minutes ago by Team Paisaseekho
