LIC SIIP is the insurer’s flagship ULIP, combining life cover with market-linked investment in a single policy. Unlike LIC’s traditional savings plans, your return here depends on fund performance, not a fixed or bonus-linked payout. Here’s exactly how it works, verified against LIC’s official sales brochure for the current Plan 752.
What Is LIC SIIP?
It’s a non-participating, unit-linked life insurance plan. Your premium, after deducting a Premium Allocation Charge, buys units in a fund you choose. The value of those units, and therefore your eventual payout, rises and falls with the fund’s market performance. This is fundamentally different from LIC’s guaranteed or bonus-based plans, and the investment risk sits entirely with you, not the insurer.
What Are the Eligibility Terms?
- Entry age: 30 days to 65 years
- Basic Sum Assured: 10 times your annualised premium if you enter before age 55, or 7 times if you enter between 55 and 65
- Policy term: 10 to 25 years, with the premium paying term matching the policy term, there’s no limited-pay option
- Maturity age: 18 to 85 years
- Minimum premium: ₹42,000 a year, ₹21,000 half-yearly, ₹10,500 quarterly, or ₹3,500 monthly, with no upper limit
What Fund Options Do You Get?
Four funds, ranging from low to high risk:
| Fund | Risk Level | Approx. Equity Exposure |
|---|---|---|
| Bond Fund | Low | None |
| Secured Fund | Lower to Medium | 15-55% |
| Balanced Fund | Medium | 30-70% |
| Growth Fund | High | 40-80% |
You can switch between funds up to 4 times a year free of charge; additional switches cost ₹100 each.
How Do Guaranteed Additions Work?
This is one of SIIP’s genuine advantages over a standalone mutual fund investment. At the end of specific policy years, a fixed percentage of your annualised premium is added directly to your unit fund, regardless of market performance:
| End of Policy Year | Guaranteed Addition |
|---|---|
| 6 | 5% of annualised premium |
| 10 | 10% |
| 15 | 15% |
| 20 | 20% |
| 25 | 25% |
These additions are converted into fund units and compound alongside your regular investment.
What Do You Get at Maturity and on Death?
Maturity Benefit:
The unit fund value on your maturity date, plus a full refund of all mortality charges deducted over the policy term, provided you’ve paid every due premium.
Death Benefit:
The highest of your Basic Sum Assured, the unit fund value on the date LIC is notified of death, or 105% of total premiums paid, adjusted for any partial withdrawals made in the two years before death.
Since maturity value depends on fund performance, it isn’t a fixed number. LIC’s own brochure illustrates a 35-year-old paying ₹60,000 a year for 15 years, with a ₹6,00,000 Basic Sum Assured invested in the Bond Fund: at an assumed 4% return, the projected maturity value is ₹10,24,189; at an assumed 8% return, it’s ₹14,20,867. Both figures are explicitly illustrative, not guaranteed, and actual returns depend on real fund performance over your policy term.
What Are the Charges?
ULIPs come with more charges than traditional plans, and it’s worth knowing what they are before committing:
- Premium Allocation Charge: 8% in year one, 5.5% in years two to five, and 3% from year six onward, for offline purchases. Buying online cuts this significantly, to 3%, 2%, and 1% respectively.
- Policy Administration Charge: ₹150 a month from year six, rising 5% annually, capped at ₹500 a month
- Mortality Charge: age-based, deducted monthly. For a 35-year-old, this runs around ₹1.62 per ₹1,000 of sum at risk annually; it rises steeply with age, reaching around ₹15.07 per ₹1,000 at age 60
- Fund Management Charge: 1.35% a year across all four funds
- Partial withdrawal charge: a flat ₹100 per withdrawal
- Switching charge: ₹100 per switch beyond the 4 free switches allowed each year
Buying online rather than offline is a genuinely meaningful way to reduce your total cost here, given how much lower the allocation charge is.
Is There a Lock-In Period?
Yes, 5 years, standard for ULIPs in India. You cannot withdraw or surrender the policy before this period ends. If you discontinue premiums or surrender during the lock-in, your fund value moves into a Discontinued Policy Fund, earning a minimum guaranteed rate currently set at 4% a year, with only the fund management charge deducted, until the lock-in period completes.
Can You Withdraw Money Early?
After the 5-year lock-in, yes, provided all due premiums have been paid. The maximum you can withdraw depends on your policy year:
| Policy Year | Maximum Withdrawal (% of Fund Value) |
|---|---|
| 6th to 10th | 20% |
| 11th to 15th | 25% |
| 16th to 20th | 30% |
| 21st to 25th | 35% |
A minimum balance equal to at least 3 years of annualised premium must remain after any withdrawal.
Is a Loan Available?
No. Unlike many of LIC’s traditional savings plans, no loan facility exists under SIIP at all.
What Rider Is Available?
Only one: LIC’s Linked Accidental Death Benefit Rider, adding a lump sum payout if death results from an accident.
Is GST Charged on SIIP Premiums?
Following the GST Council’s decision to exempt individual life insurance premiums from GST effective September 22, 2025, SIIP premiums, like other individual life insurance products, are currently not subject to GST. Older illustrations, including some still circulating from before this date, may reflect the previous 18% rate on ULIP mortality charges, which no longer applies.
To know more about the different LIC plans types that may suit your needs, have a look at our complete LIC plans guide here.
Frequently Asked Questions
What is the Basic Sum Assured under LIC SIIP?
10 times your annualised premium if you enter before age 55, or 7 times your annualised premium if you enter between ages 55 and 65.
Can I take a loan against my LIC SIIP policy?
No. Unlike many LIC traditional plans, no loan facility is available under SIIP.
How much can I withdraw from LIC SIIP, and when?
Partial withdrawals are allowed only after the 5-year lock-in period, capped between 20% and 35% of your fund value depending on which policy year you’re in, with a minimum balance of 3 years’ annualised premium required to remain.
Is the maturity benefit under LIC SIIP guaranteed?
No. It equals your unit fund value on the maturity date, which depends on market performance, plus a refund of mortality charges. Only the periodic Guaranteed Additions are fixed; the rest is market-linked.
Does buying LIC SIIP online actually save money?
Yes, meaningfully. The Premium Allocation Charge for online purchases is 3% in year one versus 8% offline, with similar reductions in later years, directly increasing how much of your premium goes toward buying fund units.
Is GST charged on LIC SIIP premiums?
No, not currently. GST on individual life insurance premiums, including ULIPs like SIIP, was reduced to 0% effective September 22, 2025.
Last Updated on 23 hours ago by Team Paisaseekho
