What are the benefits of investing in LIC plans
Benefits of Investing
in LIC Plans
Life Insurance Corporation of India
(LIC) is one of the most trusted and largest insurance providers in India. It
has been a pillar of financial security for millions of Indians since its
inception in 1956. The advantages of investing in LIC plans stem from its
government backing, organizational strength, and consistent performance. Here’s
an in-depth look at the key benefits:
1. Government
Guarantee
One of the standout features of LIC is
the government guarantee that it offers under Section 37 of the LIC Act, 1956.
This legal provision ensures that the policies issued by LIC are backed by the
sovereign guarantee of the Government of India. This means that policyholders’
funds are secure even in adverse economic scenarios.
This level of security is unparalleled
compared to private insurers, as LIC’s backing by the government instills
confidence among investors that their money is in safe hands.
2. Trusted and
Established Organization
LIC is synonymous with reliability and
trust. Being a public-sector enterprise with over six decades of experience,
LIC has established itself as a cornerstone of the Indian insurance market. It
operates with a massive distribution network, including over 2,048 branch
offices, 1,525 satellite offices, and more than a million agents, ensuring easy
access to its products across the country.
Additionally, LIC's strong legacy
ensures it has a loyal customer base. Many families across generations have
continued to invest in LIC, making it a household name in financial planning.
3. Massive Life
Fund
LIC boasts one of the largest life
insurance funds globally, which stood at over ₹45 lakh crore as of recent
years. This vast corpus is indicative of the trust it commands and its robust
financial health. A large life fund not only reflects stability but also
ensures that the company can meet its long-term obligations to policyholders,
including payouts for death claims, maturities, and bonuses.
A robust life fund also means LIC can
offer higher bonuses to policyholders, enhancing the returns on traditional
participating policies like endowment and money-back plans.
4. High Claim
Settlement Ratio
LIC has consistently maintained one of
the highest claim settlement ratios in the industry. A high settlement ratio is
a critical factor when choosing an insurance provider, as it reflects the
company’s commitment to honoring claims. LIC's claim settlement ratio has
historically been above 98%, which demonstrates its efficiency and
policyholder-first approach.
This performance assures customers that
their families will receive the promised financial support in the event of
unforeseen circumstances, making LIC a preferred choice for life insurance.
5. Wide Range of
Plans
LIC offers a comprehensive portfolio of
insurance products, catering to diverse financial needs. These include:
- Term
Plans: Providing pure life cover at an affordable cost.
- Endowment
Plans: Combining life cover with savings.
- Money-Back
Policies: Offering periodic payouts during the policy term.
- Pension
Plans: Securing retirement income.
- Health
Insurance Plans: Providing financial assistance for medical emergencies.
- Unit-Linked
Insurance Plans (ULIPs): Combining market-linked investment with insurance
cover.
This diverse range ensures that investors
can find a plan tailored to their specific financial goals, whether it’s wealth
creation, retirement planning, or ensuring family security.
6. Government-Owned
Entity
As a government-owned entity, LIC
benefits from a reputation of stability and reliability. Its policies and
operations are overseen by the government, ensuring a high degree of
accountability and transparency. This ownership structure also aligns LIC’s
objectives with public welfare, as opposed to being purely profit-driven.
7. Tax Benefits
Investing in LIC plans provides dual
tax benefits under the Income Tax Act, 1961:
- Section
80C: Premiums paid are deductible up to ₹1.5 lakh.
- Section
10(10D): Maturity proceeds are tax-free, subject to conditions.
These tax incentives make LIC plans a
popular choice among taxpayers looking to optimize their financial planning.
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8. Wealth
Creation with Bonuses
LIC’s participating policies are known
for offering bonuses declared from its surplus profits. Over the years,
policyholders have benefited from substantial returns through annual
reversionary and terminal bonuses. This feature enhances the overall value of
LIC plans, especially for long-term investors.
9. Strong Market
Presence
LIC’s overwhelming market share (around
65% as of recent years) reflects its dominance and trustworthiness. Its
unparalleled scale allows it to offer competitive products and ensure customer
satisfaction at all levels.
Investing in LIC India plans, offers unparalleled benefits, such as a government guarantee, a robust financial foundation, best after sale services, high claim settlement ratios, and a diverse range of policies. As a government-owned insurance provider with decades of experience and a massive life fund, LIC stands as a reliable choice for securing one’s financial future.
For all seeking long-term security, assured returns, and peace of mind, LIC remains an undisputed leader in the life insurance domain.
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