What are the benefits of investing in LIC plans

 

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.

 

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.