Life Insurance Corporation of India: Everything You Need to Know Before Buying a Policy


When it comes to life insurance in India, one name that stands above all is the Life Insurance Corporation of India (LIC). Established in 1956, LIC has become synonymous with trust, stability, and financial protection for millions of Indians. But before you invest in a policy from LIC, it’s important to understand the company’s background, types of policies it offers, its advantages and disadvantages, and how to choose the right plan for your needs.

This article covers everything you need to know before buying a policy from LIC — whether you're a first-time buyer, a returning customer, or someone looking to secure your family’s financial future.

What is the Life Insurance Corporation of India (LIC)?

LIC is a government-owned investment and life insurance company with its main office located in Mumbai. It was created after the nationalization of over 245 private insurance companies in India. Since then, LIC has played a central role in providing life insurance products that cater to the needs of Indians across all income groups.

As of 2025, LIC remains the largest life insurance company in India, with a market share of over 60%, more than 290 million policies in force, and a vast agent network that spans the entire country.

Types of LIC Insurance Policies

LIC offers a variety of life insurance products. These can be broadly classified into the following categories:

1. Term Insurance

These are pure life cover plans that provide financial protection for a specified term. They are low-cost and ideal for those looking for maximum coverage at minimal premiums.

  • Popular Policy: LIC Tech Term Plan

2. Endowment Plans

Endowment policies combine life insurance with savings. If the policyholder survives the term, a lump sum amount is paid along with bonuses.

  • Popular Policy: LIC New Endowment Plan

3. Money Back Plans

These policies offer periodic returns (survival benefits) during the policy term and a final lump sum at maturity or death.

  • Popular Policy: LIC Bima Shree

4. Whole Life Plans

Whole life insurance covers the policyholder until the age of 100 or for their entire lifetime, offering long-term security.

  • Popular Policy: LIC Jeevan Umang

5. ULIPs (Unit Linked Insurance Plans)

ULIPs are market-linked insurance products that combine insurance with investment.

  • Popular Policy: LIC SIIP (Systematic Investment Insurance Plan)

6. Pension Plans

These are retirement plans that help you accumulate a corpus and receive regular income post-retirement.

  • Popular Policy: LIC Jeevan Akshay VII

7. Children Plans

Designed to provide financial support for a child’s future, especially education and marriage.

  • Popular Policy: LIC New Children’s Money Back Plan

Key Features of LIC Policies

Here are some key features that make LIC policies stand out:

  • Government-Backed Security: LIC is owned by the Government of India, offering a strong sense of trust and reliability.

  • Bonus Additions: Many policies come with reversionary and final bonuses, increasing maturity or death benefits.

  • Policy Loan Facility: LIC allows loans against certain policies.

  • Flexible Premium Options: Monthly, quarterly, half-yearly, and yearly premium payment modes are available.

  • Wide Range of Riders: Add-ons like accidental death benefit, disability rider, and critical illness coverage can be added.

  • Pan-India Agent Network: More than 1 million agents help you choose and manage your policies.

  • Digital Access: LIC now offers online premium payments, policy status tracking, and mobile app services.

Pros and Cons of LIC Policies

Advantages:

  • Strong Financial Backbone: LIC’s massive asset base and government support ensure long-term stability.

  • Customer Trust: Trusted by generations of Indians.

  • Wide Product Range: Something for everyone — from basic term plans to advanced ULIPs and retirement solutions.

  • Good Claim Settlement Ratio: LIC’s claim settlement ratio is consistently above 95%, one of the highest in the industry.

  • Bonus Declarations: Participating policies earn bonuses, increasing overall benefits.

 Disadvantages:

  • Higher Premiums: LIC policies, especially term insurance, are more expensive than those offered by private players.

  • Lower Returns: Endowment and money-back plans generally offer lower returns compared to mutual funds or ULIPs.

  • Limited Online Services: Although LIC has improved its digital presence, it still lags behind some private insurers in terms of tech integration and app usability.

How to Choose the Right LIC Policy

Here’s a quick checklist before buying a LIC policy:

1. Assess Your Needs

Are you looking for pure life cover, or do you also want savings or retirement planning?

  • If you need just protection, go for a term plan.

  • If you want to save while staying insured, look into endowment or money-back plans.

2. Evaluate Affordability

Can you pay premiums regularly without disrupting your other financial obligations? Use LIC’s online premium calculators to understand costs.

3. Understand Policy Terms

Read the brochure, policy document, and especially the “exclusions” section. Clarify:

  • What benefits are guaranteed?

  • Are bonuses dependent on LIC’s performance?

  • Is there a surrender or maturity benefit?

4. Compare Policies

Use LIC’s official website or consult a certified agent to compare plans side-by-side based on:

  • Sum assured

  • Premium

  • Maturity value

  • Policy term

5. Check Claim Process

Ensure your family is aware of how to claim in case of your death. LIC’s claim process is straightforward, but documentation must be accurate.

Is LIC a Good Investment in 2025?

While LIC is primarily an insurance provider, many still view it as a long-term investment vehicle, especially due to its:

  • Bonus payouts

  • Guaranteed returns (for traditional plans)

  • Trust factor

  • Risk-free nature compared to market-linked products

However, it’s important to remember that returns from LIC’s endowment plans often fall in the 4-6% annualized range, which is modest. If you’re looking for high returns, LIC’s ULIPs or external mutual funds might be better.

Documentation Required to Buy a LIC Policy

Here’s what you’ll typically need:

  • Identity proof (Aadhar, PAN)

  • Address proof

  • Income proof (for high sum assured)

  • Recent photographs

  • Age proof

  • Bank account details

Buying LIC Policies: Offline vs Online

  • Offline: Through LIC agents or LIC branches. Ideal for those who prefer face-to-face consultations.

  • Online: Visit licindia.in to purchase select policies directly, without an agent. Good for tech-savvy buyers looking for term or simple plans.

Conclusion

The Life Insurance Corporation of India (LIC) is not just an insurer — it’s a part of India’s financial and emotional landscape. With its range of products, reliable service, and vast experience, LIC is a solid choice for anyone looking to secure their future or protect their loved ones.

However, it’s important not to buy a LIC policy just because “everyone else is doing it.” Carefully evaluate your needs, compare different plans, and consult with a trusted advisor if needed. With the right policy, LIC can be a powerful tool for your long-term financial planning.

For expert advice, policy comparisons, and seamless online purchase of LIC and other insurance products, you can also visit squareinsurance.in — a trusted platform that simplifies your insurance journey with expert guidance and digital convenience.

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