Frequently Asked Questions

No! GST on all individual LIC insurance policies (term, endowment, ULIP, pension) is 0% from September 22, 2025 (Government Notification No. 16/2025, Central Tax Rate). You only pay the base premium — no extra tax. Group/corporate policies still attract 18% GST.

Before the exemption: Term plans — 18% on the entire premium. Endowment/money back — 4.5% in year 1, 2.25% from year 2 onwards. Single premium pension — 1.8%. Now all of these are 0%.

Maturity amount is tax-free under Section 10(10D) IF: annual premium does not exceed 10% of Sum Assured (for policies issued after April 1, 2012). Note: If annual premium > 10% of SA, then maturity proceeds above ₹5L aggregate are taxable at slab rates from FY 2023-24.

Yes. LIC premiums qualify for deduction under Section 80C (up to ₹1.5L per year) under the Old Tax Regime. This deduction is NOT available under the New Tax Regime (115BAC).

LIC March 2025 valuation introduced a new SA-based slab: Plans with SA ≥ ₹5L get +₹1/1000 SA extra Simple Reversionary Bonus. Plans with SA ≥ ₹10L (e.g. Jeevan Labh 936) get +₹2/1000 SA. Example: New Endowment Plan 914 earlier ₹45/1000, now ₹46/1000 for SA ≥ ₹5L.

SRB is declared by LIC annually (₹ per ₹1000 Sum Assured) and permanently vests once declared. It does NOT compound — it is a simple addition. Total SRB = Rate × (SA/1000) × Policy Term. It is paid along with maturity or death claim.

FAB is a one-time bonus paid only when the policy results in a claim (maturity or death) after a minimum term — typically 15 years. It is declared as ₹ per ₹1000 SA. FAB is NOT paid on surrender. It is the biggest single addition to the maturity corpus.

LIC declares bonus rates after its annual actuarial valuation, typically between July and September for the financial year ending March 31. The 2025 bonus (for the year ending March 2025) was one of the most significant in recent years due to the new SA slab structure.

LIC uses tabular premium rates (₹ per ₹1000 Sum Assured) based on age at entry and policy term. Adjustments include: Mode rebate (-2% for yearly, -1% half-yearly, +2% for monthly), High SA rebate (-₹2/1000 for SA ≥ ₹2L, -₹3/1000 for SA ≥ ₹5L), Rider charges (accident benefit: ₹0.70/1000 SA/yr).

Mode rebate is a discount for paying premium in yearly or half-yearly mode. Yearly: -2% rebate on tabular rate. Half-yearly: -1% rebate. Quarterly: No change. Monthly (NACH): +2% loading (extra charge). So yearly mode is cheapest.

When Sum Assured is ₹2L–<₹5L: rebate of ₹2 per ₹1000 SA. When SA is ₹5L and above: rebate of ₹3 per ₹1000 SA. This reduces the effective tabular rate and lowers your premium for higher sum assured policies.

Yes. LIC offers loan against most participating (with-profit) policies after 3 full years of premium payment. You can borrow up to 90% of surrender value for in-force policies, 80% for paid-up policies. Interest rate: 10% p.a. compounded half-yearly (effective 10.25% p.a.).

LIC deducts the outstanding loan + interest from your maturity or death claim amount. However, if the loan amount + accumulated interest exceeds the surrender value, LIC will send notice and the policy may lapse. Always monitor your loan balance.

Yes, in most cases. LIC loan: 10% p.a., no credit check, no processing fee, flexible repayment. Personal loan: 12–24% p.a., credit score dependent, processing fees. The LIC loan rate is significantly lower and easier to get.

GSV is the minimum amount LIC must pay if you surrender. Formula: GSV = GSV Factor × (Total premiums paid − 1st year premium). GSV Factor scale: 3 yrs=30%, 5 yrs=50%, 7 yrs=60%, 10 yrs=80%, 15+ yrs=85–90%. First-year premium is excluded from the base calculation.

SSV = (Paid-up Sum Assured × SSV Factor) + Bonuses vested × 30%. SSV is typically higher than GSV after many years. LIC pays the higher of GSV and SSV. SSV considers how long the policy has been running as a fraction of total term.

Generally No, especially before 10 years. You lose the Final Addition Bonus (FAB), suffer heavy GSV penalties (30% in yr 3), and forfeit future bonuses. Better alternatives: (1) Policy loan at 10% p.a., (2) Make policy paid-up (stop paying but keep cover), (3) Continue and let it mature. Surrender only as last resort.

Depends on your goal: Pure protection (cheapest): LIC Tech-Term 854 (online) or Jeevan Amar 855. Long-term savings: Jeevan Labh 936 (limited premium, high bonus). Regular income: Jeevan Umang 945 (8% SA/yr after PPT). Child: Jeevan Tarun 932 or Jeevan Lakshya 934. Guaranteed returns: Bima Jyoti 860. Always compare based on your age, term, and financial goals.

New Endowment 914: Cover ends at maturity. Sum Assured + bonus paid at maturity or death during term. Jeevan Anand 915: Whole life element added. SA + bonus at maturity, but life cover of SA continues for the ENTIRE life after maturity too. So in case of death after maturity, additional SA is paid. 915 is slightly costlier but offers dual benefit.

Jeevan Umang is a whole-life plan where you pay premium for 15/20/25/30 years (PPT). After PPT ends, LIC pays you 8% of Sum Assured every year as 'Survival Benefit' until age 100. At age 100 (or death), full SA + bonus is paid. It is ideal for regular income planning post-retirement.

Jeevan Labh 936 is a limited premium endowment with one of the highest bonus rates (₹54/1000 SA). Three PPT/term combinations: 10yr PPT / 16yr term, 15yr PPT / 21yr term, 16yr PPT / 25yr term. 2025-26 bonus slab: SA ≥ ₹10L gets +₹2/1000 extra, SA ≥ ₹5L gets +₹1/1000.