Life Insurance Corporation of India (LIC): Complete Guide 2025

Life Insurance Corporation of India (LIC) is not just an insurance company—it is an institution that has touched the lives of millions of Indians. Established in 1956, LIC has been a pioneer in spreading awareness about financial security and life insurance in India. With its iconic tagline “Zindagi ke Saath Bhi, Zindagi ke Baad Bhi”, LIC has built a reputation of trust, reliability, and long-term commitment.

Even today, when several private players have entered the market, LIC continues to be the largest life insurance company in India, holding a dominant market share. From offering traditional endowment policies to modern ULIPs, pension plans, and term insurance, LIC has something for every income group.

In this article, we will explore LIC in depth—its history, plans, benefits, IPO, challenges, and future. This will help you understand why LIC is considered the backbone of India’s insurance sector.

History and Background of LIC

Life Insurance in India dates back to the 19th century, but it was limited to urban elites. In 1956, the Indian government nationalized 245 private insurance companies and merged them into one entity—Life Insurance Corporation of India (LIC).

• Formation Year: 1956
• Headquarters: Mumbai, Maharashtra
• Ownership: Government of India (majority stake)
• Market Share (2024): Around 62% in life insurance sector

The aim of forming LIC was not just profit-making, but also financial inclusion—to provide insurance coverage to rural and lower-income groups. Over the years, LIC has played a vital role in mobilizing household savings and channeling them into infrastructure development.

Role of LIC in India’s Financial Sector

LIC is not just an insurance company, it is also one of the largest institutional investors in India.

• LIC invests heavily in government securities, railways, infrastructure, and public sector companies.
• It contributes significantly to India’s GDP growth and capital markets.
• It is also a socially responsible organization, spreading financial literacy and security among the masses.

According to reports, LIC holds assets worth over ₹40 lakh crore, making it one of the biggest financial institutions in Asia.

Why Life Insurance is Important?

Before we dive into LIC’s plans, let’s understand why life insurance is important:

1. Financial Protection for Family – In case of the policyholder’s death, LIC provides a lump sum amount to the family.
2. Wealth Creation – Certain LIC plans not only provide insurance but also act as an investment.
3. Retirement Planning – Pension and annuity plans ensure financial independence after retirement.
4. Child’s Future Security – Child plans help parents secure funds for education and marriage.
5. Tax Benefits – LIC premiums are eligible for deduction under Section 80C of the Income Tax Act, and maturity benefits may qualify for exemption under Section 10(10D).

Popular LIC Plans

1. Endowment Plans

• These plans combine insurance + savings.
• If the policyholder survives till maturity, they get a lump sum along with bonuses.
• Examples: LIC New Endowment Plan, LIC Jeevan Labh.

2. Term Insurance Plans

• Pure life cover with high sum assured at low premiums.
• No maturity benefit if the insured survives.
• Example: LIC Tech Term Plan (online term policy).

3. Money Back Plans

• Policyholder receives periodic payments during the policy term.
• Best for those who want liquidity.
• Example: LIC New Bima Bachat, LIC Money Back Plan 20 years.

4. Pension Plans

• Designed for retirement.
• Provides regular income (annuity) after retirement.
• Example: LIC Jeevan Akshay, LIC New Jeevan Shanti.

5. ULIPs (Unit Linked Insurance Plans)

• Combination of insurance + market-linked investment.
• Returns depend on market performance.
• Example: LIC SIIP (Systematic Investment Insurance Plan).

6. Health Plans

• Provide financial support during medical emergencies.
• Example: LIC Jeevan Arogya.

7. Child Plans

• Help parents save for children’s education and future goals.
• Example: LIC New Children’s Money Back Plan.

Benefits of Investing in LIC

1. Trust & Reliability – LIC has been serving Indians for over 65 years.
2. Wide Network – With more than 2,000 branch offices and 13 lakh agents, LIC has the largest distribution network.
3. Diverse Product Range – From basic insurance to advanced ULIPs, LIC offers all types of products.
4. Tax Benefits – Premiums qualify for tax deductions.
5. Government Backing – Being owned by the Government of India, LIC is considered the safest insurance company.
6. Customer Support – Strong claim settlement ratio (97%+) ensures hassle-free experience.

LIC vs Other Insurance Companies

Feature	LIC	Private Insurance Companies
Ownership	Government of India	Private (domestic & foreign)
Market Share	Largest	Smaller but growing
Trust Factor	Very High	Moderate
Premiums	Sometimes higher	Competitive
Claim Settlement Ratio	97%+	85–95%
Network	Widest	Limited to urban areas

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LIC in Rural India & Financial Inclusion

LIC has been at the forefront of financial inclusion. Unlike private players who focus on urban markets, LIC ensures that insurance reaches villages and small towns.

• Special schemes for farmers, laborers, and low-income families.
• Awareness campaigns to promote life insurance.
• Tie-ups with self-help groups and rural banks.

This makes LIC a people’s institution, not just a corporate entity.

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Digital Transformation of LIC

With changing times, LIC is also moving towards digitalization:

• Online policy purchase through LIC’s website.
• LIC mobile apps for premium payment.
• Online claim settlement process.
• Chatbot and AI-based customer service.

This shift is helping LIC compete with tech-savvy private insurers.

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LIC IPO and its Impact

One of the most talked-about events in India’s financial history was the LIC IPO (Initial Public Offering) in 2022.

• LIC raised over ₹21,000 crore through its IPO.
• It became the largest IPO in Indian history.
• Investors got a chance to own a part of LIC.

The IPO has brought LIC under greater transparency and accountability, making it even stronger.

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Challenges Faced by LIC

1. Competition from Private Insurers – Aggressive marketing by private players.
2. Changing Customer Needs – Demand for digital-first solutions.
3. Low Returns in Traditional Policies – Customers preferring mutual funds and SIPs.
4. Maintaining Market Share – From 100% monopoly in 1956, LIC’s share is now around 62%.

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Future of LIC

The future of LIC looks promising if it adapts to modern customer needs:

• More focus on digital platforms.
• Launch of innovative products.
• Expansion into global insurance markets.
• Focus on young investors who prefer online policies.

Step-by-Step Guide to Buy LIC Policy

1. Visit LIC branch or official website.
2. Choose the plan that suits your need.
3. Fill up proposal form.
4. Submit required documents (ID proof, address proof, medical reports if needed).
5. Pay the first premium.
6. Get the policy bond after approval.

Documents Required for LIC Policy

• Identity Proof (Aadhar, PAN, Passport).
• Address Proof (Utility bill, Voter ID).
• Income Proof (Salary slip, ITR for high sum assured).
• Passport-size photographs.
• Medical reports (for some policies).

How to Pay Premiums (Offline & Online)

• Offline: At LIC branch, via LIC agent, or at authorized banks.
• Online: LIC website, LIC mobile app, UPI, debit/credit cards, net banking.

How to Claim LIC Policy

1. Inform LIC branch/agent.
2. Submit claim form with necessary documents (policy bond, death certificate, medical records).
3. LIC verifies details.
4. Claim is settled within a few days (LIC has a high claim settlement ratio).

Tips Before Choosing a LIC Policy

• Assess your financial goals (protection, savings, or retirement).
• Compare LIC plans with private insurers.
• Check the premium affordability.
• Read policy terms carefully.
• Always buy from an authorized LIC agent or official website.

Conclusion

Life Insurance Corporation of India (LIC) is more than just an insurance provider—it is a symbol of trust and security for Indian families. From rural villages to metro cities, LIC has created a legacy that no other company can match.

Whether you are looking for a simple term plan, a money-back policy, or retirement savings, LIC has a solution for everyone. With government backing, wide reach, and a strong claim settlement record, LIC continues to be the first choice for millions of Indians.

As financial awareness grows and digitalization expands, LIC’s future looks bright. For those who believe in long-term stability and reliability, LIC remains the “lifeline of India’s insurance sector.”