Why is LIC good?


Editorial team Published on

Selecting a policy from the Life Insurance Corporation of India (LIC) provides unmatched government backing and trust for conservative savers, though its traditional endowment plans yield lower returns than market-linked options.

✅ Key Advantages of LIC

  • Government Backing: State ownership ensures ultimate financial safety and zero default risk for policyholders.
  • High Claim Settlement: Maintains a robust claim settlement ratio (over 98%).
  • Guaranteed Returns: Offers risk-free savings and predictable maturity payouts on traditional plans.
  • Tax Benefits: Qualifies for deductions under Section 80C of the Income Tax Act.

⚠️ Limitations & Realities

  • Lower Growth: Endowment and money-back returns generally trail equity mutual funds.
  • Mixed Purpose: Combining insurance and investment yields lower efficiency than a pure term plan plus mutual funds.