An honest review of the best LIC plans in 2026 - endowment, term, ULIP and pension policies compared on returns, premiums, claim settlement and suitability for different financial goals.
Life Insurance Corporation of India (LIC) is the country's largest life insurer, with a claim settlement ratio exceeding 98 percent and over 30 crore active policies. For millions of Indians, LIC is synonymous with life insurance. But not all LIC plans are equally good, and choosing the wrong one can lock your money into a low-return product for decades.
This guide objectively reviews the best LIC plans available in 2026, covering term insurance, endowment plans, ULIPs, money-back policies and pension plans. We will look at returns, premium costs, claim settlement and, most importantly, whether each plan actually makes financial sense.
Understanding LIC plan categories
LIC offers over 30 active plans. They broadly fall into these categories:
| Category | Purpose | Returns | Risk |
|---|---|---|---|
| Term insurance | Pure life cover (death benefit only) | No maturity benefit | Lowest premium |
| Endowment plans | Insurance + savings | 4-6% post-tax | Very low |
| Money-back plans | Periodic payouts + insurance | 3.5-5.5% | Very low |
| ULIPs | Insurance + market-linked investment | 8-12% (variable) | Moderate to high |
| Pension plans | Retirement corpus building | 4-7% | Low to moderate |
| Whole life plans | Lifelong coverage | 4-5% | Very low |
Best LIC term insurance plan
LIC Tech Term (Plan No. 954)
LIC Tech Term is LIC's only pure online term insurance plan, and it is the one LIC product that every financial advisor agrees is worth buying.
| Feature | Details |
|---|---|
| Sum assured | Rs 50 lakh to Rs 25 crore |
| Entry age | 18-65 years |
| Policy term | 10 to 40 years |
| Premium (30-year-old male, Rs 1 crore, 30-year term) | Rs 10,000 to Rs 12,000/year approx. |
| Claim settlement ratio | 98.5%+ (LIC overall) |
| Online-only | Yes (lower premium than offline plans) |
Verdict: Excellent. LIC Tech Term offers competitive premiums (though slightly higher than private insurers like HDFC Click2Protect or ICICI iProtect Smart), backed by LIC's unmatched brand trust and claim settlement track record. If you want term insurance from LIC, this is the plan.
Important: Term insurance is not an investment. It pays out only on death during the policy term. If you survive the term, you get nothing back, and that is exactly how insurance should work. Separate your insurance and investment decisions.
Best LIC endowment plans
Endowment plans combine life cover with a savings component. They are enormously popular in India but offer poor returns compared to other investment options.
LIC Jeevan Labh (Plan No. 936)
| Feature | Details |
|---|---|
| Type | Limited premium endowment |
| Premium payment term | 16 or 21 years |
| Policy term | 25 or 31 years |
| Sum assured | Rs 2,00,000 minimum |
| Bonus | Declared annually (Rs 46-50 per Rs 1,000 SA in recent years) |
| Estimated maturity return | 5-6% pre-tax |
LIC New Endowment Plan (Plan No. 914)
| Feature | Details |
|---|---|
| Type | Regular premium endowment |
| Premium payment term | 12 to 35 years |
| Sum assured | Rs 1,00,000 minimum |
| Bonus | Rs 40-48 per Rs 1,000 SA in recent years |
| Estimated maturity return | 4.5-5.5% pre-tax |
Verdict for endowment plans: Mediocre returns. The 5 to 6 percent pre-tax return from endowment plans significantly underperforms inflation-adjusted alternatives. A combination of LIC Tech Term (for insurance) and PPF or mutual fund SIP (for savings) would give you better coverage and higher returns.
For comparison, Rs 50,000 invested annually in a mutual fund SIP at 12 percent returns would grow to approximately Rs 50 lakh in 20 years. The same amount in an LIC endowment at 5.5 percent would yield approximately Rs 19 lakh. Use our SIP calculator to run your own projections.
Best LIC money-back plan
LIC Jeevan Tarun (Plan No. 934) - for children
| Feature | Details |
|---|---|
| Type | Children's money-back plan |
| Entry age of child | 0-12 years |
| Premium payment term | Until child turns 25 |
| Survival benefits | 5-20% of SA at ages 20, 22, 24 |
| Maturity benefit | Remaining SA + bonus at age 25 |
| Estimated return | 4.5-5.5% |
Verdict: There are better ways to save for your child's future. Sukanya Samriddhi Yojana (for girls) offers 8.2 percent guaranteed returns with full tax exemption. Mutual fund SIPs offer higher potential returns with much more flexibility.
Best LIC ULIP plan
LIC New Jeevan Anand (Plan No. 915)
While technically an endowment with ULIP-like features, LIC's traditional plans do not offer true market-linked investment. For genuine ULIP exposure from LIC:
LIC SIIP (Systematic Investment Insurance Plan, Plan No. 952)
| Feature | Details |
|---|---|
| Type | ULIP with SIP facility |
| Premium | Rs 3,000 to Rs 5,00,000/month |
| Policy term | 10 to 20 years |
| Fund options | Bond, Secured, Balanced, Growth, Discontinued |
| Lock-in | 5 years |
| Estimated return | 8-12% depending on fund choice |
Verdict: LIC SIIP is a reasonable ULIP if you want insurance and market-linked investment in one product. However, the charges (premium allocation, fund management, mortality) eat into returns. Buying term insurance separately and investing in direct mutual funds almost always delivers better net returns.
Best LIC pension plan
LIC New Jeevan Shanti (Plan No. 958)
| Feature | Details |
|---|---|
| Type | Immediate/deferred annuity |
| Entry age | 30-79 years (immediate), 30-66 (deferred) |
| Annuity options | 10 options including life, joint life, with return of purchase price |
| Minimum purchase price | Rs 1,50,000 |
| Annuity rate | 6-9% depending on option and age |
Verdict: The annuity rates from LIC Jeevan Shanti are decent for someone who wants guaranteed lifetime income. However, annuity income is fully taxable at your slab rate, which reduces the effective yield. For retirement planning, NPS combined with mutual funds typically provides a larger corpus and more flexibility.
LIC claim settlement ratio
One of LIC's biggest strengths is its claim settlement ratio, the percentage of death claims it approves and pays.
| Year | LIC claim settlement ratio | Industry average |
|---|---|---|
| 2023-24 | 98.64% | 97.8% |
| 2024-25 | 98.72% | 98.1% |
LIC's claim settlement is slightly above the industry average, and its massive agent network ensures reach in rural and semi-urban areas where private insurers have limited presence.
The honest truth about LIC investment plans
Let us be direct: LIC endowment and money-back plans are poor investment choices. They deliver returns of 4 to 6 percent, which barely beats inflation. The only financial advantage is the Section 80C tax deduction, but the same deduction is available through ELSS, PPF and NPS, all of which offer better returns.
Why LIC endowment plans are still popular
- Trust: LIC has a 70+ year track record and government backing.
- Agent distribution: LIC has over 13 lakh agents who actively sell policies, often as the first financial product to new earners.
- Forced savings: The mandatory premium payment forces discipline, which helps people who would otherwise not save.
- Lack of awareness: Many policyholders do not compare post-tax returns with alternatives.
What you should do instead
- Buy LIC Tech Term for pure life cover. Rs 1 crore cover costs around Rs 10,000 to Rs 15,000 per year for a 30-year-old.
- Invest the remaining premium in PPF (for safety) and mutual fund SIPs (for growth).
- If you already have an LIC endowment plan, do not surrender it impulsively. Calculate the surrender value and compare it with the paid-up value. If you have paid more than 3 years of premium, consider making the policy paid-up (stop premiums but let it continue for a reduced maturity benefit) rather than surrendering at a loss.
LIC plans and Section 80C tax benefits
LIC premiums qualify for Section 80C deduction up to Rs 1,50,000 per year, subject to certain conditions. For policies issued after 1 April 2012, the annual premium must not exceed 10 percent of the sum assured for the tax deduction to apply. For policies issued after 1 April 2023 with annual premiums above Rs 5 lakh, the maturity proceeds are taxable.
This means if you are paying a high premium for a low sum assured (common in endowment plans), you may not even get the full tax benefit. Term insurance, with its low premium relative to sum assured, always qualifies for 80C deduction. This is yet another reason to prefer term insurance for coverage and use other instruments like ELSS, PPF or NPS for the 80C deduction.
Existing policyholders: should you surrender?
| Premiums paid | Recommendation |
|---|---|
| Less than 3 years | Surrendering gives very low value; consider continuing or making paid-up |
| 3-7 years | Calculate surrender value vs remaining premiums; paid-up may be better |
| 7+ years | The return improves in later years; continuing to maturity is usually better |
*This article is for educational purposes and does not constitute financial advice. Insurance needs vary by individual. Consult a qualified financial advisor before buying, surrendering or modifying any insurance policy.*
Frequently asked questions
Which is the best LIC plan in 2026?
LIC Tech Term (Plan No. 954) is the best LIC plan for most people because it provides high life cover at low premiums. For investment purposes, LIC endowment plans deliver only 4 to 6 percent returns, far below mutual funds (10-14 percent) or even PPF (7.1 percent). The best strategy is to buy term insurance from LIC and invest separately.
Is LIC a good investment in 2026?
LIC endowment and money-back plans are not good investments because their returns (4-6 percent) barely beat inflation. They are useful for forced savings discipline, but you can achieve the same 80C tax benefit with ELSS, PPF or NPS while earning significantly higher returns. LIC is excellent for pure term insurance.
What is LIC's claim settlement ratio?
LIC's claim settlement ratio is approximately 98.7 percent for FY2024-25, meaning they approve and pay nearly 99 out of every 100 death claims. This is slightly above the industry average and is one of the strongest reasons to buy term insurance from LIC.
What is the return on LIC Jeevan Labh?
LIC Jeevan Labh delivers an estimated return of 5 to 6 percent per annum before tax, including bonuses. After accounting for tax (if the annual premium exceeds Rs 5 lakh or the sum assured is less than 10 times the premium), the effective return is even lower.
Should I surrender my LIC policy?
It depends on how many years of premiums you have paid. If less than 3 years, the surrender value is very low. If 3 to 7 years, compare the surrender value with the potential maturity benefit. If more than 7 years, it is usually better to continue to maturity. Consider making the policy paid-up instead of surrendering.
Is LIC Tech Term better than HDFC Click2Protect?
Both are good term plans. HDFC Click2Protect typically has slightly lower premiums for the same coverage, but LIC Tech Term comes with LIC's brand trust and marginally higher claim settlement ratio. The difference in premiums is usually Rs 1,000 to Rs 3,000 per year, not significant enough to make one clearly better than the other.
Which LIC plan is best for a child?
LIC Jeevan Tarun is LIC's dedicated child plan, but its returns of 4.5 to 5.5 percent are modest. Better alternatives include Sukanya Samriddhi Yojana for girls (8.2 percent, tax-free) and mutual fund SIPs for long-term wealth creation. Use term insurance for the parent's life cover rather than buying a child plan for insurance.
What is the minimum sum assured in LIC plans?
The minimum sum assured varies by plan. LIC Tech Term starts at Rs 50 lakh, LIC Jeevan Labh at Rs 2,00,000, and LIC New Endowment at Rs 1,00,000. For adequate life cover, financial advisors recommend a sum assured of at least 10 to 15 times your annual income.