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Read This Before You Take LIC Policy
A deep dive on why Indians love LIC plans and dark truths behind it
SK
March 11, 2025
Hello,
Welcome to Paisa Monk → No non-sense finance content for middle class Indians!
I’ve created a sub on reddit : Join the sub now to discuss and de-influence personal finance. Join now and post your questions for a focused discussion!
This is article #4. Read my previous posts here:
Today, we’ll talk about middle-class Indian’s favorite investments(really bro!?)- LIC policy plans.
With the experience I faced at the maturity of my father’s LIC plan, I’m writing this article. I hope this helps you.
Did you know- LIC agents can get paid up to 25% commissions! Once a policy is issued, agents will earn commissions during the entire premium payment term!
Now you know why that friend/relative has hooked you to a LIC plan. Also, there’s a reason why they suggest you to wait till 3 years before surrendering your plans, agents get paid nice commissions during first 3 years! Paisa bro Paisa!
source: bankbazaar.com
Why Do Indians Love LIC?
If you ask an Indian about life insurance, there’s a good chance the first name they’ll mention is LIC (Life Insurance Corporation of India).
It’s not just an insurance company- it’s an emotion, deeply rooted in Indian households for generations. But why does LIC have such a massive following?
Trust built over decades - LIC was founded in 1956 and has been a government-backed entity ever since. For most Indians, anything owned by the government is considered safe and guaranteed, even if the returns are lower.
Aggressive sales tactics - LIC agents are everywhere. Relatives, family friends, and even your father’s childhood friend will pitch an LIC policy at some point. Their sales model is built on personal trust, making it hard to say no.
Insurance as an Investment - Indian parents love the idea of “safe investment with guaranteed returns”. LIC policies cleverly mix insurance and investment, convincing people that they’re doing both.
Fear of the unknown - Terms like ‘stock market’, ‘mutual funds’, and ‘inflation-adjusted returns’ scare many middle-class Indians. LIC’s promise of ‘guaranteed returns’ seems like a risk-free, no-brainer choice.
Tax benefits - Under Section 80C, LIC premiums help in reducing taxable income, making it a go-to option for salaried individuals.
Is LIC Really Worth It?
LIC policies are popular, but are they actually the best financial decision?