LIC Health Insurance Review (2025): What You Need to Know

The Life Insurance Corporation of India (LIC), a household name since 1956, is widely respected for its dominance in the life insurance sector. But when it comes to LIC health insurance, LIC’s presence has been limited and is now undergoing a significant transformation. Over the years, LIC has introduced several fixed-benefit health plans, including Jeevan Arogya, Arogya Rakshak, and Cancer Cover. However, these plans have since been withdrawn, as they failed to keep up with evolving consumer expectations and regulatory standards.

Unlike private insurers offering indemnity-based health insurance, which cover actual hospitalization expenses, LIC’s products provided predefined payouts. Recognizing this gap and the growing demand for more comprehensive health insurance, LIC has decided to pivot its strategy. Rather than develop its indemnity plans from scratch, LIC is now in advanced talks to acquire a minority stake in an existing standalone health insurance company, with ManipalCigna among the potential candidates.

This strategic move signals LIC’s intent to re-enter the health insurance market more competitively by leveraging the expertise and infrastructure of an established player. In this review, we’ll explore LIC’s journey in health insurance—what it was, what changed, and what the future could look like.

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LIC Health Insurance Review

Metrics of LIC

Note: Since LIC Health Insurance no longer exists, this review considers alternative indicators such as Claim Settlement Ratio (CSR), Amount Settlement Ratio (ASR), complaint volume, and average annual business income to assess reliability and customer experience. These numbers are from its Life insurance segment.

1) Claim Settlement Ratio 

The claim settlement ratio indicates the percentage of claims that an insurer settles out of the total claims received. LIC’s impressive average of 98.55% from 2021 to 2024 is slightly above the industry mean of 98.13%, reflecting its reliability and commitment to honoring policyholder claims. A high settlement ratio boosts customer trust and signals operational efficiency.

2) Amount Settlement Ratio 

This metric assesses the total amount of claims paid versus the total amount of claims raised. LIC's 95.5% average suggests that it pays out a substantial portion of the submitted claim values, surpassing the industry mean of 94.17%. This reflects LIC's financial strength and willingness to honor the full extent of valid claims.

3) Solvency Ratio

The solvency ratio measures an insurer’s financial capacity to meet its long-term obligations. LIC maintains a solid average of 1.9, which is well above the IRDAI-mandated minimum of 1.5, though slightly below the industry average of 2.0. This indicates that LIC is financially stable, although its buffer above regulatory requirements is marginally lower than that of the broader market.

4) Annual Business Volume

LIC’s annual business volume stands at a staggering ₹2,17,726 crores, dwarfing the industry median of ₹3,018 crores. This highlights LIC’s dominant market presence and scale of operations, which far exceed most competitors and underscore its central role in the Indian insurance landscape.

5) Amount Paid in Claims

LIC paid out ₹21,556 crores in claims, compared to the industry median of ₹254 crores, further emphasizing the vastness of its operations. This figure reflects both its large customer base and its capacity to handle high volumes of claim disbursements responsibly.

6) Complaint Volume

With just 7.3 complaints per 10,000 claims settled, LIC performs significantly better than the industry median of 15, indicating superior customer service and fewer grievances. This metric showcases LIC’s effectiveness in managing customer expectations and operational transparency.

Note: In the case of health insurance providers, the Incurred Claim Ratio (ICR) is typically used to assess claim behavior, as it reflects the proportion of premiums paid out as claims. However, since LIC is primarily a life insurance provider, we are instead focusing on the Amount Settlement Ratio (ASR), which indicates the proportion of the claim amount paid out. This shift in metric offers a more accurate lens through which to evaluate LIC’s performance.

A Quick Look Back: LIC Health Insurance Plans (Formerly Offered)

Although no longer available for sale, here’s a quick recap of what LIC Health Insurance previously offered:

1. LIC Jeevan Arogya
   A fixed-benefit health plan offering payouts for surgeries and hospital stays, but no reimbursement of actual medical expenses.
2. LIC Cancer Cover
   A specific plan for cancer-related financial protection, providing lump-sum payouts and monthly income after a diagnosis.
3. LIC Health Protection Plus
   A ULIP-based plan combining minimal health cover with market-linked investments—not an actual indemnity-based health insurance product.
4. LIC Arogya Rakshak
   Another fixed-benefit policy aims to provide predefined payouts for hospitalizations and procedures, without covering actual treatment costs.

While these plans were affordable and straightforward, they lacked cashless treatment, comprehensive hospitalization coverage, and pre-/post-hospitalization benefits—standard features in today’s top health insurance plans. Moreover, there was a lack of indemnity coverage; they did not pay based on actual expenses, which is now a core expectation among health insurance buyers.

Why LIC Refocused Its Efforts Away from the Health Insurance Market?

LIC (Life Insurance Corporation of India) exited the health insurance offering market primarily due to strategic, operational, and regulatory challenges. Here’s a concise explanation of why LIC Health Insurance no longer exists:

1) Core Focus on Life Insurance

LIC’s expertise and infrastructure are primarily aligned with life insurance, not general or health insurance. Managing health insurance, which involves high-frequency claims, shorter policy cycles, and complex underwriting, was not in sync with LIC’s traditional strengths and systems.

2) Limited Market Share

LIC's health insurance offerings, including products like LIC Jeevan Arogya, struggled to gain significant traction in a competitive market dominated by specialized health insurers. 

3) Operational Complexity

Health insurance demands robust hospital networks, cashless claim processing, and constant technological updates—areas where LIC, as a life insurer, was less equipped. The operational demands were resource-intensive and detracted from its core business focus. Moreover, other government insurers, such as New India, Oriental Health, National Insurance, and United India, were already established players. 

4) Regulatory Shifts

The IRDAI (Insurance Regulatory and Development Authority of India) has been nudging insurers to either specialize or establish separate entities for health insurance. LIC’s exit can be seen as aligning with this regulatory expectation, allowing it to streamline its business and avoid regulatory complexity.

Where LIC Stands Now in Terms of Health Insurance Coverage?

Since LIC Health Insurance no longer exists, it’s understandable if you’re curious to know what LIC is doing now:

1. No Active Health Insurance Plans
   LIC has stopped selling its health benefit-based policies due to their limited scope and evolving customer expectations.
2. Current Offering: Critical Illness Riders
   Available as add-ons with LIC’s traditional life insurance plans. While these can provide valuable support in the event of a serious diagnosis, they only cover predefined illnesses and offer a one-time payout.
3. Future Outlook: Acquisition & Relaunch
   LIC is reportedly exploring the acquisition of a minor stake in an existing health insurer, with ManipalCigna, Star Health, and Niva Bupa being possible targets. It’s expected to close the acquisition in the current year itself. This move enables LIC to leverage existing infrastructure for product distribution, claims, and digital systems, while tapping into its existing customer bases and health underwriting expertise. It also enables LIC to expand its offering without diluting its focus on life insurance.

Since LIC no longer offers health benefit insurance plans—and even if it does re-enter the market, its offerings will be brand new and untested—it’s wise to consider insurers with a proven track record in health coverage. To help you make an informed decision, we’ve curated a quick guide on how to choose the best health insurance plan in 2025, along with a comparison of the top plans currently available in the market.

How to Choose the Best Health Insurance Plan in 2025?

Choosing the best health insurance plan in 2025 involves careful consideration of your healthcare needs, financial capacity, and the evolving features offered by insurers. Here's a step-by-step guide to help you make an informed decision:

1) Assess Your Health Needs

• Family size & age: Consider the number of members and their age, especially seniors or dependents.
• Medical history: Check for pre-existing conditions that might affect premium or coverage.
• Lifestyle risks: Consider your work stress, diet, smoking, drinking habits, or hereditary health risks

2) Check Coverage & Inclusions

Opt for plans that offer comprehensive coverage, including: 

• Hospitalization (Inpatient, pre- & post-)
• Daycare procedures
• Modern treatments
• Domiciliary & AYUSH (alternative treatments) coverage
• OPD and maternity cover 

3) Sum Insured & Room Rent Limits

Choose an adequate sum insured based on healthcare costs. Look for no limits on room rent and diseases, as these can drastically affect your hospital choice and out-of-pocket expenses. 

4) Network Hospitals & Cashless Facilities

Ensure your preferred hospitals are in the insurer's network, as a strong cashless claim network means less hassle during emergencies.

5) Check Claim Settlement Ratio & Turnaround Time

The claim settlement ratio is the number of claims an insurer pays out of the total number of claims received. Look for insurers with a claim settlement ratio of above 90% and faster claim processing. Also, look for the incurred claim ratio (it is the ratio of the total amount of claims paid as compared to the total amount of premiums received). You should also consider an insurer with a low complaint volume, ensuring that your claims are processed swiftly. 

6) Copayment Clauses & Deductibles

Some plans require a co-payment (you pay a part of the bill). Avoid or minimize these if you want full coverage. Moreover, Deductibles lower premiums but increase your out-of-pocket cost, so these aren’t recommended. 

7) Lifetime Renewability & Waiting Periods

Ensure the policy offers lifetime renewability and the waiting periods. There are three types of waiting periods you should check for

• Initial 30 days (except accidents)
• Specific Illness waiting period- 24 months (this covers ailments like cataract or hernia)
• Waiting period for pre-existing conditions (between 1 to 3 years)

8) Compare Premiums, But Don’t Chase the Cheapest

A low premium might come with reduced coverage or higher exclusions. Use online comparison tools to evaluate value for money, not just price.

9) Read the Fine Print & Exclusions

Understand the exclusions of your health insurance policy clearly- cosmetic procedures, dental, or overseas treatment may not be covered unless specified.

Best Health Insurance Plans in 2025

Opting for a policy with broader coverage is crucial to ensure the quality of health services and financial security during medical emergencies. For 2025, we recommend exploring the best health insurance policies from credible insurers that provide more robust protection and value for your healthcare needs.

1. HDFC ERGO Optima Secure:
   The HDFC ERGO Optima Secure plan offers a waiting period of 3 years for pre-existing diseases (PED) and 2 years for specific illnesses like cataract and hernia (SI). It features an impressive restoration benefit, with 100% of the base sum insured restored annually, and add-ons offering unlimited restoration. Moreover, with the secure benefit, you get 2x coverage from day 1. The policy also provides a renewal bonus of 50% annually, up to 100%, regardless of the number of claims. With access to a network of 13,000+ hospitals and strong metrics like a Claim Settlement Ratio (CSR) of 98% and an Incurred Claim Ratio (ICR) of 86%, it’s a solid option for those seeking a reliable health plan with good coverage and benefits.
2. Care Supreme:
   Care Supreme offers a 3-year PED waiting period and a 2-year SI waiting period. The plan offers the unique benefit of unlimitedly restoring the base sum insured and provides a renewal bonus of 50% per year, up to a maximum of 100% per year. With a network of 11,400+ hospitals, it has a CSR of 90% and an ICR of 59%. However, the relatively lower ICR suggests that claims could be paid out less frequently than other plans. It’s a good option for those seeking flexibility and restoration, but may require more attention regarding claims behavior.
3. Aditya Birla Activ One Max:
   The Aditya Birla Activ One Max plan features a 3-year PED and 2-year SI waiting periods. It provides 100% restoration of the base sum insured unlimited times, making it a strong contender for those seeking extensive coverage. The plan also offers an impressive renewal bonus of 100% annually, up to 500%. With access to 12,000+ network hospitals and a CSR of 95% and ICR of 68%, it’s a dependable choice for policyholders seeking high restoration limits and generous renewal benefits.
4. Niva Bupa Aspire Titanium+:
   Niva Bupa Aspire Titanium+ features a 3-year PED waiting period and a 2-year SI waiting period, with the added benefit of unlimited restoration of the base sum insured following the first claim. The policy also offers a "Booster+" benefit, allowing unused coverage to be carried forward up to 10 times, which adds a unique dimension to its flexibility. With over 10,000 network hospitals and a CSR of 91%, but a lower ICR of 58%, this plan is excellent for those seeking coverage flexibility and restoration benefits. Still, it may not offer the highest claim payout frequency.
5. ICICI Elevate:
   The ICICI Elevate plan features a 3-year pre-existing disease (PED) and a 2-year specific illness (SI) waiting period. It stands out with unlimited restoration of the insured base sum and an add-on option for unlimited renewal bonuses. With a network of 10,200+ hospitals, a CSR of 85%, and an ICR of 83%, it strikes a good balance between coverage, renewal benefits, and a high claim payout ratio. This plan is ideal for those seeking flexibility in terms of restoration and a solid claims history, making it a suitable choice for both short-term and long-term coverage.

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Conclusion

LIC’s exit from the standalone health benefit-based insurance space highlights a significant shift in strategy—one that acknowledges the growing complexity and demands of modern health insurance. While LIC remains a trusted name in life insurance with strong claim metrics, its health plans are no longer active, and any future offerings will enter a competitive market dominated by specialized players.

Until LIC re-establishes itself in this domain with proven products, it’s safer and smarter to opt for health insurance plans that already demonstrate reliability, comprehensive coverage, and solid claim performance.

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