Is LIC a good option for term insurance?

All of us have heard of LIC – The Life Insurance Corporation of India – in one way or another. The brand has been popularized in numerous ways – either through a pesky relative who is an LIC salesperson, through its iconic ads in the 1990s, or its popular jingle, "Zindagi ke saath bhi, zindagi ke baad bhi." Either way, LIC has come a long way from what it was in 1956 and has become a life insurance behemoth. Being the oldest and largest life insurance company in India, they offer multiple plans catering to various needs. So, in today’s article, I will explain to you whether LIC is a good option for term insurance in 2025.

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Overview – Is LIC Term Insurance Good?

Features of LIC Term Insurance Plans

LIC New Tech Term Plan and LIC Digi Term Plan are structured to provide basic life cover with a few options for payout customization. The New Tech Term Plan is available for purchase both online and offline, while the Digi Term Plan is exclusively an online product. These plans offer flexible death benefit payout options, including lump sum payments or staggered monthly/annual payments. The minimum cover amount starts at ₹5,00,000, and you have the choice of enhancing coverage through optional riders such as the Accidental Death Benefit Rider. However, compared to private insurers, LIC’s product customisation options remain limited, focusing more on traditional life cover without extensive add-ons. But before we get to the plans themselves in detail, let’s take a look at the insurer first.

Life Insurance Corporation Metrics

LIC's high claim settlement ratio reflects its reliability in fulfilling claims promptly. Its solvency ratio comfortably exceeds the IRDAI-mandated 1.5x mark, ensuring robust financial stability. However, many other private insurers also exceed this benchmark and that of LIC’s. These metrics are important when choosing an insurer, as they indicate the company’s ability to meet policyholder obligations without financial stress.

Life Insurance Corporation of India – LIC Term Insurance Plans

1. LIC Digi Term Plan
   1. Features
      Digi Term (Plan 826) is a direct-to-consumer term policy that can only be bought online. It admits applicants aged 18 to 45, allows coverage for up to 40 years or until age 75—whichever arrives first—and requires a minimum qualification of 12th grade. Premiums can be paid as a single shot, throughout the policy term (regular pay), or over shortened 10-pay and 15-pay windows, with half-yearly and annual payment modes. The basic sum assured ranges from ₹50 lakh to ₹5 crore, while higher amounts need reinsurer approval. Customers choose between two benefit structures: a Level Cover that keeps the death benefit flat for the entire term, and an Increasing Cover that holds the chosen sum assured steady for the first five years, then steps it up by 10 percent of the original amount each year from the 6th to the 15th policy year, capping at double the original cover from year 16 onward.
   2. Advantages
      The plan’s biggest draw is its seamless online purchase, removing branch visits and paperwork. Buyers get considerable flexibility in both premium funding—thanks to single, regular, 10-pay, and 15-pay options—and benefit design, with the inflation-friendly Increasing Cover variant cushioning long-term purchasing power. A high maximum sum assured, coupled with a relatively low entry age threshold, makes the product appealing to young professionals who need large protection early in life. The half-yearly mode also eases cash-flow pressure compared with annual-only contracts.
   3. Disadvantages
      Eligibility is restricted: anyone older than 45 at entry or without a 12th-grade certificate is automatically disqualified. The policy term caps at 40 years, which may leave long working horizons partially uncovered, and monthly or quarterly premium modes are absent. Most critically, the plan strips out standard add-ons—there is no critical illness, waiver of premium, accidental disability protection, nor any terminal-illness payout, zero-cost exit window, life-stage upgrade, or loyalty discount. That bare-bones construction limits customization and forces buyers to seek supplementary policies elsewhere.
   4. Available Riders
      None — Plan 826 is offered strictly without optional riders or built-in ancillary benefits.
2. LIC New Tech Term Plan
   1. Features
      New Tech-Term (Plan 954) is a direct-to-consumer term policy you can buy only through LIC’s online portal. Anyone aged 18 to 65 who has completed 12th grade can apply. You may lock in coverage for up to 40 years or until age 85, whichever comes first. Premiums can be paid as a single lump sum, throughout the full term, or in compressed “limited-pay” windows that conclude five or ten years before the policy ends, and you can choose either half-yearly or annual payment modes. The minimum sum assured is ₹50 lakh, while the upper limit is constrained only by underwriting appetite. Benefit design mirrors the insurer’s Digi Term: a Level Cover that keeps the death benefit flat for the entire term, and an Increasing Cover that holds the chosen amount steady for the first five years, then lifts it by 10 percent of the original cover each year from the 6th to the 15th policy year, doubling the base protection from year 16 onward.
   2. Advantages
      The plan stands out for its broad entry age band—extending protection to first-time buyers well into their sixties—and for allowing coverage to run until age 85, which fits retirees who still have financial dependents. The absence of an upper sum-assured ceiling allows high-income earners to secure very large covers in a single policy, and the limited-pay option helps those who prefer to complete premium obligations early. The online sales channel maintains minimal documentation, while the half-yearly mode mitigates the cash-flow impact. Finally, the inflation-friendly Increasing Cover variant and an optional accident benefit rider add layers of flexibility rarely found in LIC’s older online products.
   3. Disadvantages
      Despite the wider age window, the contract remains lean: it excludes critical-illness protection, waiver-of-premium, accidental disability, and terminal-illness payouts, and it offers no zero-cost surrender, life-stage upgrades, or loyalty discounts. Payment frequencies stop at half-yearly—there is no monthly or quarterly option—and eligibility still hinges on a 12th-grade certificate. Even the accident benefit rider is active only while you are paying premiums or until you turn 70, whichever is earlier, leaving the later years without the extra layer. These gaps may force you to stitch together multiple policies for comprehensive risk cover.
   4. Available Riders
      New Tech-Term offers a single optional attachment—the Accident Benefit Rider (UIN 512B203V03). If you choose it, your nominees receive an additional sum assured on top of the base death benefit if you die in an accident; the rider remains in force only during the premium-paying period or until the policy anniversary nearest your 70th birthday.

Strengths of Choosing LIC Term Insurance

One of the strongest reasons people opt for LIC is its government ownership, which lends it a level of credibility and trust. LIC enjoys immense brand loyalty, built over decades of service, especially among older generations who prefer dealing with a familiar, trusted entity. 

Additionally, LIC’s vast physical network ensures that even customers from semi-urban and rural areas have access to face-to-face support. This is something that few private insurers can match. The emotional comfort and assurance that many Indians associate with LIC are difficult to replicate. However, this doesn’t mean that it lacks flaws.

Drawbacks of Choosing LIC Term Insurance

One of the biggest concerns is its relatively higher premium rates compared to top private insurers such as Axis Max Life or HDFC Life. Buyers often find that they can obtain the same coverage at significantly lower premiums by exploring private insurance providers. This is why we recommend you compare different term insurance plans before zeroing in on a policy.

Another disadvantage is the digital experience. Although LIC has improved its online presence over recent years, its digital platforms still lag behind private insurers in terms of user-friendliness and ease of use. 

Additionally, LIC’s term plans offer fewer options for customisation. Features such as flexible premium payment terms, critical illness riders, enhanced disability covers, or other riders common with private insurers are relatively limited in LIC's offerings.

Who Should Consider Buying LIC Term Insurance?

LIC term plans are an ideal choice for people who prefer the brand value and want no customization with riders. For someone who is less concerned with getting the lowest premium or extensive add-ons but wants an insurer with a longstanding reputation, LIC makes sense. Buyers residing in semi-urban or rural regions, where offline branch support matters greatly, will also find LIC’s strong network particularly advantageous. 

However, if you want greater customization, lower premiums, and an overall better experience during claims, there are better options available, such as Axis Max Life, Bajaj Allianz, Tata AIA, and HDFC Life, among others. In that light, here’s a quick comparison between LIC and some other top term insurers in 2025.

Comparison: LIC Term Insurance vs. Term Insurance from Other Top Insurers

When compared to private insurers like HDFC Life, ICICI Prudential, or Axis Max Life, LIC’s premiums are noticeably higher. Private players often offer better coverage features such as critical illness riders, waiver of premium on disability, or increased coverage during life milestones, all at relatively affordable premiums. Let’s take a look at them now:

While many consumers argue that LIC enjoys sovereign backing due to government ownership, it is important to clarify that no life insurance company, including LIC, offers explicit sovereign guarantees. All insurers are regulated strictly by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI mandates a minimum solvency ratio of 150% to ensure financial soundness. Most insurers comfortably maintain a solvency ratio between 180% and 220%. In the unlikely event of an insurer facing trouble, the IRDAI intervenes to protect policyholders' interests, often by merging distressed insurers with healthier companies.

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Conclusion: Is LIC Term Insurance a Good Choice?

LIC is a reliable and credible choice for life insurance, especially for those who prioritise legacy and brand trust over lower premiums and additional customization. LIC's efforts to modernise and adapt to the needs of the next generation are commendable, though it still has a long way to go to match the agility of private insurers.

That said, if you are looking for feature-rich plans at competitive rates from equally reliable companies, it might be worthwhile to explore offerings from other top private life insurance companies as well. Ultimately, the best choice depends on your individual priorities and financial planning goals, and you must always compare different options and choose what is best for you.