The Life Insurance Corporation of India (LIC) offers policies that are backed by a sovereign guarantee, similar to small savings schemes such as the Public Provident Fund (PPF) and Senior Citizen Savings Scheme (SCSS). This means that even if LIC fails, the government would pay the sum assured to policyholders. The sum assured on all LIC policies is governed by the Life Insurance Corporation Act, 1956, Insurance Act, 1938, and IRDAI Act, 1999, and is supported by the government’s sovereign guarantee.
The bonus payable on LIC policies is determined by the surplus generated each year, and the insurer strives to generate returns while ensuring a risk-reward balance. LIC offers various life insurance policies, including money back plans and pension plans, but the annualized returns from these policies are generally lower than those from small savings schemes.
The minister of state for finance, Pankaj Chaudhary, has also clarified that there is no plan to reduce the minimum age for endowment plans from 55 to 50 years. However, LIC policies already cater to different age and income groups, and the maximum age of entry for some plans, such as the New Endowment Plan, has been modified to 50 years.
LIC offers a range of products, including Micro Bachat, Single Premium Endowment Plan, and Pension Plus, which cater to the needs of various segments of society, including low-income individuals and those in rural India. These products offer a minimum sum assured of as low as Rs. 1 lakh, making them accessible to a wider range of people. Overall, LIC’s policies are designed to cater to the diversified needs of citizens, while providing a sovereign guarantee on the sum assured.