The LIC Story — History, Valuation & Why its IPO is Important

Life insurance is a contract that guarantees payment of a sum of money to the person insured (or his nominee) if the event insured against happens.

Unfortunate death, if it occurs sooner.

Who need?

Anyone who has a family to support and earns a living requires Life Insurance.

1. Parents With Young Children or Dependents with Functional Needs
2. Spouses Who Provide the earnings
3. Older Adults Without Savings
4. Adults with Private Student Loans
5. Business Owners

The Benefits:

1. It gives financial stability, aids in the repayment of debts, assists in the payment of living expenses, and aids in the payment of any medical or last expenditure.
2. Person insurance policies pay out a certain sum of money if the life insured dies or becomes handicapped due to an accident during the policy's term.
3. To provide financial support to your immediate relatives in the case of your death.
4. To have a future savings strategy in place so that you will have a steady source of income once you retire.
5. Other financial concerns and lifestyle necessities must be covered.
6. Tax-free benefit
7. Guaranteed cash value growth

Treat Insurance like an expense:

1. An expense cannot make you RICH.
2. Insurance policy does not make a policy holder rich even on maturity nor does it make the nominee rich on death claim.
3. Buy only TERM PLANS it is the cheapest and best for your nominee.

Let's look into some of the facts about LIC:

1. LIC was created on 1st Sept 1956 with objective of spreading life insurance more widely, particularly in rural area.
2. So even after 63 years of service, it is still trusted brand of crores of Indians. This is evident from market share- 74% of Lic against 26% of 23 private life insurance companies.
3. The sovereign guarantee in Section 37 of LIC act is the biggest USP of it. So it has 100% guarantees on returns.
4. Its policies give guaranteed returns along with risk cover. None of the investment products give this.
5. Not only investment in LIC policies but even the returns of it are tax free under sec 80c and 10(10d) of IT act.
6. If you look at current market scenario, bank interests' rates are declining; mutual funds are no more that attractive, recent crash in share market, LIC seems more attractive for stable and assured returns.
7. To fulfill need of young generation, it has come up with market linked ULIP plans which also provide risk cover, so double benefit.
8. Further LIC has stakes in almost all the major PSEs. Also many times it has helped Government in difficult situations. So by investing in L8C policy, you are helping in nation building in a way.

Steps for buying life insurance:

When you buy an insurance policy through an agent, the commission paid to the agent is included in your premium. Simultaneously, by purchasing insurance straight from the LIC website, you may avoid using an agent and save paying the agency's commission.

1. Determine whether you actually need life insurance
2. Calculate how much life insurance you need
3. Consider other objectives you may have for your life insurance
4. Determine what type of life insurance best meets your needs
5. Decide whether to pay premiums annually
6. Tell your beneficiaries about your life insurance policy

Best LIC Life Insurance Plans for Everyone:

LIC offers different types of Insurance Plans with each having unique features and benefits to fulfil the variant needs of the people. You can choose a plan as per your requirement and needs. Let's discuss the 5 best LIC plans to invest of different types offered by LIC.

1. Tech-Term Plan

Tech-Term, a pure risk premium plan, is an online term policy and therefore cheaper than other offline plans. In case a policyholder wants to double the sum assured under this plan, he can do so through payment of nearly 25 per cent to 30 per cent higher premium. The policy allows the policyholder to purchase an accident rider as an add on. The customer can also opt for options to receive death benefits in installments over the chosen period of 5 or 10 or 15 years instead of lump sum amount. The instalments shall be paid in advance at yearly or half yearly or quarterly or monthly intervals.

2. New Jeevan Anand

New Jeevan Anand is an endowment plan offered by LIC. It is a participating non-linked plan that offers a combination of protection as well as savings. It provides financial protection against death throughout the life of the insured and also provides the provision of a lump-sum payment at the end of the policy tenure in case of survival of the insured. This plan takes care of liquidity needs through the facility of loan. Features of the New Jeevan Anand plan are: The death benefit in the form of sum assured along with vested simple reversionary bonuses is provided. It offers to participate in the profits of LIC and receive bonus declared by the company It provides maturity benefits as the basic sum assured and vested bonuses as well as an additional bonus at the end of the term of the policy.

The plan offers an option of regular payment of premium to the insured individual

3. Jeevan Umang

The Jeevan Umang plan provides for annual survival benefits from the end of the premium paying term till maturity and a lump sum payment at the time of maturity or on death of the policyholder during the policy term. It is among those very few plans in the sector that offer a life coverage of 100 years. The plan pays 8 percent of the sum assured every year as moneyback on survival at the end of the policy term. Simple reversionary bonus and final addition bonus is paid, subject to conditions. For someone looking for a pension facility after retirement, it's a perfect pick.

4. Jeevan Shanti

It is a single premium plan that offers policyholders the flexibility to select between Immediate and Deferred Annuity. Its salient features and benefits are: The annuity rates are guaranteed at the inception of the policy for both types of annuity plans that are payable throughout the lifetime of annuitant(s). Offers nine different annuity options to choose from, as per one's investment objectives. Annuity rates are fixed at the inception of the policy term. Loan facility, available after completion of 1 policy year, ensures liquidity. Can be surrendered after three months from the completion of policy when the policyholder has opted for an annuity option with return of purchase price. Especially suitable for policyholders with handicapped dependant (Divyangjan) life.

Available online as well as offline.

5. Jeevan Labh

LIC Jeevan Labh is a non-linked, with-profits endowment plan, limited premium paying investment plan. Here are its salient features and Benefits: Serves the dual purpose of protection and savings. Offers Death Benefit, which is the sum assured payable to the beneficiary on the unforeseen death of the policyholder. Includes Maturity Benefit as a lump sum amount that is paid to the policyholder after the completion of the plan. Ensures liquidity through its loan facility. Policyholders are eligible for receiving Simple Reversionary Bonuses, provided the policy is in-force.Final (Additional) Bonus is also payable during claim settlement in case of the policyholder's death or maturity of the policy. Riders for complete protection.

LIC IPO is crucial for meeting the disinvestment target set for the current fiscal ending March 2022.

Budget 2022 | The much-awaited IPO of the life insurance behemoth is expected to be one of the biggest in the country, with the government aiming to raise close to $12 billion by selling a minority stake to the public.

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