Do LIC policyholders get a sovereign guarantee on sum assured like PPF, SCSS, NSC, SSY?

Yes, the sum assured on all LIC policies enjoys a sovereign guarantee like small savings schemes such as the Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY) etc.

While the individual LIC policies are contracts between the policyholder and the insurer, the sum assured is backed by a sovereign guarantee. This means, even if the LIC fails, the government would pay the sum assured to a person holding a LIC policy.

"LIC is governed under the provisions of Life Insurance Corporation Act, 1956, Insurance Act, 1938, IRDAI (Insurance Regulatory and Development Authority of India) Act, 1999 and the rules and regulations made thereunder. Whereas, LIC’s policy document is a contract between Insurer and Policyholder for the entire duration / term of the policy. However, the sum assured by all policies including any bonuses declared in respect thereof is supported by the Government’s sovereign guarantee as indicated in section 37 of LIC Act," Pankaj Chaudhary, minister of state in the Ministry of Finance, said in a written reply to a query in the Lok Sabha on February 10, 2025.

When asked about the initiatives taken by the insurer to enhance bonus for policyholders, the minister said: "The bonus payable depends on the surplus generated as result of an annual actuarial investigation in accordance with relevant rules and regulations. LIC strives to generate optimal returns by ensuring investment in high quality assets while ensuring a risk reward balance, which is also reviewed by the Investment Committee of LIC."

LIC offers various life insurance policies, including money back plans and pension plans. However, annualised returns from these policies are generally lower than small savings schemes like PPF, SCSS, NSC and SSY.

Does the Govt plan to reduce the minimum age for endowment plans to 50 years from 55?

There is no such plan, according to the minister's reply to a fresh query in the Lok Sabha on March 10, 2025.

However, LIC policies already cater to different age and income groups. For instance, the minister said that the maximum age of entry for LIC's New Endowment Plan has been modified from 55 years to 50 years.

Many other LIC products such as Nivesh Plus, Single Premium Endowment Plan, Jeevan Akshay, New Jeevan Amar, Pension plus, etc. have maximum age at entry beyond 50 years.

"LIC also offers products such as Micro Bachat with minimum sum assured of ₹1 lakh to cater to the needs of poor people including those in rural India. Similarly, in another product namely Single Premium Endowment Plan, the minimum Sum Assured is ₹1 lakh. Hence, a range of products are made available by LIC to cater to diversified needs of our citizens," Chaudhary said.