If you’re between 30 and 50, salaried, and have a family that depends on your income, a LIC term insurance plan is probably the single most cost-effective decision you can make this year. For a few hundred rupees a month, you can replace decades of income your family would otherwise lose overnight. Yet most salaried Indians either skip term insurance entirely, rely only on an employer-provided cover that disappears the day they change jobs, or buy a policy that’s nowhere near large enough to matter.
This guide walks through LIC’s current term insurance lineup, what actually drives your premium, how the September 2025 GST change affects your cost, the tax rules you need to get right, and a practical way to decide how much cover you need. By the end, you should be able to walk into LIC’s website or an agent’s office and ask the right questions instead of just nodding along.
What Is LIC Term Insurance and Why It Matters
A term insurance plan is the simplest form of life insurance that exists. You pay a premium for a fixed number of years, and if you die during that period, LIC pays your nominee the agreed sum assured. If you survive the term, you get nothing back; there’s no maturity benefit, no bonus, no investment component. That’s exactly what keeps the premium low compared to traditional LIC endowment or money-back plans, where a slice of every rupee you pay goes toward eventual returns rather than pure protection.
For a salaried person in the 30-50 age bracket, this distinction matters more than it might seem. Your peak earning years are also the years your family’s financial obligations are highest: a home loan, children’s school fees that will only grow, and parents who may start depending on you. A term plan exists to replace your income for the years your family would otherwise have to survive without it, nothing more, nothing less.
Many salaried professionals stop at the free or subsidized life cover their employer provides through a group term scheme. That cover is useful, but it’s tied to your job. The day you resign, get laid off, or switch employers, the cover ends, often with no continuation option at the same low cost. An individual LIC term insurance plan stays with you regardless of where you work, which is the entire point of buying your own policy instead of depending solely on an employer’s.
LIC's Term Insurance Plans in 2026: Which One Fits You
LIC currently sells several distinct term insurance products, and the right one for you depends mostly on how much cover you need and whether you want to buy online or through an agent. LIC revises its product lineup periodically, including plan numbers and underwriting identification (UIN), so always confirm the active plan list and exact terms on LIC’s official website before you commit.
Plans You Can Buy Instantly Online
LIC’s online pure-term plans (marketed under names like Tech Term and Digi Term) are designed for buyers who are comfortable completing the entire process digitally, without an agent. Because there’s no agent commission built in, these plans are usually the cheapest way to get a large sum assured from LIC. They typically start at a basic sum assured in the ₹50 lakh range and go up into several crore, with policy terms running until age 65-75 depending on your entry age.
Plans You Buy Through an LIC Agent
New Jeevan Amar is LIC’s flagship offline pure-term plan, sold through agents and branches, with similar protection-only structure but the added option of in-person guidance through underwriting, nomination, and claims. It offers a choice between a level sum assured (cover stays flat) and an increasing sum assured (cover steps up over the first several years to counter inflation), and lets you receive the death benefit as a lump sum or in instalments. Saral Jeevan Bima sits in a different category altogether: it’s a standardized term plan that IRDAI requires every life insurer, not just LIC, to offer with identical core features, so it’s easy to compare across companies. Its cover is capped at ₹25 lakh, which makes it best suited to first-time buyers or as a supplement to an existing policy rather than your primary cover if you earn a comfortable salary.
| Plan Type | Best For | Approx. Sum Assured Range | Buying Mode |
|---|---|---|---|
| Online Tech Term / Digi Term | Salaried buyers comfortable self-serving online; lowest cost | ₹50 lakh and above | Online only |
| New Jeevan Amar | Buyers who want agent support and flexible payout options | ₹25 lakh and above | Online or offline |
| Saral Jeevan Bima | First-time buyers or smaller supplementary cover | ₹5 lakh to ₹25 lakh | Online or offline |
| Yuva Term / Credit Life variants | Young earners or covering a specific loan balance | Varies by plan | Mostly offline |
How Much LIC Term Cover Do You Actually Need
This is the question most salaried buyers get wrong, usually by underestimating it badly. A common rule of thumb is to target 15-20 times your annual income as your sum assured, then adjust for outstanding loans and the number of years your dependents will need support.
Consider Rajesh, a 35-year-old software engineer in Pune earning ₹12 lakh a year, with a working spouse, two young children, and an outstanding ₹35 lakh home loan. Using the income-replacement method, 18 times his annual income works out to roughly ₹2.16 crore. Add his outstanding home loan of ₹35 lakh so it doesn’t become his family’s burden, and subtract the ₹50 lakh group cover his employer already provides. That leaves a target of roughly ₹2 crore in individual term cover, a number Rajesh’s instinct (he initially considered ₹50 lakh “just to be safe”) would have left dangerously short.
Run the same exercise for your own numbers: annual income, multiply by 15-20 depending on your age and how many working years remain, add specific liabilities like a home or car loan, then subtract any cover you already have through your employer or an existing policy. The remainder is roughly what an individual LIC term plan needs to cover. A salaried 40-year-old earning ₹10 lakh a year with no existing cover and a ₹20 lakh loan, for instance, should be looking at something closer to ₹1.7-1.8 crore, not the ₹25 lakh many buyers default to simply because that’s what a basic plan offers.
What Determines Your LIC Term Insurance Premium
Four factors drive most of your premium: your age at purchase, the sum assured you choose, the policy term, and your health and smoking status. Buying earlier is the single biggest lever you control, since LIC’s mortality-based pricing rises steeply with age, particularly past your early 40s.
There’s also a recent change that directly lowers your cost regardless of which plan you pick. Effective 22 September 2025, the GST Council removed the 18% GST that previously applied to individual life insurance premiums, bringing the rate down to 0% for term plans bought by individuals (group schemes purchased by employers still attract GST). On a ₹20,000 annual premium, that’s roughly ₹3,600 you simply don’t pay anymore compared to pre-reform pricing, and that saving repeats every year you renew.
The table below gives an illustrative sense of LIC’s online term plan pricing for a ₹1 crore sum assured, non-smoker male, cover running to age 65. Treat these as directional only; your actual quote depends on the specific plan, your exact health declaration, and any underwriting loading.
| Age at Purchase | Approx. Annual Premium (₹1 Crore Cover) |
|---|---|
| 25 | ₹7,500 – ₹9,000 |
| 30 | ₹9,000 – ₹11,000 |
| 35 | ₹12,500 – ₹15,000 |
| 40 | ₹18,000 – ₹21,000 |
Women generally get a modest discount over male rates at the same age, and declared non-smokers pay meaningfully less than smokers across every LIC term plan. Vikram, a 45-year-old marketing manager with a ₹40 lakh home loan and two school-going children, chose New Jeevan Amar’s increasing sum-assured option specifically because a flat cover taken today would buy noticeably less in real terms by the time his younger child finishes college fifteen years from now.
Tax Benefits on LIC Term Insurance Premiums
The premium you pay toward an LIC term insurance plan qualifies for a deduction of up to ₹1.5 lakh under Section 80C, combined with your other 80C investments like PF, PPF, and ELSS, but only if you file under the old tax regime. A salaried buyer in the 30% tax bracket who fully uses this deduction effectively saves about ₹46,800 in tax (30% plus applicable cess), which meaningfully offsets the premium itself.
If you’ve moved to the new tax regime, you don’t get this deduction at all; Section 80C benefits, along with most other Chapter VI-A deductions, simply aren’t available there. That doesn’t automatically make the old regime better for you. The new regime offers lower slab rates and a larger rebate, currently making income up to roughly ₹12.75 lakh effectively tax-free for salaried individuals after the standard deduction, so the right comparison is your total tax outgo under both regimes, not the 80C benefit in isolation.
The ₹5 Lakh Premium Rule Doesn’t Apply to Your Term Plan’s Death Benefit
A common misconception worth clearing up: a rule introduced in 2023 made maturity proceeds taxable for certain life insurance policies issued after 1 April 2023 where the annual premium exceeds ₹5 lakh. This rule targets high-premium savings-oriented policies and their maturity payouts. It has no bearing on a pure term plan’s death benefit, which remains fully exempt under Section 10(10D) regardless of how large your premium or sum assured is, because term insurance never pays a maturity benefit to begin with.
LIC vs Private Insurers: What the Claim Settlement Ratio Really Tells You
LIC’s claim settlement ratio for individual death claims stood at 98.15% for FY 2024-25 according to IRDAI data, comfortably ahead of the industry-wide average of roughly 97.8% across all insurers for the same year. That headline number is one of the strongest arguments people make for buying LIC, and it’s a legitimate one: a higher ratio means a larger share of claims actually get paid rather than rejected.
There’s a nuance worth understanding before you treat that number as the whole story. IRDAI publishes this ratio across an insurer’s entire individual life insurance book, covering endowment, money-back, whole-life, and term plans together, not as a separate figure for term insurance alone. LIC’s book is dominated by traditional savings-linked policies with comparatively smaller claim amounts, while several private insurers with smaller overall claim volumes post claim-settlement-by-amount ratios that are just as strong, sometimes higher, on their term-heavy portfolios.
How to Buy Your LIC Term Insurance Plan the Right Way
Start by calculating your actual cover need using the income-replacement method above rather than picking a round number that feels comfortable. Decide next whether you’re buying online (cheaper, fully self-service) or want an agent’s help (New Jeevan Amar, with guidance through underwriting and claims). Either way, declare your health history, smoking status, family medical history, and existing policies completely and accurately; understatement here is the most common reason term insurance claims get rejected later, and it’s entirely avoidable.
Choose your policy term to match how long your dependents will actually need the cover, not just your retirement date; if your youngest child is five, you likely need cover well past your own retirement age. Decide between level and increasing sum assured based on how much inflation concerns you over a 20-30 year horizon, and consider whether an accident benefit rider is worth the modest additional premium given your occupation and lifestyle. Finally, name your nominee precisely and keep your family informed of the policy’s existence and location of the documents; an unclaimed term policy helps no one.
Making Your LIC Term Insurance Plan Work for You
A LIC term insurance plan earns its place in your financial plan for one reason: it replaces the income your family would lose if you weren’t there to earn it, at a cost that’s become noticeably lower since the GST exemption took effect in September 2025. Match your cover to 15-20 times your income plus outstanding loans, pick between LIC’s online and agent-assisted plans based on how much hand-holding you want, and don’t assume the old tax regime is automatically better just because of the 80C deduction.
Your next steps:
- Calculate your actual cover requirement using your income, liabilities, and existing employer cover
- Compare LIC’s online Tech Term/Digi Term pricing against New Jeevan Amar if you want agent support
- Run your numbers under both tax regimes before assuming 80C makes the old regime worthwhile
- Buy while you’re younger and healthier; the premium difference between 30 and 40 is substantial
The best LIC term insurance plan is simply the one sized correctly for your family’s actual needs, bought early, and backed by complete, honest health disclosure.
Frequently Asked Questions
Which LIC term insurance plan is best for a salaried person aged 30-50?
For most salaried buyers in this age band, LIC’s online pure-term plans (Tech Term/Digi Term family) usually work out cheapest if you’re comfortable buying without an agent, since there’s no commission built into the premium. If you’d rather have an advisor guide you through underwriting and claims, New Jeevan Amar offers similar coverage with that support. Match the policy term to when your youngest dependent becomes financially independent, not just your own retirement age.
How much GST do I pay on LIC term insurance premiums now?
None. Since 22 September 2025, GST on individual life insurance premiums was removed entirely, dropping the rate from 18% to 0% for term plans bought by individuals; group term schemes purchased by employers still attract 18%. On a ₹20,000 annual premium, that’s about ₹3,600 you no longer pay each year compared to pre-reform pricing.
Can I claim a tax deduction on my LIC term insurance premium under the new tax regime?
No. The Section 80C deduction of up to ₹1.5 lakh for life insurance premiums is available only under the old tax regime. The new regime offers lower slab rates and a bigger rebate instead, so compare your total tax liability under both regimes rather than assuming the 80C benefit alone makes the old regime better for you.
Does LIC's high claim settlement ratio apply specifically to term insurance?
Not exactly. IRDAI publishes LIC’s claim settlement ratio across its entire individual life insurance portfolio, endowment, money-back, whole-life, and term plans combined, currently 98.15% for FY 2024-25. LIC doesn’t disclose a separate ratio for pure term plans alone, so treat the headline figure as a reasonable indicator of reliability rather than term-specific proof.
Is LIC Saral Jeevan Bima better than New Jeevan Amar or the online Tech Term plans?
It depends on how much cover you need. Saral Jeevan Bima caps out at ₹25 lakh, which suits first-time buyers or those supplementing an existing policy, while New Jeevan Amar and the online plans start where Saral Jeevan Bima ends and go up to several crore. At a ₹10-12 lakh annual salary, you likely need more than ₹25 lakh of cover, so a higher-cover plan is usually the better starting point.
What happens if I miss a premium payment on my LIC term policy?
LIC gives a grace period, typically 30 days for yearly or half-yearly premiums and 15 days for monthly mode, during which your policy stays active. Miss that window and the policy lapses, meaning your family loses cover until you revive it, usually possible within five years with proof of good health and payment of back-premiums plus interest. Setting up auto-debit removes this risk entirely.
Can I increase my LIC term insurance cover later if my income grows?
Not on the same policy. LIC term plans don’t allow a mid-term increase to your sum assured; you’d need a new policy for the additional cover, underwritten based on your age and health at that time. Many buyers handle this by purchasing a slightly higher cover than their current income suggests in their early 30s, then adding a second policy after a significant salary jump or major life event.
Do I need a medical test to buy LIC term insurance?
It depends on your age, the sum assured requested, and your declared health history. Younger applicants seeking moderate cover may be approved on declaration alone, while higher sums assured or older applicants are typically asked to complete tests at LIC-empanelled labs. Always answer health and lifestyle questions accurately, since misstatement is the most common reason term insurance claims get rejected.
