LIC Term Plan: 5 Tax Rules You Must Know

LIC's online term plan offers life cover with zero GST on pure protection plans. But tax benefits, claim payouts, and lapse rules have conditions most buyers miss. Here's what actually matters for your family.

Here's what happened: LIC's online term plan offers either level death cover (fixed sum assured) or increasing cover, with the death benefit paid as a lump sum to nominees.. Pure term insurance premiums — where no maturity or survival benefit exists — are exempt from 18% GST under Indian indirect tax rules.. Death claim payouts under the policy are income-tax-free for nominees under Section 10(10D), provided the premium-to-sum-assured ratio stays within prescribed limits..

What you should do: Check your tax regime: if you have opted for the new regime, you cannot claim Section 80C deduction on your term premium — factor this into your premium budget.. Verify your policy's GST charge: if your term plan invoice shows 18% GST, confirm whether you have any return-of-premium or survival benefit rider attached, as those attract GST.. Set a premium auto-pay reminder: a lapsed term policy means zero death cover — set an auto-debit or calendar alert at least 10 days before your annual premium due date..

Name a specific nominee and update it after marriage or a child's birth — an outdated or missing nominee forces the family to go through a court process to claim the death benefit.

If this affects your borrowing choices, compare current personal loan options from 100+ lenders on GoCredit.