LIC policies for tax saving
Life insurance premiums qualify for deduction under Section 80C, and maturity proceeds can be tax-free under Section 10(10D) if conditions are met.
Both come with conditions that are frequently glossed over at selling time, and getting them wrong is expensive. Tax rules also change — confirm current provisions with a tax adviser before relying on them.
The conditions that actually matter
The 80C deduction applies to premiums paid, within the overall 80C limit shared with EPF, PPF, ELSS and the rest. It is not an additional limit.
For maturity proceeds to be exempt under 10(10D), the premium must stay within a prescribed proportion of the sum assured, and recent Finance Acts have added thresholds on total premium across policies. A policy surrendered or made paid-up early can also lose deductions claimed in earlier years.
The practical implication: buying a policy mainly for the deduction, then abandoning it after two or three years, can cost more than the tax it saved.
A better order of questions
Decide what the money is for and how long you can commit. Then check the tax treatment of the plan that fits. A twenty-year contract taken for a one-year deduction is the wrong way round, and it is the single most common regret people bring to an advisor.
From LIC's own brochures
Active plans to look at
These are LIC plans currently active in our dataset, matched on the criteria described above. Each page quotes LIC's own brochure and links to the source PDF. Nothing here is ranked by what earns the most.
Work it out yourself
Calculators for this
Common questions
How much tax can I save with an LIC policy?
The deduction depends on your premium and how much of your 80C limit is already used by other investments. Because it varies by individual circumstances and by the tax regime you have chosen, any specific figure quoted without knowing those is guesswork.
Is the LIC maturity amount tax-free?
It can be under Section 10(10D), subject to conditions on the premium-to-sum-assured ratio and, for recent policies, thresholds on aggregate premium. Confirm the current rules for your policy year with a tax adviser.
Does the new tax regime still allow 80C?
The deductions available differ between regimes, and the rules have changed more than once in recent years. This is worth checking against current provisions rather than an older article.
Not sure which of these applies to you?
Five questions, no account needed, and it will tell you honestly if nothing fits rather than pushing the closest match.