Hi, in this post, we’ll explore 5 proven tips to reduce your LIC premium legally, with clear explanations and practical strategies that you can apply right away.
Life Insurance Corporation of India (LIC) is one of the most trusted names when it comes to securing your financial future. However, many policyholders feel burdened by high premium payments.
The good news is that you can legally Reduce your LIC premium without compromising your insurance coverage or long-term benefits. By making smart choices and understanding how LIC policies work, you can save thousands of rupees over the years.
Why Should You Care About Reducing LIC Premium?
Paying a lower premium means:
- More savings for your other financial goals
- Better cash flow management
- Opportunity to invest in additional financial instruments
- Same insurance coverage at reduced cost
👉 Now, let’s dive into the 5 tips 📉
1. Choose the Right Policy at the Right Age
Start Early to Pay Less
One of the biggest factors that determines your premium is your age at the time of buying the policy. The younger you are, the lower your premium will be.
- At 25 years, a ₹10 lakh term plan may cost just ₹5,000 annually.
- At 40 years, the same policy could cost over ₹15,000 annually.
Why Age Matters in LIC Premiums
Insurance companies calculate risk based on age. Younger individuals are considered healthier and less risky, hence the lower premium.
Pro Tip:
If you are in your 20s or early 30s, don’t delay buying an LIC policy. Even a 5-year delay can significantly increase your premium.
2. Opt for Term Plans Instead of Endowment Plans
What’s the Difference?
- Term Plans: Pure risk cover. Low premium, high coverage.
- Endowment Plans: Risk cover + savings. Higher premium, lower coverage.
How Term Plans Save Money
For example:
- A ₹50 lakh LIC Term Insurance may cost you only ₹6,000–₹8,000 annually.
- But an endowment plan for the same sum assured could cost ₹50,000–₹70,000 annually.
That’s almost 10 times higher!
When to Choose Term Plans
- If your goal is maximum coverage at minimum cost.
- If you already have other investment avenues like mutual funds, PPF, or NPS
3. Pay Premium Annually Instead of Monthly or Quarterly
Why Annual Payment Works Better
When you choose to pay monthly or quarterly, LIC adds extra charges for administrative purposes. This slightly increases your overall premium amount.
- Example: A ₹20,000 annual premium might turn into ₹21,500 if paid monthly.
Benefits of Annual Payments
- Saves extra charges
- Easier to track one payment instead of multiple small ones
- You may even earn cashback or reward points if paid via credit card
Pro Tip:
If affordability is a concern, plan your finances and keep a separate insurance fund where you save monthly, then pay your premium annually.
4. Maintain a Healthy Lifestyle to Get Lower Premiums
Why Health Matters in Premium Calculation
LIC often requires medical tests, especially for higher coverage policies. Your health conditions like diabetes, hypertension, smoking, or obesity can increase your premium significantly.
- Non-smokers can get up to 30–40% lower premium rates compared to smokers.
- Healthy BMI and no chronic illness also help reduce premium.
How to Stay Eligible for Lower Premiums
- Quit smoking and tobacco consumption
- Maintain an active lifestyle with regular exercise
- Go for regular health check-ups
- Manage stress and diet
LIC’s Rewards for Healthy Individuals
Some LIC policies even offer premium discounts for healthy policyholders who maintain good medical reports.
5. Use Riders Wisely
What Are Riders?
Riders are add-on covers like:
- Accidental Death Benefit
- Critical Illness Cover
- Waiver of Premium
How Riders Affect Premiums
While riders provide additional benefits, they also increase your premium. Not every rider is necessary for everyone.
- Example: If you already have health insurance, a Critical Illness Rider may not be essential.
Smart Way to Use Riders
- Choose only those riders that add real value
- Avoid duplicate coverage
- Compare total premium with and without riders before deciding
Pro Tip:
Always customize your policy instead of blindly adding riders. This can save you thousands over the long term.
Some More Tips to Save on LIC Premium
Compare Policies Before Buying
Don’t rush into buying the first plan suggested by an agent. Compare different LIC policies and choose the one that balances affordability with benefits.
Use Online Purchase Discounts
Buying LIC policies online often comes with discounts on premiums since there’s no agent commission involved.
Claim Tax Benefits
Premiums paid towards LIC are eligible for deduction under Section 80C of the Income Tax Act. This reduces your taxable income, giving you indirect savings.
Conclusion
Reducing your LIC premium legally is not about cutting corners—it’s about making informed financial decisions. By:
- Choosing the right policy early
- Preferring term plans over endowment
- Paying premiums annually
- Maintaining good health
- Using riders wisely
…you can save a significant amount while still enjoying the full protection of LIC.
Remember, insurance is not just an expense—it’s a financial safety net for your loved ones. So, reduce your premium smartly, but never compromise on adequate coverage.
FAQs
Can I reduce my LIC premium after buying a policy?
No, once the policy is issued, the premium is fixed. However, you can reduce costs by avoiding unnecessary riders or switching to a more affordable policy.
Which LIC policy has the lowest premium?
LIC’s term insurance plans (like LIC Tech Term) have the lowest premiums compared to endowment or money-back plans.
Does paying LIC premium annually save money?
Yes, annual payments usually cost less than monthly or quarterly modes because LIC adds administrative charges for multiple transactions.
Can my health affect LIC premium?
Yes, smoking, chronic illness, or high BMI can increase premiums. Maintaining a healthy lifestyle can help you get lower rates.
Can riders increase my LIC premium?
Yes, adding riders like critical illness or accidental benefit increases your premium. Choose only necessary riders to keep premiums low.
Is buying LIC policy online cheaper than offline?
Yes, online purchases often come with discounts since no agent commission is included.
