There is no single best LIC policy. Here are the currently sold LIC plans that fit each goal, from term cover to pension, with real premium examples.
Quick answer
A term plan gives the most life cover for the money but pays nothing if you survive. An endowment plan returns a lump sum with bonuses but gives much less cover. For a 30-year-old man, our calculators show ₹10 lakh of cover for 20 years costs about ₹4,914 a year under Jeevan Raksha 894, against ₹49,913 under New Endowment 714. For protection, choose term.
A term plan is better for protecting your family, and an endowment plan is better only if you want life cover bundled with a guaranteed-style savings habit. The difference is large: for the same person, term cover can cost a small fraction of what an endowment policy costs for the same sum assured. Below we run both through our calculators for one buyer and then test the “buy term and invest the difference” idea.
Independent comparison: we are not LIC. All figures come from our own calculators and are close estimates, not LIC quotes. No GST is included, because individual life insurance premiums are GST-exempt from 22 September 2025.
Term plan vs endowment plan: the basic difference
A term plan is pure insurance. If the life assured dies during the term, the nominee gets the sum assured. If the life assured survives, nothing is paid. LIC’s current term plans include New Tech Term 954, Bima Kavach 887 and Jeevan Raksha 894.
An endowment plan combines insurance with savings. It pays the sum assured plus bonuses at maturity, or on earlier death. New Endowment Plan 714 and Jeevan Labh 736 are the main examples. Most of an endowment premium goes into savings, not into the cost of cover, which is why it is so much more expensive.
The worked example: one buyer, two choices
Meet Ravi, a 30-year-old non-smoking man. He can set aside about ₹50,000 a year for 20 years and wants to protect his family until he is 50.
Option A: New Endowment Plan 714
From our New Endowment 714 calculator, with ₹10 lakh sum assured and a 20-year term:
- Yearly premium: ₹49,913, paid for 20 years (total ₹9,98,260).
- Maturity at age 50: about ₹18,20,000, assuming a bonus of ₹40 per ₹1,000 a year and a final additional bonus of ₹20 per ₹1,000. Without the final bonus it is ₹18,00,000.
- Death cover: ₹10,00,000 (the higher of the sum assured or 7 times the yearly premium) plus bonuses accrued up to the date of death.
- Implied return: about 5.4% a year.
Option B: Jeevan Raksha 894 for the same ₹10 lakh cover
From our Jeevan Raksha 894 calculator, with ₹10 lakh cover for 20 years:
- Yearly premium: ₹4,914 (total ₹98,280 over 20 years).
- Death cover: ₹10,00,000. Nothing is paid at maturity.
That leaves ₹44,999 a year, or about ₹3,750 a month, that Ravi can invest elsewhere while keeping the same basic cover.
What if Ravi needs more cover?
₹10 lakh is rarely enough for a family. A common rule is 10 to 15 times yearly income. Our New Tech Term 954 calculator puts ₹1 crore of level cover to age 60 at about ₹11,837 a year. Our general term plan calculator shows the same figure for this profile. Treat both as estimates and take LIC’s own quote as final. Getting ₹1 crore through Plan 714 instead would cost about ₹4,99,131 a year, which is out of reach for most people.
Buy term and invest the difference: the SIP illustration
Now suppose Ravi takes Option B and puts ₹3,750 a month into a SIP for 20 years. Using our SIP calculator, with ₹9,00,000 invested in total:
| Assumed return a year | Value at age 50 | Compared with Plan 714 maturity (₹18.20 lakh) |
|---|---|---|
| 7% (cautious) | ₹19,64,870 | About ₹1.4 lakh more |
| 10% (our main assumption) | ₹28,71,363 | About ₹10.5 lakh more |
| 12% (optimistic) | ₹37,46,805 | About ₹19.3 lakh more |
Ravi’s total outlay is almost the same in both cases: ₹98,280 in term premiums plus ₹9,00,000 in SIPs, against ₹9,98,260 in endowment premiums.
If he instead buys ₹1 crore of cover through Plan 954 at ₹11,837 a year, he can invest about ₹3,170 a month. At an assumed 10% a year, that grows to about ₹24,27,259 by age 50, still well above the endowment maturity, and his family is protected for ₹1 crore rather than ₹10 lakh. He does need to keep paying the ₹11,837 term premium from age 50 to 60.
Read these numbers with care:
- The 10% return is an assumption for a diversified equity fund over 20 years. It is not guaranteed, and markets can fall sharply in any year.
- Tax. Long-term gains on equity funds above ₹1.25 lakh a year are taxed at 12.5% (the rate since July 2024, unchanged in Budget 2026). At 10%, selling everything in one year would mean roughly ₹2.3 lakh of tax plus cess, leaving about ₹26.3 lakh. Spreading withdrawals over several years reduces this.
- Discipline. The plan only works if the SIP actually runs for 20 years. An endowment premium forces that saving.
- Bonus risk. The Plan 714 maturity also depends on future bonus declarations, which are not guaranteed.
Pros and cons at a glance
| Term plan | Endowment plan | |
|---|---|---|
| Life cover per rupee | Very high | Low |
| Money back on survival | None | Sum assured + bonuses |
| Typical return | Not applicable | About 5–6% a year on our estimates |
| Premium for ₹10 lakh, age 30, 20 years | ₹4,914 (Plan 894) | ₹49,913 (Plan 714) |
| Flexibility | High: invest the rest as you choose | Low: money locked in for the term |
| Early exit | Cover simply stops | Surrender value is low in early years |
| Loan facility | No | Yes, against surrender value |
| Savings discipline | Depends on you | Built in |
| Tax on premium | Deduction under Section 80C, old regime | Same |
| Tax on payout | Death benefit tax-free | Maturity usually tax-free, subject to limits |
Section 80C becomes Section 123 under the Income-tax Act, 2025, which applies from 1 April 2026; the deduction limit of ₹1.5 lakh and the old-regime condition stay the same. For non-ULIP policies issued from 1 April 2023, maturity is taxable if total yearly premiums across such policies exceed ₹5 lakh.
Who should choose which
Choose a term plan if you:
- have a spouse, children, parents or a loan that depends on your income;
- need cover of ₹50 lakh or more;
- are comfortable investing on your own through SIPs, PPF or NPS;
- want to keep your money flexible.
Consider an endowment plan if you:
- already have enough term cover;
- want a low-risk, disciplined way to save and know you will not invest on your own;
- value guaranteed-style benefits, loan facility and a fixed maturity date over higher expected returns.
Many families end up with both: a term plan for protection and a small endowment or guaranteed plan for a specific goal. Our guide to the best LIC plans for 2026 lists current options by goal.
If you already hold an endowment policy
Do not surrender it in a hurry. In the first few years, the surrender value is usually far below what you have paid. Check it with our surrender value calculator. Often the better step is to keep the policy (or make it paid-up) and add a separate term plan to close the cover gap.
Key takeaways
- A term plan gives far more cover for the money: ₹10 lakh for ₹4,914 a year against ₹49,913 for an endowment plan, for the same 30-year-old.
- An endowment plan returns about 5–6% a year on our estimates, with bonuses that are not guaranteed.
- Investing the difference at an assumed 10% a year grew to about ₹28.7 lakh in our example, against about ₹18.2 lakh from the endowment, before tax on the SIP gains.
- The term route needs discipline and accepts market risk; the endowment route trades return for safety and forced saving.
- Buy adequate term cover first. Add savings plans only after that.
Try these calculators
Frequently asked questions
Which is better, LIC term plan or endowment plan?
For protecting your family, a term plan is better because it gives many times more cover for the same premium. An endowment plan is better only if you want forced, low-risk savings with life cover attached and accept returns of roughly 5–6% a year. Many people buy term cover and invest separately.
Do I get my money back in an LIC term plan?
No. A pure term plan such as New Tech Term 954 or Jeevan Raksha 894 pays only if the life assured dies during the term. If you survive, nothing is paid. That is why the premium is a small fraction of an endowment premium for the same cover.
What return does an LIC endowment plan give?
On our calculator, New Endowment 714 for a 30-year-old with ₹10 lakh sum assured over 20 years works out to about 5.4% a year, assuming bonuses of ₹40 per ₹1,000 a year and a small final bonus. Bonuses are not guaranteed, so the actual return can be lower or higher.
What does buy term and invest the difference mean?
It means buying a cheap term plan for life cover and investing the money you would otherwise have spent on an endowment premium, for example through a monthly SIP. The investment is separate from the insurance, so its value depends on the market and on your discipline to keep investing.
Is an endowment plan maturity tax-free?
Usually yes, if the premium in any year stays within 10% of the sum assured. For non-ULIP policies issued from 1 April 2023, maturity is taxable if your total yearly premium across such policies is above ₹5 lakh. The death benefit is tax-free in either case.
Can I convert an LIC endowment plan into a term plan?
No. The two are separate products. If you already hold an endowment policy, you can keep it, make it paid-up or surrender it, and buy a new term plan for the cover you need. Check the surrender value first, because exiting in the early years usually costs you money.
Is GST charged on LIC term or endowment premiums?
No. From 22 September 2025, premiums on individual life insurance policies, including term and endowment plans, are exempt from GST. Before that, term plans attracted 18% and endowment plans 4.5% in the first year and 2.25% after.
Disclaimer: LIC Premium Calculators is an independent website. We are not affiliated with, endorsed by or connected to Life Insurance Corporation of India. All figures are estimates for illustration; confirm exact premiums and benefits with LIC or a licensed agent before buying.