LIC SIP Plan: How It Works and Who Should Invest?

What is your approach to investing: regular or one-shot? Well, this is definitely not a new question for many investors out there. People usually ask this question when they start investing or trading. But this is just the start. Following this, you would need to consider the risk, return expectations, amount, and other factors. 

And then there is the question of safety and steadiness. This is where many people go for safer options like the LIC SIP plan. Many investors hear the term SIP plan in LIC and assume it is a type of SIP only. That is not fully true.

So, now the question is, what is the SIP plan in LIC? Also, why you should be considering the same when you start your investing journey. Well, let us explore the answer to the same in the guide here. 

What is the LIC SIP Plan?

The LIC SIP plan is not a single or standalone product. It is a way of investing regularly in certain LIC policies. You do this by paying a fixed amount every month or quarter. 

When people talk about a SIP plan in LIC, they usually mean periodic investments in ULIPs or money-back type policies offered by LIC. These plans combine disciplined savings with insurance cover. This makes them different from mutual fund SIPs.

Key Features

• It allows regular investments instead of a one-time lump sum.

• Most LIC SIP-style options are linked to ULIP or endowment plans.

• A life insurance cover is included along with the investment.

• Returns depend on the plan type and, in ULIPs, on market performance.

• It suits investors who want savings with insurance under one plan.

By investing in the LIC SIP plan, you get an opportunity to invest to get the best returns, safety, and stability. 

Pros and Cons of the LIC SIP Plan

Before choosing a LIC SIP plan, it is important to look at both sides clearly. These plans offer discipline and insurance. But at the same time, they come with some flaws. These, when compared to mutual fund SIPs or lumpsum investment, can help better. So, let's explore the pros and cons first here.

Pros of the LIC SIP Plan

• It builds a regular savings habit through fixed periodic payments.

• Life insurance cover is included along with the investment.

• It suits conservative investors who prefer stability over high risk.

• Investors can pay a premium with flexible payment options.

• These are safe for long-term investment and financial goals with protection needs.

Cons of the LIC SIP Plan

• Returns are usually lower than equity or index mutual fund SIPs over the long term.

• High cost and charges are not good.

• Transparency on fund performance might be limited or lacking at times.

• Stopping in between may not be possible at times.

• Not ideal for investors focused purely on wealth creation.

How Does the LIC SIP Plan Work?

The LIC SIP Plan works on regular and disciplined investing. It is quite similar to how you invest in mutual funds. So, here are the steps to follow:

• You select an LIC policy that allows periodic premium payments.

• A fixed premium amount is decided based on your income and goal.

• Set auto-debit for premium payments.

• Part of the amount goes toward life insurance coverage.

• The remaining amount is invested or accumulated as per the plan type.

• In ULIP-based plans, funds are invested in equity or debt options.

• Returns are credited at maturity or at defined payout intervals.

Who Should Invest in the LIC SIP Plan?

The LIC SIP plan suits those who want protection and returns. But there are certain other profiles of investors as well. These are:

• Individuals looking for regular savings with life insurance cover.

• First-time investors who prefer low to moderate risk options.

• Salaried professionals who are looking to safeguard their investments and family.

• If you need funds for children’s education or retirement.

• Those who want to avoid the volatility.

• Those who want options that are on the low side of the riskometer.

LIC SIP Plan vs Mutual Fund SIP

Conclusion

The LIC SIP plan is a great choice if you want growth with insurance cover under one structure. It is simple and allows you to start investing with ease. It offers protection and growth as well. And if you need expert support, visit Rupeezy. Get all the guides you need with simple tools and clear insights to plan better.

FAQs

Is there a direct LIC SIP plan like mutual funds?

No, LIC does not offer a separate product called an LIC SIP plan. This is usually offered with some plans, and you can opt in. 

Is a SIP plan in LIC safe?

LIC-backed plans are considered stable due to government ownership. But the returns might be lower and based on the market as well.

Can I stop an LIC SIP plan anytime?

Stopping or exiting early may lead to penalties or surrender charges. Terms depend on the specific LIC policy chosen.

Which is better, the LIC SIP plan or the mutual fund SIP?

An LIC SIP plan suits conservative investors who want insurance and savings together. A mutual fund SIP is better for long-term wealth creation.

How much should I invest in an LIC SIP plan?

The amount is based on policy, plan, and your goals. Many investors start with Rs. 2,000 to Rs. 5,000 per month, based on affordability.