LIC Premium Modes Explained. Yearly vs Monthly vs Quarterly
When buying an LIC policy, you choose how often to pay: yearly, half-yearly, quarterly, or monthly. Most people pick monthly because it feels easier. But they're actually paying MORE. Here's the math.
The Hidden Cost of Monthly Payments
LIC charges extra for non-yearly payment modes. This is called 'loading.' Here's how it works:
If your yearly premium is ₹50,000:
- •Yearly: ₹50,000/year (no loading. cheapest)
- •Half-yearly: ₹25,655 × 2 = ₹51,310/year (2.6% extra)
- •Quarterly: ₹13,105 × 4 = ₹52,420/year (4.8% extra)
- •Monthly (SSS/ECS): ₹4,430 × 12 = ₹53,160/year (6.3% extra)
Over 20 Years, The Difference Adds Up
On a ₹50,000/year premium over 20 years: Yearly total: ₹10,00,000. Monthly total: ₹10,63,200. Difference: ₹63,200. that's more than a full year's premium wasted on loading charges!
And this is on a modest ₹50K premium. Higher premiums mean higher absolute losses.
When Monthly Makes Sense
Despite the extra cost, monthly payment is the right choice if:
- •You genuinely cannot afford the lump sum yearly payment
- •You're salaried and budget monthly. setting up ECS auto-debit makes it hassle-free
- •The alternative is not buying insurance at all. paying 6% extra is better than having no cover
- •You're buying a small policy (loading on ₹10K premium = only ₹630/year extra)
Pro Tip: Salary Account Auto-Debit
The best approach: Choose yearly payment, but set up a monthly RD of ₹4,200/month in a separate account. When the yearly premium is due (₹50,000), your RD has accumulated ₹50,400. enough to cover it. You pay yearly (saving 6% loading) but budget monthly (easier on cash flow).
This article is for educational purposes. Premium rates and benefits are indicative. For official details, visit licindia.in.