LIC New Tech-Term Plan 954: Features, Tax Benefits, GST & Claim Rules

Summary: LIC’s New Tech-Term (Plan No. 954, UIN 512N351V02) is an online-only, non-linked, non-participating individual pure-risk life insurance plan of Life Insurance Corporation of India. As per LIC’s current product listing and policy documents reviewed in October 2026, the plan offers Level Sum Assured and Increasing Sum Assured death-benefit options, with single, regular and limited-premium choices. Entry is permitted from age 18 to 65 years, maximum maturity age is 80 years, minimum Basic Sum Assured is ₹50 lakh and the policy term starts at 10 years, subject to product-specific maximum-term rules. There is no maturity benefit on survival. For Tax Year 2026-27, the Income-tax Act, 2025 is the operative law: eligible life-insurance premium deduction is governed by Section 123 read with Schedule XV, subject to the applicable tax regime and conditions, while qualifying life-insurance receipts are dealt with under Section 11 read with Schedule II. The corresponding provisions under the repealed Income-tax Act, 1961 were Sections 80C and 10(10D). Individual life-insurance policies are presently exempt from GST following the 2025 GST reforms. Buyers should treat the product primarily as risk protection and verify the latest LIC policy wording, premium quotation, underwriting decision and tax position before purchase.

LIC New Tech-Term Plan 954: Features, Tax Benefits, GST & Claim Rules

What is LIC’s New Tech-Term?

LIC’s New Tech-Term is a pure term-assurance product sold online directly by Life Insurance Corporation of India. LIC currently lists it as Plan No. 954 with UIN 512N351V02. It is non-linked and non-participating, so it is not a market-linked investment and does not participate in LIC’s profits. Its core purpose is payment of the contractual death benefit when an admissible death claim arises during the policy term while the policy is in force.

Unlike an endowment or money-back plan, the base plan does not pay a maturity benefit merely because the life assured survives to the end of the policy term. This distinction is important when comparing premiums and expected outcomes.

Key Eligibility and Product Conditions

The actual premium depends on underwriting and factors including entry age, smoking status, gender, policy term, premium-paying term, Basic Sum Assured and death-benefit option. LIC provides separate smoker and non-smoker rate categories; eligibility for non-smoker rates is subject to its prescribed testing/underwriting requirements. Special rates for women and high-sum-assured rebates are features stated by LIC, but the actual quotation should be checked at purchase.

Two Death-Benefit Options

Option I: Level Sum Assured

Under the Level Sum Assured option, the absolute amount assured to be paid on death is equal to the Basic Sum Assured and remains unchanged throughout the policy term.

Option II: Increasing Sum Assured

Under the Increasing Sum Assured option, the absolute amount assured to be paid on death remains equal to the Basic Sum Assured through the first five policy years. It then increases by 10% of the Basic Sum Assured in each policy year from the sixth year until the fifteenth policy year, when it reaches twice the Basic Sum Assured. From the sixteenth policy year onward it remains at twice the Basic Sum Assured, subject to the policy continuing and the detailed contractual conditions. The option selected at inception cannot subsequently be changed.

For example, if the Basic Sum Assured is ₹1 crore under the increasing option, the relevant absolute amount remains ₹1 crore through year five, becomes ₹1.10 crore in year six and progressively increases until it reaches ₹2 crore in year fifteen. This is only an explanation of the benefit structure; the actual “Sum Assured on Death” remains governed by the policy formula described below.

How the Death Benefit is Determined

For Regular Premium and Limited Premium policies, LIC defines “Sum Assured on Death” as the highest of:

• 7 times the Annualised Premium;
• 105% of Total Premiums Paid up to the date of death; or
• the applicable absolute amount assured to be paid on death under the selected Level or Increasing Sum Assured option.

For a Single Premium policy, the death benefit is the higher of 125% of the Single Premium or the applicable absolute amount assured to be paid on death. Definitions and exclusions from “Annualised Premium”, “Total Premiums Paid” and “Single Premium” must be read exactly as provided in the policy document.

Death Benefit Can Be Structured in Instalments

The plan permits the life assured, during his or her lifetime and while the policy is in force, to opt for payment of all or part of the death benefit to the nominee in instalments over 5, 10 or 15 years instead of entirely as a lump sum, subject to LIC’s conditions and minimum instalment requirements. The policy document should be checked before exercising this option because the instalment calculation and operative conditions are contractual.

Premium Payment, Grace Period and Lapse

Regular and Limited Premium policies permit yearly or half-yearly payments. LIC’s brochure provides a 30-day grace period for payment of yearly or half-yearly premiums from the date of the first unpaid premium. During that grace period the policy is treated as in force in accordance with the policy terms. If the premium remains unpaid after the grace period, the policy lapses and benefits are affected as provided in the contract.

A term policy should therefore not be evaluated only on its first-year premium. The policyholder should assess the ability to maintain the required premiums throughout the chosen premium-paying term.

Surrender and Unexpired Risk Premium Value

Because New Tech-Term is a pure-risk plan, conventional savings-plan surrender expectations should not be applied to it. Under the current LIC brochure, nothing is payable on surrender of a Regular Premium policy. For Single Premium and qualifying Limited Premium policies, an Unexpired Risk Premium Value may become payable under the prescribed formula and conditions. Limited Premium eligibility depends, among other things, on the required number of consecutive full premiums having been paid. Policyholders should use the current policy document for the exact formula and eligibility rather than assuming that premiums already paid will be refunded.

Optional Accident Benefit Rider

LIC states that the plan permits an eligible policyholder to opt for LIC’s Accident Benefit Rider on payment of an additional rider premium, subject to the rider’s separate eligibility, term, sum-assured and other conditions. A rider is not a substitute for reading the base-plan exclusions and the rider policy wording.

Free-Look Period

The current policy document provides a 30-day free-look period from receipt of the policy document in electronic or physical mode, whichever is earlier. A policyholder dissatisfied with the terms may return the policy within that period by following LIC’s prescribed process. The refund is subject to deductions permitted by the policy, including proportionate risk premium for the period of cover, medical-examination expenses and stamp duty, where applicable.

Income-Tax Treatment From FY/Tax Year 2026-27

Section 123 of Income-tax Act, 2025 replaces the familiar Section 80C reference

The Income-tax Act, 2025 applies from 1 April 2026. For Tax Year 2026-27, the provision corresponding to the earlier Section 80C deduction is Section 123 read with Schedule XV. Subject to the statutory conditions, an individual may count eligible life-insurance premium paid for self, spouse or child within the overall ₹1.50 lakh ceiling shared with the other eligible items under that provision.

The deduction should not be assumed merely because a premium has been paid. Among other things, the taxpayer’s chosen tax regime matters. The Section 123 deduction is relevant where the taxpayer is entitled to and chooses the regime permitting such deduction; it is not available merely as an additional deduction under the default new-regime computation.

Death benefit and the former Section 10(10D)

Under the Income-tax Act, 2025, qualifying life-insurance receipts are dealt with through Section 11 read with Schedule II. This corresponds broadly to the familiar exemption framework under Section 10(10D) of the Income-tax Act, 1961. For a genuine pure term policy, the principal insured event is death during the policy term, and death proceeds are not converted into a taxable maturity receipt merely because the premium is high. TaxGuru has also explained the historical life-insurance exemption conditions and the special treatment of death receipts.

New Tech-Term itself pays no maturity benefit on survival. Any surrender/unexpired-risk-premium payment, rider payment or unusual receipt should nevertheless be examined under the law applicable in the year of receipt rather than automatically treated as exempt.

TDS on taxable life-insurance payouts

Where a life-insurance payout to a resident is taxable rather than exempt, the TDS provision corresponding to old Section 194DA is now contained in Section 393(1), Table Sl. No. 8(i) of the Income-tax Act, 2025. The current rate is 2% of the income component, subject to the statutory ₹1 lakh payment threshold. TaxGuru’s TDS/TCS guide for FY 2026-27 sets out the old-to-new provision mapping. An exempt death benefit should not be treated as a taxable payout merely because this TDS provision exists.

GST on Individual Term-Life Insurance

The GST Council’s 2025 reforms exempted all individual life-insurance policies, including term-life, ULIP and endowment policies, and their reinsurance. Accordingly, an individual New Tech-Term policy falls within the current individual life-insurance GST exemption framework. This is materially different from the earlier regime under which life-insurance services could attract GST.

Tax treatment should always be checked on the actual transaction date because GST exemptions and rate notifications can change, and a rider or another separately supplied service should be examined under its applicable legal treatment.

Nomination, Claims and Grievance Handling

A nominee should be properly recorded and kept current. At claim stage, LIC may require the prescribed claim form, policy particulars, death certificate, claimant identity/bank details and other evidence depending on the nature and circumstances of death. The exact requirements should be taken from LIC’s current claims process rather than relying on a generic checklist.

If a servicing or claim grievance is not resolved through LIC’s internal grievance mechanism, the policyholder/claimant may use the regulatory grievance-redressal channels and, where jurisdictional conditions are satisfied, the Insurance Ombudsman mechanism. Policyholders should retain proposal disclosures, medical records submitted during underwriting, premium receipts, policy schedule, nomination records and relevant communications.

Important Risks and Practical Checks Before Purchase

• No maturity value: survival to the end of the policy term does not produce a base-plan maturity payment.
• Underwriting matters: the requested cover and quoted premium are not necessarily final until underwriting is completed.
• Disclosure risk: health, occupation, habits and other proposal questions should be answered completely and accurately. Material non-disclosure can create claim disputes subject to applicable insurance law.
• Affordability over the full term: regular/limited premium buyers should assess long-term premium-paying capacity.
• Cover adequacy: ₹50 lakh is only the product’s minimum Basic Sum Assured, not a statement that ₹50 lakh is sufficient for a particular family.
• Inflation and liabilities: level and increasing cover have different premium and protection profiles; the choice should reflect actual liabilities and protection needs.
• Rider limitations: an accident rider covers only what its own wording provides and should not be confused with the base death cover.
• Tax benefit is secondary: a protection policy should not be purchased merely to obtain a deduction.

FAQs on LIC New Tech-Term

1. Is LIC New Tech-Term an investment or savings plan?

No. It is a non-linked, non-participating pure-risk life insurance plan. The base plan provides no maturity benefit if the life assured survives the policy term.

2. What is the minimum cover under the plan?

The current LIC brochure specifies a minimum Basic Sum Assured of ₹50 lakh. The maximum has no stated fixed product ceiling but remains subject to LIC’s underwriting decision.

3. Can the policyholder switch later from Level to Increasing Sum Assured?

No. LIC’s current product terms state that the death-benefit option chosen at inception cannot later be changed.

4. Does the Increasing Sum Assured start increasing immediately?

No. The applicable absolute amount remains equal to the Basic Sum Assured through the first five policy years. It then increases by 10% of the Basic Sum Assured each year from policy year six until it reaches twice the Basic Sum Assured in policy year fifteen, subject to the contractual conditions.

5. Is premium paid for New Tech-Term eligible for income-tax deduction in FY 2026-27?

Potentially yes, subject to Section 123 read with Schedule XV of the Income-tax Act, 2025, the overall ₹1.50 lakh ceiling, the policy-specific statutory conditions and the taxpayer using a tax regime in which the deduction is available. The former reference was Section 80C of the Income-tax Act, 1961.

6. Is GST currently charged on an individual New Tech-Term policy?

Individual life-insurance policies, including term-life policies, are presently covered by the GST exemption introduced through the 2025 reforms. The position should still be verified against the invoice and law applicable on the premium-payment date.

7. Is there a free-look period?

Yes. The current policy document provides 30 days from receipt of the policy document, subject to the prescribed return procedure and permissible deductions.

8. Does LIC return all premiums if the policy is surrendered?

No. Regular Premium policies do not carry a surrender payment under the stated terms. Single Premium and qualifying Limited Premium policies may have an Unexpired Risk Premium Value under the policy formula and conditions. This should not be treated as a guaranteed refund of premiums paid.

Key Takeaways

• LIC New Tech-Term is an online pure-protection plan, not a savings product.
• The current UIN is 512N351V02 and the minimum Basic Sum Assured is ₹50 lakh.
• Buyers can choose Level or Increasing Sum Assured, but the selected death-benefit option cannot later be changed.
• Single, Regular and Limited Premium structures are available, subject to the product terms.
• There is no maturity benefit on survival to the end of the term.
• From FY/Tax Year 2026-27, life-insurance premium deduction should be examined under Section 123 read with Schedule XV of the Income-tax Act, 2025 rather than mechanically citing old Section 80C.
• Individual life-insurance policies are presently exempt from GST under the post-September 2025 framework.
• Cover amount, premium affordability, proposal disclosures and nominee details matter more than the tax deduction alone.

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Disclaimer: This article is solely for general informational and educational purposes. It does not constitute insurance, investment, financial, legal, tax or accounting advice, or an offer, solicitation, endorsement or recommendation to purchase, renew, surrender, switch or otherwise deal in LIC’s New Tech-Term or any other insurance policy. Insurance products are subject to the insurer’s policy wording, underwriting, eligibility criteria, exclusions, premium terms, claim conditions and applicable laws and regulations. Benefits, premiums, tax treatment, GST treatment and regulatory requirements can change and may depend on individual facts. Readers must independently read and verify the latest official policy wording, Customer Information Sheet, sales brochure, benefit/premium illustration where applicable, and current LIC/IRDAI information before acting, and should consult an appropriate IRDAI-authorised insurance intermediary/adviser and tax, legal or accounting professional where required. TaxGuru is not LIC, an insurer, insurance intermediary or distributor merely by publishing this article. TaxGuru, its owners, management, editors, authors, employees and associated persons accept no responsibility or liability for any loss, damage, rejected claim, tax consequence, decision or action arising directly or indirectly from reliance on or use of this article or the information contained in it.