Does my LIC money get transferred to the new private insurer?

No. Term insurance has no surrender value. You simply stop paying LIC and start paying the new insurer fresh premiums.

Will I lose tax benefits under Section 80C if I switch?

No. Both LIC and private term insurance premiums qualify for Section 80C deductions up to the ₹1.5 lakh limit annually.

Is the GST removal applicable to my old LIC policy too?

Yes. The 0% GST rate applies to all term insurance renewals due on or after September 22, 2025, regardless of the insurer.

Can I have two term insurance policies at the same time?

Yes. You can hold multiple policies. Just ensure you disclose all existing life covers to every insurer to avoid claim rejection.

What happens if I forget to disclose my LIC policy to the new insurer?

This is considered material non-disclosure. The new insurer can legally reject your death claim, even if you paid premiums for years.

Do I need a fresh medical test for the private policy?

Almost always. Since it is a fresh purchase, the insurer needs to assess your current health status before taking the risk.

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How to Port Term Insurance: Can You Switch from LIC to a Private Player?

Most people think porting life insurance is like changing a SIM card. It is not. Here is how to transition your cover safely.

4 min read

OneAssure Team

April 05, 2026

Need advice tailored to you?

Looking for the right plan? You don't have to guess. Let us compare the fine print for you and give you an unbiased recommendation.

Need advice tailored to you?

Looking for the right plan? You don't have to guess. Let us compare the fine print for you and give you an unbiased recommendation.

The Portability Myth

You want to move your term plan from LIC to a private player. You might call it porting. But here is the hard truth. Life insurance portability does not exist in India the way it does for health insurance or mobile numbers. When you switch, you are not transferring a file. You are starting from scratch. You are buying a brand new contract based on who you are today, not who you were when you first bought that LIC policy. This means a fresh medical checkup and a new premium calculation.

Why Even Consider the Switch?

If it is a fresh start, why bother? Cost is the biggest trigger. LIC premiums for term plans are often significantly higher than private competitors. For a 30-year-old non-smoker, a ₹1 Crore cover with a private giant might cost ₹10,000 to ₹12,000 annually. A similar plan with LIC might sit at ₹18,000 or more. Over 30 years, that is a ₹1.8 lakh difference. Then there is the GST impact. As of September 22, 2025, the 18% GST on term insurance premiums has been removed. This makes new policies even cheaper. You now pay only the base premium. Private players also offer modern riders that older LIC plans lacked. Think of Critical Illness covers that pay a lump sum on diagnosis or Waiver of Premium if you face a permanent disability. Your old policy might just be a plain vanilla death cover.

The Critical Three-Year Clock (Section 45)

This is where most people trip. It is the biggest risk of switching. Under Section 45 of the Insurance Act, an insurer cannot reject a claim after three years for any reason except proven fraud. This is the incontestability clause. If your LIC policy is five years old, it is effectively bulletproof. The insurer must pay. When you buy a new private policy, this three-year clock resets. For the first 36 months of your new plan, the private insurer has the right to investigate and potentially reject a claim if they find any misstatement in your form. You are moving from a safe, seasoned policy to a fresh, vulnerable one. You must weigh if the lower premium is worth resetting this safety timer.

Claim Settlement: The Real Numbers

LIC is the king of trust in India. Their Claim Settlement Ratio (CSR) usually hovers around 98.5%. But private giants are no longer laggards. Top-tier private insurers now consistently post CSRs of 99% or higher according to the latest IRDAI data. However, look at the Amount Settlement Ratio (ASR). This tells you what percentage of the total claim money was actually paid out. Sometimes an insurer settles 99 small claims but rejects one massive ₹5 Crore claim. Private players often lead in digital efficiency here. Platforms like OneAssure help you compare these settlement ratios side-by-side so you do not just chase the lowest price but find the most reliable payer.

How to Transition Without Gaps

Do not just stop paying your LIC premium. That is a recipe for disaster. Follow this sequence:

Apply First: Apply for the new private policy while your LIC plan is active.
Disclose Everything: Mention your existing LIC policy in the new application. If you hide it, your future claim will be rejected.
Undergo Medicals: The private insurer will likely send a paramedic to your house. Do not lie about that occasional cigarette or your father’s blood pressure history.
Wait for Issuance: Wait until you have the new policy document in your hand (or email).
The Overlap: Keep both policies for 15 days. Read the new policy's fine print during the free-look period.
Cancel the Old One: Only after the new one is fully active should you stop paying the LIC premium.

The Digital Experience

Let's be honest. Visiting an LIC branch on a Tuesday afternoon is nobody's idea of fun. Private players offer a smoother digital experience. You can update your nominee, change your address, or download tax certificates in two clicks on a mobile app. LIC is catching up, but the gap in user experience is still visible. If you value DIY management, private players win. If you value a local agent uncle you can call at midnight, LIC stays relevant.

Final Decision Guidance

Should you switch? If you are under 35, healthy, and your current LIC premium is over 40% higher than private quotes, a switch makes financial sense. The long-term savings are massive. But if you have developed health issues like diabetes or hypertension since buying your first policy, stay put. A new insurer will either charge you a heavy 'loading' fee or reject you entirely. In that case, your old LIC policy is a gold mine. Do not let it go.