As a life insurance company, LIC (Life Insurance Corporation of India) collects premiums from policyholders and manages those funds to fulfill its obligations. Here's what LIC typically does with the money it receives from policyholders:

  1. Paying Claims: When a policyholder or their beneficiaries make a claim due to the occurrence of an insured event, such as the policyholder's death or maturity of the policy, LIC uses the collected premiums to pay out the claim amount.
  2. Investment: LIC invests a significant portion of the premium money it receives in various financial instruments and assets. These investments aim to generate returns and grow the funds available for meeting future obligations, such as paying out claims and providing policy maturity benefits.
  3. Operating Expenses: LIC uses a portion of the premium money to cover its operating expenses, including administrative costs, agent commissions, marketing, and other overheads involved in running the insurance business.
  4. Reserves and Solvency Margin: As a responsible insurance company, LIC is required to maintain statutory reserves and a solvency margin as per regulatory requirements. These reserves act as a financial cushion to ensure that LIC can meet its financial commitments to policyholders even in adverse scenarios.
  5. Profit Distribution: LIC is a government-owned corporation, and its profits contribute to the government's revenue. As a public entity, LIC pays dividends to the government based on its performance.
  6. Surplus Distribution: After fulfilling all financial obligations, meeting expenses, and maintaining reserves, LIC may distribute surplus or bonuses to eligible policyholders. Surplus distribution is common in participating policies, where policyholders share in the profits of the company.

It's important to note that LIC, like any other insurance company, follows a conservative investment approach, focusing on stable and relatively low-risk assets to ensure the safety of policyholders' funds. The investments are closely regulated by the Insurance Regulatory and Development Authority of India (IRDAI) to protect policyholders' interests.

Overall, the primary goal of LIC is to fulfill its commitments to policyholders by providing financial protection, generating returns on investments, and maintaining financial stability.

[Note: This is not lic orginal website.This is  the only thing to shear information about lic] 

Top of Form