When it comes to safe investment options in India, most people often find themselves choosing between LIC schemes and Post Office savings plans. Both are backed by the government, offer low-risk returns, and are ideal for conservative investors. But which one actually provides better returns, more flexibility, and higher security?
Whether you’re a working professional planning for retirement or a parent seeking secure growth for your child’s future, choosing the right scheme can make all the difference. In this article, we’ll compare LIC vs Post Office schemes in detail—analyzing returns, safety, tax benefits, and investment flexibility.
LIC vs Post Office Scheme Comparison
| Feature | LIC Jeevan Shanti | Post Office Monthly Income Scheme (POMIS) |
|---|---|---|
| Type of Investment | Deferred Annuity Plan | Fixed Monthly Income Plan |
| Return Rate | 6% to 7.5% (depends on annuity option & age) | 7.4% per annum (as of April–June 2025) |
| Minimum Investment | ₹1.5 lakh (single premium) | ₹1,000 |
| Maximum Investment | No limit | ₹9 lakh (joint), ₹4.5 lakh (single) |
| Payout Frequency | Monthly, Quarterly, Half-Yearly, or Annually | Monthly |
| Tax Benefits | Eligible under Section 80CCC | Interest is fully taxable, no Section 80C benefits |
| Risk Factor | Very low (backed by LIC, a Govt entity) | Zero risk (Govt-backed scheme) |
| Tenure / Lock-in Period | Lifetime annuity | 5 years |
Choosing between LIC and Post Office schemes isn’t about which is better—it’s about what’s right for you. LIC provides lifetime financial security, ideal for retirement. Post Office MIS delivers immediate, short-term returns with complete peace of mind.
Whether you’re investing for your retirement, children’s future, or just looking to grow your savings safely, understanding these schemes will help you make smarter, safer financial decisions.
What Is LIC Jeevan Shanti?
LIC Jeevan Shanti is a deferred annuity plan offered by Life Insurance Corporation of India. You invest a lump sum amount once, and in return, you get a guaranteed monthly income starting from a future date (chosen by you). It is especially popular among retirees and those seeking a lifetime pension.
Key Features of LIC Jeevan Shanti
- Single premium investment
- Guaranteed monthly income for life
- Option for joint annuity (ideal for spouses)
- Various annuity options (immediate or deferred)
- Payouts can start after 1 to 20 years
- Nominee gets the death benefit
Best suited for: Retirees or individuals planning for long-term financial security.
see also: Depositing ₹10,000 Will Give You a Return of ₹7,13,659 After 5 Years
What Is Post Office Monthly Income Scheme (POMIS)?
POMIS is a low-risk, government-backed savings scheme where you invest a lump sum and earn a fixed monthly income through interest payouts. The current rate (as of April 2025) is 7.4% per annum, paid monthly.
Key Features of POMIS
- Fixed tenure of 5 years
- Minimum deposit: ₹1,000
- Maximum deposit: ₹4.5 lakh (individual), ₹9 lakh (joint)
- Monthly interest payout directly to savings account
- Option to reinvest in another scheme post-maturity
Best suited for: Conservative investors looking for short-to-medium term monthly income.
LIC vs Post Office – Side-by-Side Comparison
Let’s break down some of the major differences and practical use-cases.
Returns & Income Stability
| Point | LIC Jeevan Shanti | Post Office MIS |
|---|---|---|
| Rate of Return | Depends on age & annuity type | Fixed at 7.4% per annum |
| Payout Type | Lifetime income (annuity) | Monthly interest for 5 years |
| Payout Flexibility | Choose monthly/quarterly etc. | Only monthly |
Verdict: If you’re aiming for lifetime guaranteed income, LIC wins. If you want short-term income with fixed returns, go with Post Office MIS.
Safety & Risk Factor
Both are backed by the Government of India, making them extremely safe. LIC is a government-owned corporation, and all Post Office schemes are sovereign-backed.
Verdict: Both are equally secure, making them ideal for low-risk investors.
Tenure & Liquidity
| Feature | LIC Jeevan Shanti | Post Office MIS |
|---|---|---|
| Lock-in Period | Till end of life | 5 years |
| Premature Exit | Only under special cases | Allowed after 1 year with penalty |
Verdict: POMIS is more flexible if you might need your money back sooner.
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Tax Benefits
- LIC Jeevan Shanti: Premiums qualify for deductions under Section 80CCC of the Income Tax Act.
- Post Office MIS: Interest earned is fully taxable, and no deductions apply under Section 80C.
Verdict: LIC gives better tax advantages, especially for those in higher tax slabs.
Which LIC vs Post Office Scheme Gives Better Returns?
Let’s say you have ₹5 lakh to invest. Here’s what you’d earn:
Post Office MIS
- Interest rate: 7.4%
- Annual income = ₹37,000
- Monthly income = ₹3,083
- Total payout in 5 years = ₹1,85,000 + ₹5 lakh principal
LIC Jeevan Shanti
- Assuming 7.2% annuity for a 60-year-old
- Monthly pension = ₹2,950 (approx.)
- Lifetime income (till age 85) = ₹8,85,000
Conclusion: LIC gives higher long-term benefits, while Post Office MIS gives better short-term returns with full principal refund after 5 years.
Who Should Choose What?
Choose LIC Jeevan Shanti if:
- You’re looking for lifetime income
- You’re a senior citizen or retiree
- You want tax deductions and legacy planning
- You don’t need liquidity
Choose Post Office MIS if:
- You want short-term fixed monthly income
- You might need your money after 5 years
- You prefer easy withdrawal and low entry cost
- You are a low-risk investor saving for goals like kids’ tuition or rent
see also: Post Office FD vs Bank FD Deposit ₹8 Lakh in a 36-Month TD of Post Office
LIC vs Post Office Scheme FAQs
Q. Which gives better returns: LIC or Post Office?
For short-term (5 years), Post Office MIS gives slightly better returns. For long-term (10+ years), LIC’s Jeevan Shanti provides more secure income.
Q. Are both schemes 100% safe?
Yes. Both LIC and Post Office schemes are backed by the Government of India and are among the safest investment choices.
Q. Can I invest in both?
Absolutely! Many smart investors use Post Office MIS for short-term income and LIC for retirement planning.
Q. Is the income from these schemes taxable?
- LIC annuity income is taxable.
- Post Office MIS interest is also taxable, but there is no TDS.
Q. What happens if I withdraw early?
- LIC Jeevan Shanti doesn’t allow early withdrawal easily.
- Post Office MIS allows withdrawal after 1 year (with a small penalty).
