LIC Bonds: Understanding Features, Benefits, and Interest Rates

11 November 2025

What Are LIC Bonds?

When it comes to secure and long-term financial instruments, LIC Bonds have been among the trusted names in India’s fixed-income market. Issued by the Life Insurance Corporation of India (LIC)—a government-backed financial institution—these bonds are designed to offer investors stable returns while supporting LIC’s financing and operational goals.

In this article, we’ll explore what LIC Bonds are, how they work, their interest rates, and the overall benefits and risks associated with them. This guide is intended purely for educational and informational purposes to help readers understand this asset class better.

LIC Bonds are debt instruments issued by the Life Insurance Corporation of India (LIC). When investors purchase these bonds, they essentially lend money to LIC in exchange for regular interest payments and repayment of the principal at maturity.

These bonds can be classified as corporate bonds, given that LIC, though government-owned, operates as a corporate entity. LIC uses the funds raised from bond issuance to support its various financing needs, infrastructure projects, and insurance-related commitments.

In simple terms, LIC Bonds offer investors a way to earn predictable income while contributing to the financial activities of one of India’s largest financial institutions.

Key Features of LIC Bonds

1. Issuer

The bonds are issued by the Life Insurance Corporation of India (LIC), which carries a strong credit profile due to its government ownership and long-standing market credibility.

2. Coupon Rate (Interest Rate)

The LIC Bonds interest rate—also known as the coupon rate—typically varies depending on the bond type, tenure, and prevailing market conditions. Historically, these bonds have offered fixed interest payouts, making them attractive to conservative investors.

3. Tenure

The tenure of LIC Bonds can range from 5 years to 20 years, depending on the specific issue. Longer-term bonds often provide slightly higher yields.

4. Credit Rating

LIC Bonds usually carry high credit ratings (often AAA or AA+) assigned by agencies like CRISIL or ICRA, indicating strong repayment capacity and low default risk.

5. Interest Payment Frequency

Interest is typically paid semi-annually or annually. The exact frequency depends on the specific bond issue’s terms.

6. Mode of Investment

Investors can apply for LIC Bonds through exchange platforms or authorized intermediaries like online bond marketplaces. Platforms like BondScanner enable users to explore and compare different bond options in a transparent manner before investing.

LIC Bonds Interest Rate

The interest rate on LIC Bonds varies across different series and issue periods. As of recent issues, LIC Bonds have typically offered yields in the range of 7% to 8% per annum, depending on market conditions and credit rating.

However, it is important to note that bond yields fluctuate with interest rate movements. Investors should always verify the latest coupon rate and yield details on official exchange platforms like NSE or BSE, or through SEBI-registered bond platforms.

Benefits of LIC Bonds

1. Reliability of the Issuer

Being issued by LIC of India, a government-owned institution with decades of financial trust, these bonds are perceived as highly reliable within the corporate bond category.

2. Regular Income Stream

LIC Bonds provide fixed, periodic interest payments, making them suitable for investors seeking a steady income flow.

3. Portfolio Diversification

They help diversify an investor’s fixed-income portfolio, balancing higher-risk instruments like equities or mutual funds.

4. Transparency and Regulatory Oversight

As a regulated entity, LIC adheres to SEBI and RBI guidelines, ensuring transparency in bond issuance, listing, and compliance.

5. Tradability

Listed LIC Bonds can be traded on exchanges like NSE and BSE, offering liquidity to investors who may wish to exit before maturity.

Risks Associated with LIC Bonds

While LIC Bonds are relatively secure, they are not entirely risk-free. Here are a few risks investors should be aware of:

  • Interest Rate Risk: Bond prices move inversely with interest rates. Rising rates can reduce the market value of existing bonds.

  • Liquidity Risk: Although exchange-listed, certain series may have low trading volumes, affecting ease of sale.

  • Market Risk: Broader market conditions can influence yields and bond demand.

  • Reinvestment Risk: If investors receive periodic interest payments, reinvesting them at lower rates in the future may reduce total returns.

How to Buy LIC Bonds

Investors can explore and purchase LIC Bonds through registered online bond platforms, such as BondScanner, or directly via stock exchanges (NSE/BSE) where these bonds are listed.

Here’s an illustrative process:

  • Visit a SEBI-registered bond platforms.

  • Browse available bonds under categories such as corporate or government bonds.

  • Review key details such as credit rating, coupon rate, and maturity.

  • Complete the KYC process if not already done.

  • Place an order through the platform, ensuring settlement occurs via authorized clearing corporations.

This process ensures operational transparency and regulatory compliance, as all transactions are routed through official exchange mechanisms.

Example: Recent LIC Bond Issues

For educational reference, let’s consider a past example of an LIC Bond issue (illustrative only):

  • Issuer: Life Insurance Corporation of India

  • Type: Non-convertible debenture (NCD)

  • Coupon Rate: 7.5% p.a.

  • Tenure: 10 years

  • Credit Rating: AAA by CRISIL

  • Listing: NSE and BSE Such examples illustrate how corporate bond structures function and help investors understand bond characteristics before exploring investment options.

Role of LIC Bonds in India’s Bond Market

LIC Bonds contribute to India’s corporate debt market development by promoting long-term savings and fixed-income participation. Institutional investors like pension funds, mutual funds, and insurance companies often hold LIC Bonds as part of their fixed-income portfolios.

Moreover, the presence of entities like LIC in the bond market enhances investor confidence and market stability, aligning with India’s broader financial inclusion and capital market growth goals.

FAQs on LIC Bonds

1. What are LIC Bonds?

LIC Bonds are debt instruments issued by the Life Insurance Corporation of India to raise capital. Investors receive fixed interest payments and principal repayment at maturity.

2. What is the interest rate on LIC Bonds?

The interest rate varies depending on the issue and market conditions, typically ranging between 7% and 8% per annum.

3. Are LIC Bonds safe?

LIC Bonds are considered relatively secure due to LIC’s government ownership and strong credit profile, though all bonds carry some level of market and interest rate risk.

4. How can I buy LIC Bonds online?

Investors can buy LIC Bonds through SEBI-registered online platforms like BondScanner or via stock exchanges such as NSE and BSE.

5. Are LIC Bonds suitable for short-term investors?

LIC Bonds generally suit long-term investors looking for stable income and capital preservation. Short-term investors may prefer more liquid debt instruments.

Conclusion

LIC Bonds continue to hold a strong position in India’s bond market due to their credibility, regular returns, and government-backed issuer. While they provide a stable avenue for income generation, investors must consider factors such as interest rate movements, liquidity, and risk profile before investing.

Platforms like BondScanner make it easier to explore such opportunities transparently, enabling investors to learn and compare bond options in the Indian fixed-income space.

Disclaimer

This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner, as a SEBI-registered Online Bond Platform Provider (OBPP), does not provide personalized investment advice through this content.

Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.

Clarity is power

BondScanner

About UsBlog

SustVest Broking Private Limited
Sco No. 32 2nd Floor, M3M 113 Market,
Sector 113, Narsinghpur, Gurgaon,
Narsinghpur, Haryana, India, 122004

Discourse LogoQuora Logo

© 2025 BondScanner. All Rights Reserved

Privacy PolicyTerms and ConditionsInvestor Charter
SEBINSDLCDSLNSEBSESMART ODR PORTAL
logo

SustVest Broking Private Limited (U66120HR2024PTC119856), Member of NSE - SEBI Registration No.: INZ000320834, NSE Member Code: 90404

Registered Office: Sco No. 32 2nd Floor, M3M 113 Market, Sector 113, Narsinghpur, Gurgaon, Narsinghpur, Haryana, India, 122004
Corporate Office: Sco No. 32 2nd Floor, M3M 113 Market, Sector 113, Narsinghpur, Gurgaon, Narsinghpur, Haryana, India, 122004
Compliance Officer: CS Vandana Jhinjheria; Contact No: +91 70118 69639; Email id: Vandana.jhinjheria@bondscanner.com
For grievances: Phone: +91 70118 69639

Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Procedure to file a complaint on SEBI SCORES:
(i) Register on SCORES portal
(ii) Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID
(iii) Benefits: Effective communication, Speedy redressal of the grievances

i. Prevent Unauthorised transactions in your account - Update your mobile numbers/email IDs with your Stock Brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day. Prevent Unauthorized Transactions in your demat account Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL/CDSL on the same day.

ii. There is no need to issue a cheque. Please write the Bank account number and sign the IPO application form to authorize your bank to make payment in case of allotment. In case of non-allotment the funds will remain in your bank account. Issued in the Interest of Investor.

iii. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.

iv. Investor awareness on fraudsters that are collecting data of customers who are already into trading on Exchanges and sending them bulk messages on the pretext of providing investment tips and luring them to invest with them in their bogus firms by promising huge profits.

v. Advisory for investors - Clients/investors to abstain them from dealing in any schemes of unauthorised collective investments/portfolio management, indicative/ guaranteed/fixed returns / payments etc.

1. Risk warning: Investments in debt securities/municipal debt securities/securitised debt instruments are subject to risks including delay and/or default in payment. Read all the offer related documents carefully.

2. SCORES Procedure: Procedure to file a complaint on SEBI SCORES- (i) Register on SCORES portal (ii) Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID (iii) Benefits: Effective communication, Speedy redressal of the grievances

Attention Investors:
1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 01, 2020.
2. Update your email id and mobile number with your stock broker / depository participant and receive OTP directly from the depository on your email id and/or mobile number to create a pledge.
3. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.