Is LIC insurance policy halal or haram

I have already clarified in an earlier post that only term insurance can be considered in the subject of halal/ haram:
Is Life Insurance Halal in India

Building on that we can analyze the policies of India's favourite Insurance destination.
Many Muslims may have been subscribed to these policies both for tax benefits as well as the promising returns. Those that have been blessed by knowledge may have curiosity to research the term and may have invested in Unit Linked plans (ULIP).
But biggest problem of all Insurance based Investments is transparency. It is not at all easy to find where exactly your money is invested. Mutual Funds are so much better since you can see every percentage of where exactly it is invested.
Here we analyze the investment pattern which will conclude what is permissible and what is not. Although this article takes LIC for reference, but it is applicable to all insurance companies since they all have similar plans.


LIC Term Insurance Plans:

Plain simple explanation: Except Term Insurance (Assurance), rest all are not permissible.
The Term policies in LIC are named:

1. LIC's Anmol Jeevan 
2. LIC’s Amulya Jeevan
3. LIC eTerm policy

All are pure insurance and not investment that will give you return on maturity. Since these are not "money-back" plans there aren't any investments made.
These are the only ones fine; rest all are non-permissible. Let us explore each category and check the reasons for the same.


Endowment Plans:

Whether it is single premium or any other Xxxxx Jeevan plan it doesn't matter. The fact that you are getting money back points to some form of investment. So we only have to examine where the returns from investment are coming.
All plans of LIC invest into Government debt unless explicitly specified that the plan investments majorly in equity.
So government debt means loan to government and the profit is gets is the INTEREST it receives from government for those loans.
So all these plans are just Interest based investments and obviously not permissible.


Money Back Plans and Child Plans:
Exactly same investment pattern as Endowment plans. Hence Interest based investments and obviously not permissible.


Pension Plans:
Similar problem either Interest based (Jeevan Nidhi) or Annuity based (Jeevan Akshay).
Annuity is nothing but interest earnings.


ULIP (Unit Linked Insurance Plan):
This is one plan that is sold to many Muslims who might raise the interest objection to an insurance agent. Many Muslims are told that investment plan can be chosen and you can invest 100% into stock market which is halal.
However, things are not so simple.
And also here comes the comparison with Mutual Funds. In case of Mutual Funds I can easily search and get the complete investment breakup of every single rupee. I know how much is invested in equity in which sectors and in which exact company's stock. This helps in finding out how much of the MF investment is in haram stocks.
All this is very difficult in ULIP. You cannot easily get these details at all. And in case you can get the details, please check the stock market investments. Am sure you will find major part of investment in Financial Sectors especially bank stocks.
Also not 100% is allowed in stocks. Most plans will restrict it to 70-80% in stocks and rest will be in Government Securities or Money Market Instruments (both interest based)
And this is the reason why ULIP cannot be counted as halal.


In the end I would suggest to completely read the policy document carefully and research on the internet. Do not fall into the Insurance Agents trap or the Investment trap since it is clear that other than basic life insurance rest all is purely interest based income.

Is Life Insurance Halal in India?

First, most people do not know what insurance is. I mean what most people invest in India cannot be called Insurance.

There are 2 types:

1. Pay premium, get coverage & no returns.
2. Pay premium, get coverage & get returns at maturity/ intervals.

The 1st one is popularly known as Term Insurance and it is the only real life insurance. The second although not exactly an insurance is called by various names like - ULIP/ ULPP/ Pension Plan/ Endowment, etc.

Basically, insurance is only payment of a premium for an uncertainty. If the uncertainty happens, you get the money assured If everything is fine, you get nothing.

Arguments against insurance:

1. Challenging Allah with Life: I don't see any challenge in this. We all know we are going to die. What we are doing is that, we pay a small sum, so that in any eventuality, our loved ones are financially secure.
2. Don't have faith that Allah will help: Faith in Allah doesn't mean just don't do anything. You have to be ready for your death always- and readiness includes your deeds and too some extent planning for your family. If you have earned enough or have sufficient amount of wealth, then there isn't a need for Insurance. It's only the case that you know that if you die today, your family could struggle financially. 
3. Haram Investments: This issue comes in for those so called insurance which promise a return. Their investments could be categorized into interest and gambling based. As I already said, they are not insurance, hence the question doesn't arise.
4. Uncertain Contracts/ Gambling: Most contracts/ dealings/ trades involve some degree of uncertainty. This is absolutely fine. It is only those which are 100% uncertain and based entirely on chance that are forbidden. Because in such cases, the chance of loss/ gain is very high and it could leave the losing party utterly sulking with loss.  
• In pure Insurance, first thing there is certainty that death will occur, so the Insurance company is well aware of the risk; it is only the timing that is uncertain. 
• Secondly all Insurance companies in India operate on a pan-India basis. They have huge no. of customers. There are statistical tables present that use the science of probability to find out the near-approximate calculations in deciding the premium and the profitability of the company. So there is not really a big gain/loss for any party. Note that most Insurance companies are making huge losses not due to Life Insurance but due to other Insurances. 
• Thirdly, claim rejections in case of Life Insurance are low.

Recently the Darul Uloom Deoband banned insurance. If you read carefully, you will find that they are talking of interest and gambling aspects. 

Regarding Interest part they do invest in interest bearing securities. However the claim is supposed to be paid from the premium collected. But we can never know for sure if the claim is paid from pooled premium or from interest income. This situation is somewhat similar to salaries paid by companies. You never know if your salary is paid from interest income of the company.

As for the gambling part, I have already explained above, not sure what else they are talking of in gambling. It would be great if someones can throw additional light on that aspect in a clear way with relevant references.

This is the Deoband Fatwa site, I am referring: http://darulifta-deoband.org 

Based on the various responses given for Transactions & Dealing, you can research about it.