LIC Health Plans: Arogya Rakshak (Plan 906) & Cancer Cover (Plan 905)
Healthcare expenditures in India can quickly wipe out lifetime family savings. While most families rely on traditional mediclaim policies from general insurers, standard mediclaim has substantial limitations: room rent caps, co-payments, deductions for medical consumables, and strict non-medical expense exclusions.
To solve these coverage gaps, the Life Insurance Corporation of India provides defined-benefit health insurance through LIC Arogya Rakshak (Table No. 906) and LIC Cancer Cover (Table No. 905). Instead of reimbursing hospital invoices, LIC pays fixed lump-sum cash allowances directly to your bank account, which you can use for non-medical expenses, recuperation, income loss replacement, or advanced treatments.
Core Benefit Structure of Arogya Rakshak (Plan 906)
Choose ₹1,000 to ₹10,000 daily allowance. Doubles to 200% for Intensive Care Unit (ICU) admissions.
Equal to 100 times daily HCB (e.g. ₹5,000 HCB gives ₹5,00,000 MSB cover), paying 20% to 100% per surgical category.
Fixed lump sum support for day care surgeries, ambulance transport, and medical recuperation allowances.
Dual Claims Advantage: Pair With Your Mediclaim
Independent Defined-Benefit Payouts
Because LIC Arogya Rakshak is an independent defined-benefit contract, you can claim 100% of your LIC health payouts even after your corporate or private health insurance has already paid your entire hospital bill. You only need to submit verified hospital discharge summaries to receive your full cash benefit from LIC without any deduction.
Section 80D Tax Deductions & 18% GST Compliance
Section 80D Deduction Limits
- Self, Spouse & Children: Up to ₹25,000 per financial year.
- Parents (Below 60): Additional ₹25,000 deduction.
- Parents (Senior Citizens 60+): Additional ₹50,000 deduction.
- Total Max Deduction: Up to ₹1,00,000 annually.
Statutory 18% GST
Under Indian tax law, standalone health insurance policies and health riders attract a flat 18% GST (9% CGST + 9% SGST) across all years of coverage. All claim disbursements received from LIC are 100% tax-free under Section 10(10D).
Frequently Asked Questions (FAQ)
What is the difference between LIC Arogya Rakshak (Plan 906) and standard mediclaim?
Standard mediclaim is an 'indemnity' policy that only reimburses actual medical bills incurred. LIC Arogya Rakshak is a 'defined-benefit' plan that pays fixed cash sums directly to you—such as ₹5,000 per day of hospitalization or 100x daily benefit for major surgery—regardless of whether you already claimed from another health insurance policy or your employer.
How does the Hospital Cash Benefit (HCB) work in Plan 906?
You choose an Initial Daily Hospital Cash Benefit (HCB) ranging from ₹1,000 to ₹10,000. If hospitalized for 24+ hours, LIC pays this daily amount. For ICU admissions, the benefit doubles to 200% of the HCB amount.
What is the Major Surgical Benefit (MSB) in Arogya Rakshak?
The Major Surgical Benefit Sum Assured is 100 times the chosen daily HCB. For example, an HCB of ₹5,000 gives an MSB cover of ₹5,00,000, paying out categorized percentages (from 20% to 100%) depending on surgical severity.
What are the tax deduction limits under Section 80D for LIC health plans?
Premiums paid qualify for deduction under Section 80D up to ₹25,000 for self, spouse, and dependent children. An additional deduction of ₹25,000 (or ₹50,000 if parents are senior citizens aged 60+) is available for parents' health insurance, enabling up to ₹75,000 to ₹1,00,000 in total deductions.
What is the GST rate on LIC health insurance policies?
Under statutory Indian tax law, standalone health insurance policies and critical illness riders attract a flat 18% GST (9% CGST + 9% SGST) across all policy years.
Major Surgical Categories & Claim Payout Schedule
Under LIC Arogya Rakshak, over 140 major surgical procedures are categorized into four payout tiers:
- Category 1 Surgeries (100% MSB): Open heart surgeries, organ transplants, brain surgeries—pays full 100% of MSB (₹5,00,000 on a ₹5,000 daily HCB plan).
- Category 2 Surgeries (60% MSB): Major arterial bypass, total hip or knee replacements—pays 60% of MSB (₹3,00,000).
- Category 3 Surgeries (40% MSB): Gallbladder removal, appendectomy, spinal surgeries—pays 40% of MSB (₹2,00,000).
- Category 4 Surgeries (20% MSB): Minor surgical procedures—pays 20% of MSB (₹1,00,000). All paid directly as cash into your account!
Pre-Existing Diseases (PED) & Waiting Periods Under Plan 906
Under LIC Arogya Rakshak, standard general waiting period is 90 days from the date of policy commencement (waived for accidental injury hospitalization). Specific waiting periods of 2 years apply to specified procedures (such as hernia, cataract, or hydrocele). Pre-existing conditions declared and accepted at underwriting are covered after the standard 48-month waiting window.
