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LIC Term Plan: Things you need to know!

Ever since its establishment nearly 6 decades ago, the LIC has been a huge market share holder in the insurance industry. The company offers plans to match every requirement of a policyholder.

LIC is the oldest, largest and the most profitable Life Insurance Company in India

The Life Insurance Corporation of India is one of the oldest and most trusted insurance providers of India. Established by the government as a sole insurance provider, this company has expanded exponentially over the years with respect to its services and customer centric insurance plans. At one point of time, LIC was the only insurer which had successfully penetrated to the most remote and rural parts of India. With over 250 million customers PAN India with a wide range of products such as term plans, child plans, life and health insurance plans, traditional saving plans, pension plans and ULIPs.

Benefits of buying LIC Term Insurance Plan

  • Higher coverage at cheaper rates and lower premiums. Pay even lower premiums if you are a non-smoker.
  • You have the flexibility to choose your Sum Assured amount and it caters to people from 18 years to as high as 75 years.
  • Flexible mode of payments and flexible in the frequency of the premium payment schedule.
  • Variable sum assured options and add on coverage to choose from.
  • Available for everyone from young to old.
  • Gives you the ability to continue your lifestyle when paying premiums.
  • Options to convert one plan to another (not available for all plans).
  • Can be bought online directly or through intermediaries.
  • Get insured with the very first and the most trusted insurer in India.
  • Best claims settlement ratio of 98% (2015-16).

Types of LIC Term Insurance Plans

Important Things to Consider When Purchasing Term Insurance

  • Cover Provided - This is the most important factor to consider with respect to every term insurance plan. The amount of cover required depends on additional factors such as number of family members, financial liabilities, age and current lifestyle of the insured, existing income, rate of inflation etc. This requires adequate planning and assessment. Post assessment, you can evaluate the future financial requirements of your family in case of your unfortunate demise.

  • Claim Settlement Ratio (CSR) - A CSR is a ratio of the claims paid to the policyholders/beneficiaries/nominees by the insurance companies v/s the total claims received from the customers. A high CSR indicates that an insurer has a good track of settling claims in the past. This means that your claim settlement will be processed faster with minimum hassle. You can always check the claim settlement ratio of various insurers on the website of Insurance Regulatory and Development Authority of India (IRDAI).

  • Customer Service - Quality customer service and 24x7 online assistance are two important things you should consider while purchasing a term plan. This is important in case of an emergency, 24x7 online assistance can be easily accessed from any part of India. Quality customer service means the entire process of claim settlement should be hassle free and the customer service executives should be helpful and easily available.

  • No. of family members - The very purpose of purchasing a term plan is to provide financial security to your family/beneficiary/nominee in case of your unfortunate demise. Therefore, you need to consider all of your family members across different stages of life and their financial requirements. You should also take into consideration any other additional dependents in your life. A term cover must cover them all.

  • Standard of living - A term plan must provide adequate cover to meet all of your family’s future expenses in your absence. Rise in the cost of living, inflation, education expenses/ medical treatment are some of the needs where your term policy will come to help.

LIC Term Insurance Plan Exclusions

Like every other insurance plan, LIC term insurance also has certain exclusions under which LIC is not liable to settle the claims.

The major exclusion on all life term insurance plan is on the suicidal death of the life assured during the policy term. In that case, there is no death benefit paid.

Having said that, if the life assured commits suicide within the first 12 months from the date of inception of the policy or the date of revival of the policy, then there is no payout.

The nominee is eligible for 80% of the premium paid till then. This is again subjected to the confirmation that the premiums have been paid and there are no dues whatsoever on the policy.

Riders Offered by LIC

LIC offers two special featured packed riders, which you can buy along with any non-linked term insurance plan.

The two riders are:

1. Features of LIC’s New Critical Illness Benefit Plan Rider

  • It covers 15 Critical Illnesses, including Cancer of specific severity, Open Chest CABG, Kidney Failure requiring regular dialysis, Stroke, Permanent paralysis of limbs, Blindness, Third degree burns, Alzheimer’s, etc.
Entry AgeMin. 18 years and Max. 65 years
Maturity AgeMax.75 years
Premium Payment ModeLimited pay, Regular pay
Premium Payment FrequencySame as base plan
Min. Sum Assured Max. Sum Assured Rs.1,00,000 Rs.25,00,000
Premium Paying TermRegular Premium Policies: 5 years to 35 years depending on the policy term Limited Pay: 5 years to (Policy year – 1) years
Policy TermRegular Premium Policies: 5 years to 35 years depending on the policy term Limited Pay: 10 years to 35 years

2. Features of LIC’s New Critical Illness Benefit Plan Rider

  • LIC's New Term Assurance Rider is a pure death benefit rider. At a nominal cost, the policyholder can buy this rider along with any base term insurance plan. In case of life assured’s death, the nominee will receive the life cover and rider sum assured. This rider can be bought only at the inception of the base policy.

  • Death Benefit: In case of unfortunate death of the life assured during the policy term, the claimant will receive an amount equal to the rider sum assured, which can be equivalent to the base policy sum assured.

  • Maturity Benefit: There is no maturity benefit.

Entry AgeMin. 18 years and Max. 60 years
Maturity AgeMax.75 years
Premium Payment ModeSame as base plan
Premium Payment FrequencySame as base plan
Min. Sum Assured and Max. Sum Assured Rs.1,00,000 Rs.25,00,000
Premium Paying TermSame as base plan
Policy TermSame as base plan

How can I apply for LIC Term Insurance?

There are two ways to apply for a term insurance plan:

  • Online - LIC’s e-Term Plan is the only insurance plan which is available online through the official portal of LIC. You can simply visit the same and register an account. Next, select the appropriate coverage and plan tenure. Post selection, your premium will be automatically calculated and you will be directed to the online payment portal where you can make the payment via credit/debit/net banking. Once you have paid the premium amount, your policy will be automatically issued.

  • Offline - The other term plan which cannot be purchased online can be purchased from banks, LIC agents, brokers, intermediaries etc.

Claim Process - LIC Term Life Insurance

Given that these are death benefits that have to be claimed, you have to follow a structured process and it requires you to fill in certain documentation and submit proofs, etc.

The documents you would need to claim under LIC term insurance plan:

For claiming death benefit, the nominee or claimant of the policy has to submit the following documents:

  • The LIC term insurance policy document.
  • The certificate of death which clearly states the cause of death.
  • These documents have to be accompanied with a mandate that gives LIC permission to transfer the claim amount through NEFT to your account.

Once you have the documents ready, you have to submit them to the office of LIC post, after which verification is carried out on the same. After verifying that the policy has been effective and the claimant is the one mentioned as the nominee, the claim is processed further and the sum assured is transferred to the nominee’s account.

When it comes to choosing the right term insurance policy , you don’t want to be left with one that takes an overly long time to settle the claims. On that thought, you would find that LIC has the best claim settlement ratio among the other term life insurance providers in India.

Documents Required for LIC Term Insurance

The documents required for LIC Term Insurance are-

  • Identity proof - Aadhaar, PAN, License, Passport.

  • Age proof - PAN, Birth Certificate, Matriculation Certificate.

  • Address proof - Passport, Aadhaar, Electricity/Gas/Phone Bill, Rental Agreement.

  • Proof of income - Salary Statement, Income Tax Returns.

  • Medical reports - Latest medical report wherever required.

LIC Term Insurance FAQs

What kind of LIC term insurance policy should I opt for?

Every LIC term insurance policy has its own benefits and drawbacks. You need to choose the term policy based on your requirements, long term goals and of course your affordability. You have to compare multiple policies and their quotes and match them with your objectives to arrive at the right term plan for you. It also depends on the lifestyle that you want for your family and the number of dependents you have.

Is there any difference in the LIC term insurance premium rates when buying LIC term insurance plan online and offline?

You might find a little variance in the premiums between LIC term insurance plan bought online and offline. You may find buying term insurance plan online much cheaper in comparison. The reasons include the reduction in the cost in the processing of the issuance of term plan.

What if I forget to pay the term insurance premium for a month?

If you don't pay the premium on or before the due date, the company will provide you a grace period of 30 days to make the payment (in case of monthly premiums, the grace period is only for 15 days). If the premium is still not paid in this period, then the policy is considered as lapsed and you have to revive your policy. If you do not revive the policy during the revival period, then the policy is null and void. And there cannot be any claims made on the same in future.

Can I get LIC Term Insurance of Rs.1 crore?

Whether you can buy LIC's term plan with the sum assured of Rs.1 crore depends on your annual income and premium paying capacity. You can use term insurance premium calculator to calculate the premium amount of LIC term plan for a sum assured of Rs.1 crore. Please click this link to know more.

What kind of tax benefits can I have on my LIC term insurance plan?

Like every other term insurance, you can get tax exemptions under the sections 80(C) and 10(10D) of Income Tax Act. All the premiums paid to keep the LIC term insurance in force, is tax deductible. The sum assured received by the nominee is also exempted from tax.

Which is the best LIC term policy?

LIC e-Term life insurance plan is considered to be the best from their range of term insurance plans. It is a pure insurance policy with a maturity term of 75 years. This basic plan guarantees a sum assured of at least Rs.50 lakh at a reasonable annual premium. The public sector insurer is renowned for having the highest claim settlement ratio of 98% for more than 3 consecutive years.

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