Life Insurance Corporation of India Term Plan

In this article I will talk about Life Insurance Corporation of India Term Plan which is officially known as LIC e-Term Plan. It is a term life insurance policy which provides financial protection to a person’s family in case of his sudden death. If the person survives till the end of the policy term, nothing is payable to him.

Life Insurance Corporation of India (LIC)

LIC is the largest life insurance company in India. They are a very big name accross villages, town and cities. LIC has a huge distribution network, and simple and consumer friendly insurance products (their investment schemes suck). LIC has a huge network of insurance agents who have been an integeral part of the company.

Please take note of three keywords above:

  1. simple product
  2. consumer-friednly
  3. insurance agent

Introduction to Life Insurance Corporation of India Term Plan

  1. A term plan is the simplest of all insurance products. LIC’s e-Term policy is a pure life cover policy. Under this insurance policy, against payment of regular premium, the insurer agrees to pay your beneficiaries the sum assured in event of your premature death during policy term. However, if you survive till the end of the policy term, nothing is payable to you. Hence LIC e-Term Plan is the simplest no-nonsense vanilla product offering from LIC.
  2. A term life insurance provides a substantial amount of protection against death at fairly low prices. LIC e-Term is available through on-line mode only. In these two respects, LIC e-Term plan is a very consumer friendly product.
  3. Being an online-only product, there are no insurance agents or intermediaries involved. Hence Life Insurance Corporation of India Term Plan is more convenient and cheaper as compared to an offline policy.

The LIC e-Term plan which was launched on 17th May, 2014, is more than 30% cheaper than the LIC offline term plan Anmol Jeevan / Amulya Jeevan, but compared to many online pure protection term plans from private companies, it is more expensive.

LIC is better in terms of its claim settlement ratio (CSR). According to Insurance Regulatory and Development Authority, LIC has the highest percentage at 98.19 per cent.

LIC’s historical claim settlement ratio is given below.

Year LIC Claim Settlement ratio
2006 – 07 96.94%
2007 – 08 96.71%
2008 – 09 95.48%
2009 – 10 96.54%
2010 – 11 97.03%
2011 – 12 97.42%
2012 – 13 97.73%
2013 – 14 98.14%
2014 – 15 98.19%

Who should buy Term Insurance?

Term insurance policies are best suited for working individuals who have dependents (Children, parents) and are looking for a considerable sum of protection against uncertainties of life (death) at fairly low prices. Term insurance plans fulfill the basic purpose of any life insurance policy by providing financial security for the applicant and his family. Buying a term plan online is one of the cheapest modes to buy insurance as it saves your time and money.

LIC e-Term Plan Aggregate versus Non-smoker Category

Under this plan, there are two categories of premium rates namely Aggregate Cetgory and Non-Smoker category.

If you smoke or use tobacco in other forms, your premium will be roughly 25-30% higher than that of a non- smoker.

For Sum Assured upto Rs. 49 lacs Aggregate category rates only would apply.
For Sum Assured Rs. 50 lacs and above there is an option to choose differential premium rate for Non-smoker category.
However, the application of Non-smoker rates shall be based on the findings of the Urinary Cotinine test. In all other cases the Aggregate premium rates shall be applicable.

Death Benefit of LIC e-Term Plan

In case of unfortunate death of the Life Assured during the policy term Sum Assured shall be payable.

Maturity Benefit of LIC e-Term Plan

On survival to the end of the policy term, nothing shall be payable.

Sum Assured

Minimum
Rs. 25,00,000 for Aggregate category
Rs. 50,00,000 for Non-smoker category
Maximum – No limit

Indicative Premiums

Latest indicative premiums for Life Insurance Corporation of India online Term Plan is given below.

Rs.                       Duration of Policy (Year)
Age (Years) 10 15 20 25 30 35
20       10,488      10,488      10,602      11,400          12,654      14,478
30       12,540      13,680      15,846      18,924          22,458      26,334
40       23,028      28,272      34,200      40,584          47,766  NA
50       55,404      65,208      76,722  NA  NA  NA

Once the policy is issued, Premium will remain the same for the entire tenure of the policy. This is subject to service tax regulations as declared by the Government of India from time to time.

Coverage

  • Your coverage will begin only on acceptance and completion of your proposal.
  • Once the policy is issued you are covered across the globe.
  • Even in case you get an opportunity to work abroad the coverage shall be applicable.

Eligible Life

  • One cannot propose for anyone other than self.
  • Key Man Insurance (KMI)/ Partnership/ Employer-Employee Cover will not be allowed.

Qualifying Criteria of of LIC e-Term Plan

  1. Person should be an Indian citizen.
  2. A Non-Resident Indian (NRI) is not eligible for LIC e-Term Plan.
  3. An Overseas Citizen of India (OCI) is not eligible for LIC e-Term Plan.
  4. A Person of Indian Origin (PIO) is not eligible for LIC e-Term Plan.
  5. A person should have at least Rs 3 lakhs of annual income to purchase under non-smoker rates.
  6. Minimum Age at Entry is 18 years.
  7. Maximum age at entry is 60 years.
  8. Maximum cover ceasing age is 75 years.
  9. Minimum Policy Term is 10 years.
  10. Maximum Policy Term is 35 years.

Mode of Payment

  • Premiums are to be paid annually.
  • Premium can be paid online either through Net-Banking/ Credit Card/ Debit Card.

Nominee

A nominee is a person who is eligible to receive the coverage amount from insurance policy in the event of death of the applicant. If death takes place during the term of the insurance policy, then the nominee receives the sum assured under the plan. A Nominee can be a Minor. However, an Appointee (major) has to be provided for the Minor Nominee.

Medical Test

In general, medical test is mandatory if a person opts for non-smoker rate and if it is not covered under Non-medical scheme. Underwriting requirements and a person’s health disclosures will also determine whether a medical test would be required or not.

Tax Benefit

  • Premium paid is eligible for tax benefits under Section 80C of Income Tax Act.
  • Benefits received are exempt from tax under Section 10(10D).

Can a loan be taken under this product?

Loan is not available under this product.

Exclusion

If a policyholder dies within 1 year of the start of the policy due to suicide, 80% of premiums paid will be paid as death benefit.

Final Words

Life Insurance Corporation of India Term Plan is a very good term insurance product from LIC which is one of the most trusted names in insurance in India. It is cheaper compared to its offline version and quite convenient and useful.

I hope you found this article useful. If you have any comments please feel free to contact me. Before making any investment decision, please contact your financial adviser.

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References

I hope you found this article useful. I have provided this introductory article on car insurance for educational purpose only.

If you have any comments on Life Insurance Corporation of India Term Plan, please feel free to contact me. Before making any investment decision, please contact your financial adviser.

Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

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