Life Insurance Corporation of India (LIC):
Life Insurance Corporation of India was created on 1st September, 1956. It is popularly known as Life Insurance Corporation or in short LIC. In LIC product list, it has many plans to fulfill the needs of life insurance plans, health plans, pension etc. Here I am going to provide the details & comparison of LIC's term plan.
Term Plan:
Term plans comes under Life insurance plan. Term insurance plans are meant for life cover but not for any maturity benefits. Since term insurance does not provide any maturity benefits to the policy holder many individual perceive term insurance as wastage of money. In reality it is not correct perception, In my YouTube video, I have provided comparison between Term insurance plan and Endowment plan. You can also refer to my website https://www.investmentgyan.com/.
Term Plan Vs. Endowment Plan:
As against term plan, Endowment plan gives maturity benefits. The main reason behind more selling of endowment plan is its maturity benefit feature but my suggestion is to first have term plan and then if required, go for endowment plan.
My formula is simple-
Put the difference of Endowment insurance premium - Term insurance premium for same sum assured to mutual fund for the duration of the insurance policy period. At the end of the policy period perform the valuation.
Endowment Premium - Term Premium ---> Invest in balanced mutual fund of index mutual fund.
Compare the supposed to maturity benefits from the endowment plan with valuation of the mutual fund investment. Result itself will tell why buying term plan is better.
For sure I can say now that people inclination towards term plan are increasing. This is the reason why insurance companies are adding many flavors to term plans like increasing sum assured, limited premium options, withdrawal in installment etc. In August 2019, LIC has introduced new term plan name Jeevan Amar to cater the changing needs of term plan.
Currently LIC has three Term insurance plan in term plan category.
Below is the quick comparison between three plan :
LIC's Jeevan Amar Plan : LIC’s Jeevan Amar is a Non-Linked, Non-participating Offline Term Assurance Plan which provides financial protection to the insured’s family in case of his/her unfortunate death during the policy term.
Eligibility Criteria at a Glance
Minimum age at entry : 18 Years
Maximum age at entry: 65 Years
Maximum age at maturity: 80 Years last birthday
Minimum basic sum assured : Rs. 25,00,000/-
Maximum sum assured : No. maximum limits
Sum assured between Rs. 25 Lakhs & Rs. 40 Lakhs : Multiple of Rs. 1 Lakhs
Sum assured above Rs. 40 Lakhs : Multiple of Rs. 10 Lakhs
Premium payment mode : Annual/ Half-yearly/ Quarterly/ Monthly
Policy Term : 10-40 Years
Jeevan Amar Benefits
Increasing Sum Assured
First Five Years – No change in sum assured
6th to 15th Year – Till 15th year, every year 10% increase in sum assured
10% increase is till original sum assured amount is doubled.
Limited Premium
For Policy period 10-40 Years
Policy period – 5
For Policy period 15-40 Years
Policy period – 10
Accidental Benefit rider
Till age of 70 Years
Maximum upto 100% of Jeevan Amar sum assured
Death Benefit
5 or 10 or 15 years installments
Monthly, Quarterly, Half- Yearly or Yearly distribution
Premium rates categories
Smoker rates
Non-Smoker rates
Special rates for women
Special discount on high sum assured
Sum assured below Rs. 50 Lakhs : No Discount
Sum assured Rs. 50 Lakhs to Rs. 1 Crore : 4% to 12%
Sum assured more than Rs. 1 Crore : 6% to 20%
“Sum Assured on Death” is the highest of:
7 times of annualized premium; or
105% of all the premiums paid as on the date of death; or
Absolute amount assured to be paid on death.
Jeevan Amar Premium Sample:
The sample illustrative premiums for both option I (Level Sum Assured) and option II (Increasing Sum Assured) for Basic Sum Assured of Rs. 50 Lakh for Non-Smoker, Male, Standard lives under different Premium Payment options are as below :
LIC's Anmol Jeevan II Plan : LIC’s Anmol Jeevan - II is a protection plan which provides financial protection to the insured’s family in case of his/her unfortunate demise. As maximum sum assured for the Anmol Jeevan II is Rs. 24 Lakhs, it is suitable for those looking term insurance for lesser amount.
Eligibility Criteria at a Glance
Minimum age at entry : 18 Years (last birthday)
Maximum age at entry: 55 Years (last birthday)
Maximum age at maturity: 65 Years (last birthday )
Minimum basic sum assured : Rs. 6,00,000/-
Maximum sum assured : Rs. 24,00,000/-
Policy Term : 5-25 Years
LIC's e-Term Plan or Tech Term Plan : LIC's Tech-Term is a Non-Linked, Without Profit, Pure Protection "Online Term Assurance Policy" which provides financial protection to the insured's family in case of his/her unfortunate demise. This plan will be available through online application process only and no intermediaries will be involved.
Eligibility Criteria at a Glance
Minimum age at entry : 18 Years (last birthday)
Maximum age at entry: 65 Years (last birthday)
Maximum age at maturity: 80 Years (last birthday )
Minimum basic sum assured : Rs. 50,00,000/-
Maximum sum assured : No Limit
Policy Term : 10-40 Years
Other Insurance Companies in India : Below is the list of some of the life insurance companies in India. Term plan from below companies can be compared with LIC's term insurance plan.I can say comparison is not an easy task so comparing insurance company on the basis of just premium amount is not advisable.
Summary : At the end, I would emphasis on buying of term insurance plan. Life coverage of term insurance plan should be at least cover till policyholder reaches at retirement age. Since my suggestion is to put the difference of premium amount between endowment plan premium & term plan premium into mutual fund , It is also necessary to have mutual fund folio. Apart from buying mutual fund directly from Asset Management Company, it is also possible to buy from other service providers like Zerodha or there are some more. They provide single platform to buy direct mutual fund from many mutual fund house.