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With so many companies offering Insurance in India, a prospective buyer is often confused or gets worried about which company he should go for. However, being a government company, The Life Insurance Corporation of India is one choice which any person can opt for with a peaceful mind.
Since inception, the company has been coming up with innovative insurance policies catering to the needs of every section of the society and has become one of the most trusted brands in the country. We outline one such policy hereunder.
The LIC New Money Back Plan 20 Years was floated on January 6, 2014 to cater to the financial needs of the business and the salaried class of Indians. This is a fixed-period non-linked participating plan which protects the policy holder against death besides disbursing a periodic payout upon survival at twenty percent of Sum Assured upon completion of five, ten and fifteen years.
A simple reversionary bonus also accrues upon policy maturity and the plan comes with an add-on accidental death and disability coverage.
The key differences between the New Money Back Plan – 20 years (Plan no. 820) and the older Money Back Plan – 20 years (Plan no. 75) are highlighted below:
- Premium paying terms under the older plan were 20, so to say, the policy holder had to keep paying premiums for the entire coverage of the policy. While under the new plan premium paying terms are only 15.
- Minimum Sum Assured under the older plan was rupees 50,000, while this has been raised to rupees 100,000 under the new plan.
You need to pay annual premiums for only 15 years
You are eligible to apply for a loan against the policy after it has acquired a Surrender Value
You can opt for additional Benefits such as Accidental Death and Disability
You can choose as high an amount as you wish for coverage as there is no upper limit to the Sum Assured
You are eligible for Income tax benefit on the paid premium under Section 80C and on the received claims as per Section 10 (10D) of the Income Tax Act
Paid up Survival Benefits are not deducted from the Death Benefit payout
Grace period of up to a maximum of 30 days in case of missed premiums
Policy Revival is possible for up to 2 years from the date of policy lapsing owing to missed premiums even after grace period gets over
God forbid, in the unfortunate event of your demise during the policy coverage period, your nominee would be paid ten times the annualized premium or 125% of the Basic Sum Assured along with simple vested reversionary bonuses and additional final bonus. Moreover, the periodic survival benefits paid, if any, won’t be deducted from the payout.
Upon you surviving the policy coverage period, the company would be paying you 20% of the Basic Sum Assured upon completing each of the fifth, tenth and fifteenth policy year.
With the insured surviving to the end of the policy term, he would be paid 40% of the Basic Sum Assured besides being paid simple reversionary bonuses and additional final bonus.
The Minimum Basic Sum Assured must be rupees 100,000, with no upper limit for maximum Sum Assured.
The minimum age required for enrolling is 13 years, with the maximum being 50 years.
Accidental Death and Disability Benefit Rider
You may choose to enrol for Accidental Death and Disability coverage after paying additional premium as long as the policy is still in force on the accident date.
In the case of death resulting from an accident, your nominee would be paid out both the Accident Benefit Sum Assured as well as the Death Benefit. In the event of accidental permanent disability the insured would be paid, within the time frame of 180 days from the date of the accident, an amount equal to Accident Benefit Sum Assured spread over a period of ten years.
Resultantly, all upcoming premiums for Accident Benefit Sum Assured would cease to exist.
Simple Reversionary Bonus
The company calculates this bonus per thousand of the Sum Assured upon completion of each year of policy coverage. Consequently, these form part of the guaranteed benefits.
Thus, these bonuses accrue during the premium paying period during the life of the policy but are paid when the policy matures or upon the death of the policyholder along with the additional final bonus.
Simple Reversionary Bonuses are determined by the company taking into consideration its performance.
Final Addition Bonus
The company pays this bonus if the policy runs for a minimum period determined by us. It may be declared at the time of claim upon either death or maturity.
The minimum Accident Death Benefit Sum Assured is rupees 100,000, with the maximum being Rupees 50 lacs. The minimum age must not be less than 18 years, with no ceiling set to the maximum, with the maximum coverage for a period of 70 years.
|Coverage and Benefits||Minimum Basic Sum Assured||Maximum Basic Sum Assured||Minimum Required Age for Enrolling||Maximum Age permitted for Enrolling|
|Death / Survival / Maturity||100,000||No Limit||13 Years||50 Years|
|Accidental Death and Disability||100,000||50,00,000||18 Years||Below 70 Years|
Grace Period: If you choose the monthly mode of paying premiums then you would get a grace of 15 days should you miss a payment. The grace period is set at 30 days in cases of quarterly, half-yearly and yearly modes of premium payments.
Revival: In the event of premium not being paid even during the grace period, the policy would lapse. Nonetheless, it may be revived before a period of two years from the day premiums payment get stopped, upon due approval from the company
As far as the policyholder choosing to surrender the LIC New Money Back Plan is concerned, he can do so only after having paid the premiums in full for not less than three years.
Mode of Premiums
The company gives you the leverage to choose a premium paying mode of yearly, half-yearly, monthly or quarterly basis or via deductions in salary.
The table below shows the premiums per rupees 1000 of basic sum assured.
|Age||Sum Assured 5 Lacs||Sum Assured 10 Lacs|
In the unfortunate incident of the policyholder committing suicide within a year from the date of policy purchase, the company won’t accept any claim in excess of 80% of the premiums paid excluding taxes, rider premiums, and extra premium.
In the case of suicide within a year of policy revival, the company would be paying 80% of the premiums paid excluding taxes, extra premium and rider premiums or acquired Surrender Value, whichever is higher.
Let’s say, Romesh Chaudhary, a thirty-year-old Finance professional, buys the LIC New Money Back 20 Years Policy for a Sum Assured of Rupees 2 lacs. He also opts to enrol in the Accidental Death and Benefit Disability Rider. He would be paying an annual premium of approximately 15,000 for 15 years.
If he happens to die accidently his nominee will get 125% of Sum Assured in addition to Accidental Sum Assured and Accrued Bonuses. Moreover, any survival benefits already paid would not be deducted from this payout.
If he survives the policy term he would be getting paid 20% of the Sum Assured, which is rupees 40,000, at the end of completing each of the 5th, 10th and 15th year. When the policy matures, he would be paid rupees 80,000 besides also being paid accrued bonuses.
The charm of this policy is that it’s a money back policy, wherein the endurance benefits are periodically paid– that is one of the biggest deciding factors for guys like Romesh Chaudhary. Also, the large Sum Assured under this policy along with additional add-on benefits such as Accidental Death and Disability gives the insured a heightened sense of peace of mind for himself and his family members. The biggest draw is that unlike most of the other policies there is no limit to the amount of Sum Assured one can opt for.
Policy Holder has to fill an ‘Application form / Proposal form’ with accurate medical history. A medical exam may be necessary in few cases based on sum assured and the age of the applicant
Overall, following documents are required :
1. Plan application form with a photograph
2. Residence proof
3. ID & Age proof
4. Medical reports if necessary