LIC’s New Term Assurance Rider
When it comes to protecting one’s family there seems to be no limit. As the head of the family or as the earning member, everyone wishes to ensure that his family is always all looked after, even when he is not present with them any more. This wish can be fulfilled if one invests wisely in insurance plans. And when we talk about insurance the first name that comes to mind is LIC.
LIC offers a range of life insurance plans to individuals for their insurance needs. Besides insurance plans, there are riders too. LIC’s New Term Assurance Rider is one such rider which is offered by the company. Let’s see some of the key highlights of the rider
- The rider can be added to a life insurance policy by paying an additional premium
- In case of death of the insured during the term of the policy, the rider sum assured is paid
- The rider sum assured is either equal to or less than the sum assured of the base policy
- The maximum rider sum assured which is allowed is limited to INR 25 lakhs which includes riders taken in multiple plans. This means that if two or more insurance plans have been bought with the rider, the aggregate rider sum assured cannot be more than INR 25 lakhs
- The premium payable for the rider is very low and affordable
- The rider can be added to traditional life insurance policies, not ULIPs
- The rider can be taken at the time of buying the base life insurance plan
- Discounts in the premium for premium paying frequency can be availed if the base plan offers such discounts
LIC’s New Term Assurance Rider Eligibility Conditions
|Minimum Age of Entry of Insured Individual||18 years|
|Maximum Age of Entry of Insured Individual||60 years|
|Maximum Age when cover stops||75 years|
|Minimum Tenure of the Policy||5 years|
|Maximum Tenure of the Policy||35 years|
|Sum assured (Minimum)||INR 1 lakh|
|Sum assured (Maximum)||INR 25 lakh|
|Frequency of Payment||Same as Base Policy|
|Mode of Payment||Same as Base Policy|
Important Features of LIC’s New Term Assurance Rider
Payment of Premiums
The payment of the rider premium is done along with the payment of the base policy. The premium payment term would be similar to that of the base policy. Here are some sample premium rates for different types of premium payment terms for a rider sum assured of INR 10 lakhs –
For regular and single premium plans –
|Age of the insured||Regular premium||Single Premium|
|Term = 10 years||Term = 20 years||Term = 10 years||Term = 20 years|
|20 years||INR 1,610||INR 1,610||INR 10,810||INR 17,770|
|30 years||INR 1,880||INR 2,440||INR 13,360||INR 27,570|
|40 years||INR 3,670||INR 5,520||INR 25,960||INR 61,360|
For Limited premium plans –
|Age of the insured||Policy Term = 10 years||Policy Term = 20 years|
|Premium payment term = 5 years||Premium payment term = 9 years||Premium payment term = 10 years||Premium payment term = 15 years|
|20 years||INR 2,620||INR 1,610||INR 2,490||INR 1,880|
|30 years||INR 3,230||INR 1,960||INR 3,870||INR 2,920|
|40 years||INR 6,300||INR 3,830||INR 8,670||INR 6,560|
There is no paid-up value under the plan. If the premiums are not paid, the rider benefit would cease.
Under LIC’s New Term Assurance Rider there is no surrender value payable. Nevertheless, if the basic plan is surrendered and the rider’s premiums have been paid regularly, the additional rider premium that has been charged may be refunded. However, the refund would be subject to the following terms and conditions –
- In the case of the Regular Premium Plan
No amount is refunded.
- In case of Limited Premium Paying Policies
For limited premium plans, a refund is applicable if premiums for the minimum tenure has been paid. If the premium paying term was less than 10 years, premiums for the first two years should have been paid. If the premium payment term is 10 years or more, premiums for the first three years should have been paid.
If these conditions are met, 75% of a specified value would be refunded. The specified value would be calculated taking into consideration the policy tenure elapsed till surrender, the sum assured, premium paying term and the term of the rider.
- In case of a Single Premium Policy
In the case of single premium plans, the amount to be refunded would be calculated as follows –
90% of the rider premium paid * (outstanding policy tenure / original rider tenure)
Under Section 80C of the Income Tax Act, the premiums that are paid towards the rider are tax deductible and the death benefit that is received is tax-exempted under Section 10 (10D).
There is no provision of the loan under LIC’s New Term Assurance Rider.
Cooling Off Period
If in case a policyholder buys LIC’s New Term Assurance Rider but is not completely happy with the terms and conditions of the rider, he is given a cooling-off period of 15 days. Within this period, that starts from the day the policy was purchased, the policyholder has the option of cancelling the rider. When the request is submitted the Corporation, the rider would be cancelled and the premium that was paid for the rider will be returned after deducting the relevant expenses
The revival of the Rider
When a policyholder doesn’t pay the premium even in the grace period then the policy lapses. For the revival of the policy and the rider, the arrears are to be paid along with interest. It should be kept in mind that the amount has to be paid within 2 years of the date of first unpaid premium. It should also be noted that the rider will only be revived along with the basic policy and not independently.
Death by Suicide
In the case of suicidal death, payment of the rider benefit would depend on the payment of death benefit under the basic plan. Usually, in case of such deaths, the following benefits are payable if suicide is committed within 12 months of buying the policy or reviving it –
- 80% of the premium paid if suicide occurs within 12 months of policy purchase
- Higher of 80% of premiums paid till death or the available surrender value if suicide happens within 12 months of policy revival
Section 45 of the Insurance Act, 1938
As per Section 45 of the Insurance Act, after 2 years of the policy coming into force, it cannot be called in question, on the basis of a misstatement or any wrong disclosure. In simpler words, the insurance company has a time period of 2 years to turn down a death claim if it can prove that the claim was corrupt.
LIC’s Term Assurance Rider offers a life coverage in case of the death of the policyholder. If the insured dies during the term of the policy, the nominee would receive an amount that is equal to the Term Assurance Rider sum assured.
There is no maturity benefit with this rider, so if the policyholder survives the policy, nothing shall be payable.
Under Section 80C of the Income Tax Act, the premiums that are paid towards the rider is tax deductible and the death benefit that is received is tax-exempted under Section 10 (10D).
The insured must be in the age group of 18 to 55 years.
The minimum sum assured is INR 1 lakh whereas the maximum sum assured is INR 25 lakhs.
Within a 15 day period that starts from the day the policy was purchased, the policyholder has the option of cancelling the rider and returning it to the Corporation. He needs to state the reason of objections. When the request is submitted the Corporation, the tier would be cancelled and the premium that was deposited will be returned after deducting the required amount.