Category: Insurance update

What is Riders in LIC Policies

Posted on by avinash

 

Insurance rider is a kind of add-on benefits to the primary policy, which offers extra benefits with a bit extra premium over the policy subject to certain condition.On such way to maximize the policy benefits on your LIC policy and You may customize it to suit your specific needs is by opting for rider. 

So Rider is for extra benefits with extra cost. But extra premium will not affect Maturity.
Suppose i took DAB (double accidental benefit ) rider alongwith my LIC policy, If i die due to accident then my family will get double of sum assured.

Types of RIDERS in LIC

1.PWB (Premium waiver benefit)

2.A.B(Accidental Benefits)

3.A.D& D.B (Accidental Benefits and Disability benefits)

4. T.R.(Term rider)

5. C.I.R (Critical illness Rider)

1.PWB (Premium waiver benefit)

PLANS available for PWB: 832, 834 & 848.

  • If father/mother take policies for child they can take pwb rider, in this rider if proposer dies then next premium will be waived.
  • It can be included at time of INCEPTION or LATER (atleast min 5 years ppt/term must be left before Date Of Maturity (DOM)
  • The death of the proposer must be before the completion of 18 yrs of age.
  • All the future premiums will be waived till Prem Paying Term/Policy Term.

2) A.B(Accident Death Benefit)

  • Plans numbers available for this Riders are 827, 835, 843, 844 (845, 847, 848).
  • It covers Accidental death before the DOM or 70 yrs of age.
  • For plans in the bracket till ppt only.

3. A.D.& D.B(Accidental Death & Disability Benefit)

Plans available for this Riders are 814, 815, 820, 821, 830, 833, 836, 838, 845, 846, 847 & 848.

  • AD & DB covers both Accidental death and disability due to Accident.
  • Disability means due to any of the 4 out of 6 activities couldn’t be performed mention below.

1) Dressing
2) Feeding
3) Washing
4) Toileting
5) Mobility
6) Transfering

Benefits of Disability riders

1) Waiver of future premiums
2) AB sum assured divided by 120 and payable mly for 10 yrs
3) SB if any payable
4) Maturity benefits payable.
If Death occurs before Maturity Death Claim also payable.

4) T.R(Term Rider) benefits

Plans available for this Riders are: 814, 815, 820, 821, 830, 833, 836, 845, 847 & 848..

  • An Additional S. A is payable on Death of the P.H before maturity by any way.

5) C.I.R(Critical Illness Rider)

  • Plans available for this Riders are: 814, 815, 820, 821, 830, 836, 838, 845, 847 & 848.
  • On the 1st diagnosis of any of the 15 diseases mentioned in the circular dt 19.12.2016 N.B Dept. The CIR S.A is payable to the PH ON survival after 30 days of the Diagnosis.
  • Min. 1 lakh
  • Max. S.A. Overall limit 25 lakhs per person.

(If we take Cancer Cover plan this benefit is upto 50 lacs.)

 

NEFT FORM FOR LIC

Posted on by avinash

NEFT (National Electronic Fund Transfer) is a compulsory form when you are taking LOAN , Surrender previous policy , Maturity of Your LIC policies etc. LIC transect of money only through NEFT to customers. Its a National wide system to transfer a Fund as per RBI guidelines.

How to fill NEFT form

Mention all policies numbers in the form .

Put bank details where You want Your money should come

Like

  1. Bank name
  2. Bank branch address
  3. Account types: saving/current
  4. Bank account no
  5. IFS CODE
  6. MOBILE NO
  7. EMAIL ID

Enclosed paper alongwith NACH

Cancelled cheque YOUR should be printed

OR

BANK PASSBOOK XEROX

PAN card zerox

Advantage of submitting NACH

Once you submit NEFT, LIC will never demand again for further transactions. No any extra charge made by LIC. Each payments from LIC through NEFT will create one unique transaction reference.

Where to submit NEFT Details

Servicing LIC branch : address is prescribed to policy BOND paper.

Customer zone: LIC has customer zone at different locations at several place. You may find customer zone near by to you.

Through EMAIL : you can mail with attachments of NEFT and cancelled cheque and PAN.

LIC term insurance is costlier than others

Posted on by avinash

Insurance Premium of term insurance plan of LIC is very costly than other insurer in India. What would be the reason?If 30yrs old person gets term insurance than Yearly premium would be rs 19000 for 1cr sum assured policy even though private insurer charge approx 10 to 11k only.
Few reasons to ponder prior to take LIC term insurance:

LIC CLAIM RATIO: LIC CLAIM statement is the highest in the world Its 98.3% as per IRDA data. We all know LIC has huge customers but maintaining greatest CLAIM RATIO .

Government’s backing: LIC is paying huge dividends to government from its Yearly profit . On the contrary Government provides sovereign Guarantee on each policies . Which is not available in PRIVATE INSURER.

Mortality Rate: it is basic ingredient to calculate premium of any policies . But we know that mortality Rate is common for all insurer. Private company must not reduce it. Even though longevity of every citizen has been increased and on an average people living 72 years normally.Which is common for all insurance company

Admin Charge: LIC has the lowest administration charge amongst almost all insurers. Salary of LIC staff,Offices and all other expenditure is very less in LIC.It is visible to all.

Note: The only reason for high premium of its Guaranteed CLAIM payments. One can take online term insurance from LIC with reduced premium.

Methods to pay LIC PREMIUM

Posted on by avinash

LIC OFFICE: One can pay LIC PREMIUM at LIC office by cheque or cash. It is very traditional method.

LIC’s PREMIUM POINT: LIC has opened some premium points to collect premium. It may be near to Your house. LIC agents and LIC DEVELOPMENT OFFICER can open premium points to collect premium.

Banks: Whether you are playing in Yearly/half yearly/Quarterly/monthly mode, you can pay by NACH from banks.

Online payments: LIC has given facilities to pay premium online by Debit/credit card or net banking. There are two option on LIC site , one is to register and pay ,and second option is to pay directly. Having paid premium, you will get receipt through email.

Pay tm:Now you can pay your LIC insurance premium through PayTM app also.You have to select insurer and then put in policy number. After submitting the details u can see the basic details and u can verify and proceed. Receipt will be downloaded in your phone/profile.

WHY To Get LIC PLAN in Yearly Payment mode premium

Posted on by avinash

There are five modes of PREMIUM payments available  for LIC insurance plan like Yearly,half yearly, Quarterly, monthly and single premium. Why should we select yearly MODE of LIC insurance plan?  It will give few additional benefits. One can make their payment as they want. but if we pay premium for LIC plan in yearly mode in the month of March then we will have some benefits.

Suppose  we select date-backing of my LIC PLAN to April, age reduces & Prem every year reduces, in 15-20 years, this Rs _________ is the total Difference in Prem, with Yly premium MODE, there is every year discount of 2%, total discount in 15-20 years would be Rs ___.

  • By back-dating, I shall get you extra 6% on Maturity Value of 25-50 Lacs, how ?

  • By Getting Maturity 1 year earlier, that AMT can be invested in Bank FDs,

    FD would earn 6% Interest,

  • By back-dating, OUR loan, in case of emergency, would get due early, 2 years instead of 3,

  • By back-dating, our loan amt increases, Because of more Premium, more bonus & more loan,

  •  By back-dating, In case of death, more death benefit coz of more bonus,

  • By Back-dating, In case of Money Back plan, every SB 1 year earlier,

In case of Umang, 3’Extra Benefits –

(I) 1 SB Extra,

(II) 1 Bonus Extra (after PPT),

(III)Higher FAB ( 1 year higher Term),

Some plan may be available only now by dating back to April because of higher age.

HNI Clients buy Life Insurance:EVEN IF THEY DON’T NEED IT !

Posted on by avinash
Now why do they buy it then? (The Million Dollar Question)
 
  1. Liquidity:  A lot of wealthy families are “Asset Rich” but liquid poor. The Life Insurance policy becomes a quick tool to create liquidity when any key person in the family passes away to ensure Hard Assets are not liquidated in a “Fire Sale”. It also protects the reputation of the family
  1. Income Replacement: AND I get this question asked a lot…  But don’t the Super Rich have passive incomes and established businesses?? Well they do, But when the primary breadwinner passes away, these income sources may start to dry up, so the Life Insurance provides a quick buffer to help stabilize the income flow. 
  1. Wealth Transfer: We all work very hard to build HARD Assets; It is essential that these HARD Assets are transferred to the next generation without loosing value. Taxes, Transfer fees, Probate costs, Lawyers, Trusts, Foundations, the more complex the structure the more fees the estate has to pay. Life Insurance ensures those payments are made without touching any of the assets in the estate. Hence ensuring full Wealth Transfer.
  1. Hedge against the Future: But don’t the SUPER RICH already have a secured future? Well just like a car, every estate needs to have Shock-Absobers, Seat Belts and Airbags. You may be in a Rolls Royce, but you would still need the essential protections from uncertainity. Life Insurance is the Shock Absober in the Estate Value. It hedges the pot holes on the way. Life is unpredictable and so is your estate value. 
  1. Life Insurance as an Asset!! Life Insurance is not considered an expense on the Super Rich Income Statement; one of the reasons why a lot of people think the Super Rich don’t have it..It is on the Balance Sheet as an Asset. No wonder a lot of people have the Myth that Life Insurance is only for the Poor and not the Rich. Life Insurance is an option (for all the traders and accountants out there) which is always “in – the – Money” which means; it will always have value for an estate even at its worst performance. Its a Liquid Asset/Property on the Balance Sheet of the SUPER RICH

LIC Term Insurance Plan: New Anmol Jeevan And New Amulya Jeevan Plan

Posted on by avinash

LIC’s Term Insurance is a protection plan which gives only financial protection to the insured’s family in case of his/her unfortunate demise.
There are two Term Insurance Plans are in LIC of India

  • Anmol Jeevan
  • Amulya Jeevan

Eligibility Conditions And Other Restrictions for Anmol Jeevan

  • Minimum Sum Assured: Rs. 6,00,000
  • Maximum Sum Assured:  Rs. 24,00,000
  • (The Sum Assured shall be in multiples of Rs. 1, 00,000/-)
  •  Minimum age at entry   18 years (completed)
  • Maximum age at entry    : 55 years (nearest birthday)
  • Maximum cover  age     : 65 years (nearest birthday)
  • Minimum policy term : 5 years
  • Maximum policy term    : 25 year

Eligibility Conditions And Other Restrictions for Amulya Jeewan Plan

  • Minimum Sum Assured  : Rs. 25,00,000
  • Maximum Sum Assured : No uper limit
  • (The Sum Assured shall be in multiples of Rs. 1, 00,000/-)
  • Minimum age at entry         : 18 years (completed)
  • Maximum age at entry        : 60 years (nearest birthday)
  • Maximum cover  age : 70 years (nearest birthday)
  • Minimum policy term : 5 years
  • Maximum policy term   : 35 years

Features and benefits:


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


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

 

Paid -Up value– Both policy can not be Paid Up.

 

Surrender Value: No Surrender Value will be available under this plan.

Taxes: Income Tax benefits (80 c) are available 

Cooling-off period:If the Policyholder is not happy with the “Terms and Conditions” of the policy, the policy may be returned to us within 15 days from the date of receipt of the policy .


Suicide: This policy shall be void if the Life Assured (whether sane or insane) commits suicide within 12 months from the date of commencement of risk or from the date of revival, an amount equal to 80% of the premiums paid till the date of death (excluding any taxes, extra premium, if any,), provided the policy is inforce, shall be payable. The Corporation will not entertain any other claim under this policy.

Revival of Policy: If Premiums are not paid on time with in grace period then then the policy ,A lapsed policy can be revived with in the two consecutive years from the date of first unpaid premium.

 

 

Suppose A Person age 35 yrs old took this Term Insurance for 35 years
Plan Amulya jeevan (823)
Sum Assured :5000000
Premium With Tax 18.0% :

Yearly : 23128 (19600 + 3528)  Halfly : 11795 (9996 + 1799)

TERM INSURANCE FROM LIC IS COSTLY THAN OTHER INSURER, BEFORE HAVING THIS PLAN ONE MUST HAVE A LOOK CLAIM RATIO REPORT FROM IRDAI

LIC gives BONUS to policy holders

Posted on by avinash

LIC declare Bonus rate every years but it not paid immediately, it will be paid at the time of maturity or premature death of policy holder. Bonus varies as per the plans term and condition.Bonus rate of LIC is declared on per thousand of sum assure(SA) basis.
Original bond paper consist the detail of type of bonus available in the Insurance PLAN. One can get bonus rate charts of desired year from LIC website home page

 

 Types of LIC bonus

There are four types of bonuses declared by LIC.

  • Simple Reversionary Bonus

  • Final Additional Bonus (FAB) or Terminal Bonus

  • Loyalty Additions

  • Guaranteed Additions (GA

Simple Reversionary Bonus

  • What we simply meant when we say Bonus is this “Simple Reversionary Bonuses”. This bonus is declared per thousand of the Sum Assured Amount in each financial year by LIC but will be paid at the end of maturity period or on the death of the policyholder, whichever is earlier.

  • For instance if you are holding Jeevan Lakshya policy with Sum Assure amount of Rs.10 lakhs and policy term exceeding 20 years and the bonus declared this year is Rs.49, then your bonus amount would be Rs.49,000 for current year, but as said earlier, you will get this amount only at maturity or on death.

Final Additional Bonus (FAB) or Terminal Bonus

  • This is the second type of bonus declared by LIC termed as Final Additional Bonus (FAB). FAB is a onetime payment and paid only to those policyholders who have policy of longer duration, say 15 years and more, and has paid premium for all 15 years. Usually, policies having Guaranteed Additions are not eligible for FAB.

Loyalty Additions

Loyalty Addition is a non-guaranteed bonus which is given as an appreciation of being a long-term loyal customer of LIC. Usually this is also declared per thousand of sum depending and at the end of the policy term but for some policies it gets declared after completion of certain policy period such as in Jeevan Saral Policy, loyalty additions will be awarded to the policyholders after completing minimum of 10 years. But likewise FAB, loyal addition is also paid at the end of maturity period or on death whichever is earlier subject to completion of minimum policy period.

Guaranteed Additions (GA)

  • Some of the LIC Policies offers a “Guaranteed Additions” which means that policyholder will get an assured amount of sum for a specified period. For instance, Jeevan Shiromani policy provides a Guaranteed Additions of Rs.50 per year per thousand sum assured for first five years of the policy.

  • Another such policy is Komal Jeevan (Now closed plan). Guaranteed Additions are added with the Basic Sum Assured and paid at the time of claim.

How to Calculate LIC bonus

  • Suppose SA =10,00,000 and policy is taken for Term 30 yrs

  • Bonus declared = 49/1000

                                        then   1000000X49X30  

                                                       1000

                    =14,70,000

  • FAB declared = 1100/1000

=11,00,000

 

Then Total Maturity =SA + Bonus + FAB

 

= 10 lac+14.70 lac+11 lac=35.70 lac

National Automated Clearing House (NACH) for LIC Policy

Posted on by avinash
If you are taking a LIC policy in monthly mode then you have to submit NACH form along with LIC proposal. NACH is a replacement of ECS (electric clearance service) form. As you must know ECS was giving authority to your bank for monthly deduction from your account, same thing NACH will do .

But one basic difference is that you have to pay two month’s premium to start the policy ,whereas, through ECS only one month premium was needed to log in your policy in LIC .

One benefit is there ,Now you don’t need to go to concern BANK to get stamp on this NACH ,like it was in practice in ECS form.
 
Difference between ECS and NACH 

NACH

  1. Administered by NPCI
  2. Bank if LIVE on NPCI all its branches participate in NACH
  3. Creation of NACH master on the basis of creating branch
  4. Customer need not visit Bank-Branch for validation of mandate form
  5. Cheque leaf type mandate form
  6. NACH processing starts only when mandate is validated and accepted by destination bank
  7. Only CBS account number allowed ( 9 digit or more )

ECS

  1. Administered by RBI
  2. Participation of Bank branch if authorised by RBI
  3. Creation of ECS master on the basis of MICR
  4. Customer needs to visit Bank-Branch for validation of mandate form
  5. A4 type ECS mandate form
  6. ECS processing starts immediately on registration
  7. No restriction on account number
  8. Under ECS-Mly, one premium at NB stage

JEEVAN LAKSHYA PLAN 833

Posted on by avinash

Its a complete Financial protection

  1. For Child Future Provision
  1. (Kanyadan,Marriage,Education)
  1. Own Particular dream)

It is a combination of Saving and risk cover both.

Eligibility:

  • Min & Max Age at entry   18 to 50 years lbd (Last BirthDay) 
  • Age at maturity : 65 years.
  • Policy Term  : 13 to 25 years.
  • PPT (Policy Term – 3) years
  • Premium Mode Yly, Hly, Qly , SSS and ECS.
  • Mini Sum assured 100,000. No upper Limit.
  • Riders DAB available upto 1 cror and Term rider

Age proof Only Standard age proof and NSAP I & II acceptable.**

  • Mode Rebate
  •  Yly: 2% of TP,
  • Hly: 1% of TP, 
  • Qtly & monthly : NIL
  • Date Backing  Allowed 
  • Surrender & loan  Allowed after 3 yrs. 
  • Female  All categories allowed as per LIC rules

Non Medical  allowed as per present rules.
NRI   Allowed for Both NRI and FNIO in V,VI & VIII   countries. 

Maturity :

SA+Bonus+FAB will be paid

Example     

Now see risk cover from this Plan with example

Now see risk cover from this Plan with example

Jeevan lakshya plan 833 returns if Policy Holders dies

  1. Immediate 110% of Sum Assured

  2. 10% of Sum Assured till policy end

  3. Maturity Benefit also goes to family

  4. Premium will stop

  5. Tax Benefit

Suppose if Policy holder dies at 10 year after taking this policy,

Till 10th year He/She  paid premium =4.5 Lac (45000 yearly X 10 years)

  • Immediate 11 lac (+ 10 lac if accidental death )

  • 1 lac every yearly till 14th year = 14 lac

  • Maturity 26.75 lac

Total 51.75 Lac tax free amount goes to family

Note : This is much suitable for young age group . even though it is not a child Plan but one may have for child Education and Daughter”s  marriage.

This Plan is also called  “KANYA DAN” policy .