Category: LIC OF INDIA

Surrender of LIC Insurance policy

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 LIC POLICY Surrender

If you don’t want to continue LIC policy for any reason then LIC gives you an option to surrender your Policy. There are Lock in period for 3 years in Endowment Plan and 5 years for ULIP plan. LIC policy is not allowed in LOCK in period. It does not matter of policy term but it is clear that delay in surrender gives you better amount. Normally LIC agents in Mumbai are doing all this procedure for surrender of LIC policies.

Where can you surrender your LIC policy

ü LIC parent Branch: Where you have taken your policy, you may go there and do all procedure.

ü LIC Customer Zone: LIC has opened several Customer Zone to help its customer.Here one can get any service related to LIC policies irespestive of parent branch. It is compulsory that Customer has to visit by own along with ID card.You can find Customer Zone in your locality with the help of internet.

ü LIC agent: Just do a call to LIC agent,he will do all documentation of behalf of you.

Documents Require To surrender LIC Policy

Ø Original Policy Paper (Bond Paper)

Ø  Surrender Form (No.5074)Surrender Value(Form No.5704)

Here and take the printout

Ø Your Bank cancelled cheque (your name should be printed on cheque)

If Your Name is not printed on cheque or you don’t have Cheque Book then

 Submit bank passbook photocopy.

Ø NEFT form :Fill all bank details , so that amount will go directly to you.

Ø Aaadhar Card and PAN card self attested zerox copy

Ø One questionnaire form also should be fill in LIC office.

How to Calculate Surrender Amount?

The exact value will be conveyed to you through servicing branch or you can also collect it through SMS/LIC customer care.but  you can also calculate it by own.

{(Total Premium Paid in years/total premium Payable years)X Sum Assured } + Accrued Bonus } X Surrender Factor

 Suppose Mr A has take a policy of rs 30 Lac for 30 years  terms. Now Having paid for 10 years , Mr A wants to surrender it.

{(10/30) X 30 lac} + Bonus } LIC surrender Factor}

 

Note:Once you submit the all necessary documents, then wait for 5-10 days they transfer the fund to your bank account.

 

If you plan to surrender your endowment policy, bear in mind all the money you have paid that you may never get back.

What is Riders in LIC Policies

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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

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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

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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.

WHY To Get LIC PLAN in Yearly Payment mode premium

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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 !

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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 gives BONUS to policy holders

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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

How to link LIC Policy with Aadhaar Card & PAN Card ?

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Its compulsory to link your Aadhaar and PAN card wilth New LIC policy and OLD LIC policy otherwise you will not get maturity amount. You can link aadahr and PAN card online and offline both manner.As per Govt Directives it is mandatory to link Aadhar with all financial instruments.

There are two methods to link Aadhaar and PAN with LIC plan

 

1) Offline: We have shown forms and also elaborate how to fill this form.

2) Online:Go to official LIC web site and update  

 

Offline Method

There is form available in every LIC office collect it fill will all existing  LIC POLICy details and submit there. 

 
 

Online Method

Follow some Step 

 

  • Go to official website of LIC of India 
  • Click to link Addahr Card 
  • New window will be open
  • Fill all the detail as Aadhar card
  • Get OTP on resitered Mobile 
  • Submit All
 

JEEVAN LAKSHYA PLAN 833

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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 .

LIC NEW MONEY BACK POLICY PLAN 820 AND PLAN 821

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LIC a has New Money Back Plan for 20 years and for 25 years term .It is a non-linked plan means returns will not affected by Share/Equity market .It offers an attractive combination of Risk cover of death throughout the policy term along with the periodic payment, called as Survival benefits at every 5 years of duration of during the term. A unique combination provides financial help for the family if death occur any time before maturity and lump sum amount at the time of maturity for the surviving policyholder.Plan also gives liquidity needs through its loan facility and surrender of policy.

Example for New Money Back  820 for Maturity and Survival benefits

Policy term= 20 years

PPT= 15 years (One Has to pay premium only 15 years)

Survival Benefit(Money back) = 20% Of Sum assure every 5 years

On Maturity = 40 % of SUM ASSURE + Bonus+ Final Addison Bonus

Example:

Age 35yrs

SA – Rs 10,00,000

Example for New Money Back  820 for Maturity and Survival benefits

Policy term= 20 years

PPT= 15 years (One Has to pay premium only 15 years)

Survival Benefit(Money back) = 15% Of Sum assure every 5 years

On Maturity = 40 % of SUM ASSURE + Bonus+ Final Addison Bonus
SA – Rs 10,00,000

 Death Benefit

What is Sum Assured on Death?

Sum  Assured on Death shall be Higher of ~

125% of Basic Sum Assured (1.25 x BSA)

OR

10 times Annualised Premium.(10 x AP).

         [Premiums – excluding taxes, extra premiums and premiums for riders, if any]