Tag: LIC update

Term Life Insurance: Basics, Benefits, and Considerations

Posted on by avinash

Life insurance is a contract between an insurer and a policyholder, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the policyholder. 

There are various types of life insurance policies, and term life insurance is one of them. In this article, we will explore the basics of term life insurance, its benefits, drawbacks, and some considerations to keep in mind while choosing a term life insurance policy.

What is Term Life Insurance?

Term life insurance is a type of life insurance policy that provides coverage for a fixed period of time or a “term.” It is designed to provide financial protection to the policyholder’s beneficiaries in the event of the policyholder’s death during the term. Unlike whole life insurance, which provides lifetime coverage and has a cash value component, term life insurance does not have a cash value and is solely focused on providing death benefit coverage.

Term life insurance policies can typically be purchased for terms ranging from one year to 35  years.

Once the term of the policy is over, the coverage ceases, and the policyholder has the option to renew the policy or let it expire.

Benefits of Term Life Insurance:

Affordable Premiums: Term life insurance is generally more affordable than other types of life insurance policies, such as whole life insurance. This is because term life insurance policies only provide coverage for a specified period and do not have a cash value component.

Flexibility: Term life insurance policies can be tailored to meet the policyholder’s needs, such as the length of the term and the amount of coverage.

Simple: Term life insurance policies are relatively simple and straightforward, making them easy to understand.

Death Benefit: Term life insurance policies provide a death benefit that can help provide financial support to the policyholder’s beneficiaries in the event of the policyholder’s death.

Drawbacks of Term Life Insurance:

No Cash Value: Unlike other types of life insurance policies, such as whole life insurance, term life insurance policies do not accumulate cash value over time.

Limited Coverage: Term life insurance policies only provide coverage for a specified period, which means that if the policyholder outlives the term, the policy will expire, and no death benefit will be paid out.

Renewal: If the policyholder decides to renew the policy after the initial term, the premiums may increase, which can make the policy more expensive over time.

Considerations for Choosing a Term Life Insurance Policy:

Length of the Term: When choosing a term life insurance policy, it’s important to consider the length of the term. The length of the term should be long enough to provide adequate coverage for the policyholder’s beneficiaries.

Coverage Amount: The coverage amount should be sufficient to provide financial support to the policyholder’s beneficiaries in the event of the policyholder’s death. It’s important to consider the policyholder’s income, debts, and other financial obligations when determining the coverage amount.

Premiums: The premiums for the policy should be affordable and fit within the policyholder’s budget.

Renewal Options: If the policyholder wants to renew the policy after the initial term, it’s important to consider the renewal options and any associated costs.

Conclusion:

Term life insurance is a popular and affordable option for individuals who want to provide financial protection to their beneficiaries in the event of their death. While term life insurance policies have some drawbacks, such as no cash value and limited coverage, they offer many benefits, such as affordable premiums, flexibility, and a death benefit.

When choosing a term life insurance policy, it’s important to consider the length of the term, coverage amount, premiums, and renewal options to ensure that the policy meets the policyholder’s needs and budget.

Critical Illness Insurance Polic: Protect Yourself and Your Finances

Posted on by avinash

Introduction:

No one wants to think about the possibility of being diagnosed with a critical illness, but the reality is that it can happen to anyone at any time.

The financial burden of a critical illness can be overwhelming, with medical bills, lost income, and other expenses adding up quickly.

That’s where a critical illness insurance policy can help provide financial protection and peace of mind. In this article, we’ll discuss what critical illness insurance is, the different types of policies available, and the factors to consider when choosing the right coverage for you.

What is Critical Illness Insurance?

Critical illness insurance is a type of insurance policy that provides a lump-sum payment if you are diagnosed with a critical illness that is covered by the policy. The payment can be used for any purpose, such as paying for medical bills, covering living expenses, or funding a change in lifestyle due to the illness.

Types of Critical Illness Insurance Policies:

There are two main types of critical illness insurance policies: standalone policies and riders on life insurance policies.

Standalone Policies: Standalone critical illness insurance policies are separate policies that are specifically designed to provide coverage for critical illnesses. These policies can be purchased on their own or in combination with other types of insurance policies.

Riders on Life Insurance Policies: Some life insurance policies offer critical illness riders, which provide coverage for critical illnesses in addition to the death benefit of the life insurance policy.

These riders can be more affordable than standalone policies, but they may have restrictions or limitations on the types of illnesses covered or the amount of coverage available.

Factors to Consider When Choosing a Critical Illness Insurance Policy:

When choosing a critical illness insurance policy, there are several factors to consider to ensure that you are getting the right coverage for your needs:

Covered Illnesses: Different policies may cover different types of critical illnesses, so it’s important to review the list of covered illnesses to ensure that the policy provides the coverage you need.

Benefit Amount: The benefit amount of the policy is the amount of money that will be paid out if you are diagnosed with a covered critical illness. Consider your financial needs and expenses when choosing the benefit amount.

Premiums: Premiums are the payments you make to the insurance company to maintain the policy. Consider the affordability of the premiums and how they fit into your budget when choosing a policy.

Waiting Period: The waiting period is the amount of time between the diagnosis of a covered critical illness and the payment of the benefit. Consider the waiting period when choosing a policy and ensure that it fits within your financial plan.

Policy Exclusions: It’s important to review the policy exclusions to ensure that you understand any limitations or restrictions on coverage. Some policies may not cover pre-existing conditions or certain types of illnesses.

Conclusion:

A critical illness insurance policy can provide valuable financial protection in the event of a covered critical illness. When choosing a policy, consider the types of policies available, the factors to consider when choosing the right coverage for you, and ensure that the policy provides the coverage you need.

With the right critical illness insurance policy, you can have peace of mind knowing that you and your loved ones are protected from the financial burden of a critical illness.

Surrender Value Calculation of Jeevan Shanti

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1. Jeevan shanti policy can be surrendered at any time after three months from the Date of issuance of policy or after expiry of the free-look period, whichever is later.
2. Surrender is allowed only under the following annuity options:

a) Immediate annuity–
 Option F: Immediate Annuity for life with return of Purchase Price.
 Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as
long as one of the Annuitant survives and return of Purchase Price on death of last survivor.

b) Deferred annuity–
 Option 1: Deferred annuity for Single life.
 Option 2: Deferred annuity for Joint life.
3. On payment of the surrender value all other benefits payable will cease.
Procedure for Determining Surrender Value:
a. Surrender During deferment period under Deferred Annuity:
SV = F3 x (F1 x Equivalent annuity amount payable for yearly mode + F2 x 110% of Purchase Price)
Where:

 F1 is Annuity Factor applicable at age lbd on the date of Vesting.
 F2 is the Risk Factor applicable for age lbd on the date of Vesting.
 F3 is the Factor applicable for outstanding deferment period in complete full years as at date of
surrender.
For Example: if the policy with deferment Period 20 years is surrendered during 20th year of policy, then outstanding period will be Zero.
 In case of Joint life policies factors F1 and F2 shall depend on the age lbd of younger annuitant.

Example:
Age at Entry (lbd): Primary Annuitant – 45 Years, Secondary Annuitant – 35 years.
Purchase Price – 10,00,000, Deferment Period – 20 years, Annuity Mode – Yearly,
Calculate Surrender Value payable during 4th
year.
 Age lbd of Younger age at Vesting = 35 + 20 = 55 years
 Annuity rate Payable p.a. for 10 lacs Purchase Price under Joint Life = 225.10 + 2.10 = 227.20
Annuity Payable Per annum = 10,00,000 x 227.20/1000 = 2,27,200
 Outstanding Deferment Period = 20 – 4 = 16 years.
 Factor F1 at Age 55 lbd = 9.4760
 Factor F2 at Age 55 lbd = 0.1306
 Factor F3 for Outstanding Deferment Period of 16 years = 23.94%
Surrender Value = F3 x (F1 x Annual Annuity Payable + F2 x 110% of Purchase Price)
= 23.94/100 x (9.4760 x 2,27,200 + 0.1306 x 11,00,000)
= 0.2394 x (21,52,947 + 1,43,660)
= 0.2394 x (22, 96,607) = 5,49,807

Surrender Value and Loan Payable during each year under Above Example:

b) Surrender after deferment period under Deferred Annuity and under Immediate Annuity:

Surrender Value =
(F1 x Equivalent annuity amount payable for yearly mode + F2 x 110% of Purchase Price) – Annuity
installments paid under the policy during the policy year of surrender up to date of surrender.
Where:
 F1 is Annuity Factor applicable for age lbd on the date of surrender.
 F2 is the Risk Factor applicable for age lbd on the date of surrender.
 In case of Joint life policies factors F1 and F2 shall depend on the age lbd of younger annuitant.
Example:
Age at Entry (lbd): Single/Primary Annuitant – 45 Years, Secondary Annuitant – 35 years.
Purchase Price – 10,00,000, Deferment Period – 20 years, Annuity Mode – Yearly,
Calculate Surrender Value after 3 years (During 4th year after Vesting):
a) Under Option F of Immediate Annuity and
b) Option 2 of Deferred Annuity
a) Under Option F of Immediate Annuity:
 Age lbd of Annuitant on the date of Surrender = 45 + 3 = 48
 Annuity Rate under option F for 10 Lacs Purchase Price Payable yearly = 63.30 + 2.10 = 65.40
 Annuity payable p.a = 10,00,000 x 65.40 /1000 = 65400
 Factor F1 for Age lbd 48 years = 10.0515
 Factor F2 for Age lbd 48 years = 0.0828
SV = (F1 x Equivalent annuity amount payable for yearly mode + F2 x 110% of Purchase Price) –
Annuity installments paid under the policy during the policy year of surrender up to date of surrender.
SV = (10.0515 x 65400 + 0.0828 x 11,00,000) – Nil ( As Annuity mode is yearly).
= 6,57,368 + 91,080 = 7,48,448

GST Rates (Service Tax) On LIC Policy

Posted on by avinash

https://wwwlicagent.blogspot.in/


Goods and Services Tax or GST has come into effect from July 1st, 2017 earlier GST on LIC Policy in the form of Service Tax .GST is a biggest tax reform in India history .It impact every one and all industries then How LIC can keep themselves apart from it. GST rate on LIC should be abolish,because LIC is paying huge dividends to Govt.

GST is also chargeable on the Interest Charged for Delayed Premium that late fees .we can say now GST will be applicable on Interest charged on delayed receipt of premium.

Rate will be applicable according to the type of premium collected. Here Types of premium means Mode of premium (yearly ,half-yearly,quarterly,monthly)

If you paid LIC premium by Bank Cheque ,but for any reasons your cheque bounced

(known as CDA ) then also GST is applicable .CDA Charges will be 18%.

There are few  tax exemptions are in GST as decided by GST council

( i) Services of life insurance business provided by way of annuity under the NPS regulated by PFRDA

( ii) Services provided by IRDAI to insurers under IRDAI

(iii) Services of life insurance business provided under following schemes

  1. Janashree Bima Yojana(JBY)

  2. Aam Aadmi Bima Yojana (AABY

  3. Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of fifty thousand rupees;

  4. Varishtha Pension Bima Yojana

  5. Pradhan Mantri Jeevan Jyoti Bima Yojana

  6. Pradhan Mantri Jan Dhan Yojana

  7. Pradhan Mantri Vaya Vanadan Yojana

  8. Any other insurance scheme of State Government as may be notified by Government of India on recommendation of GSTC

New RATE Of GST on LIC POLICIES


 

 

PLANS
of LIC

 

Earlier
service tax

 

New
Rates w.e.f. 1.7.2017

 

Term & Health Products and ULIP charges

15%

18%

 

 

 

NB premium(including Single Premium) of Life and
Pension products and First year premium of Annuity products

 

3.75%

4.50%

Renewal premium

1.875%

 

2.25%

Single premium of Annuity Products

1.50%

1.80%

 

 

 

 

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.)

 

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.

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