The purchase of life insurance is one of the most important financial decisions in one’s life. The future is uncertain, and this is one of the ways to blunt the blow of the ambiguity.
Term Insurance Plan has gained quite a momentum in the past couple of years. The benefits of a policy such as this are plenty, and more people have been opting for it of late.
The term insurance plans offered by the Life Insurance Corporation of India aim to provide life cover to policyholders at very low premiums. LIC is one of the most trusted insurance providers in the country.
Reasons to pick an LIC Term Insurance Plan
- Affordable Premiums:
LIC provides insurance cover at affordable premium rates. It is only one of the most affordable forms of life insurance. Being as it is not a combination of insurance and investment as most tax-saving instruments are, the low premiums make it easier to afford.
- Large cover:
An LIC policy for term insurance provides a large cover for you and your family. The same coverage might come with additional premiums from other companies.
- Financial stability for the family:
The policy ensures that upon the untimely demise of a family member, the other members can still lead a life that is unaffected by the deceased-financially. The policy lump sum that is payable to the beneficiaries upon the policyholder’s death will help to pay for the funeral and also other commitments such as a wedding or further education. It is essential to invest in an LIC policy if the policyholder has people who are dependent on him financially.
If the family of the deceased is in any debt due to loans that have not been paid off or any other unavoidable circumstances, this can be cleared with the help of the term insurance money.
Once these said debts are cleared off with the insurance money, the remaining amount will be given to the nominee.
Life insurance helps to build up cash value over a specified period. This cushion can be quite advantageous when rainy day approaches. Life insurance can also help with estate taxes on inheritances. These can sometimes be exorbitant and having some cash on hand would help.
Policyholders are provided with quite a bit of flexibility when it comes to the assured amount and the period for which it is valid. The premium payments can be made on a flexible schedule as well. Premiums can be paid monthly, quarterly, half yearly, or yearly- depending on the convenience.
- Long-term goals: Each family has its own long-term financial. These goals such as the starting of a business or the development of property can be done with the amount that is received from LIC upon a death in the family.
Insurance proceeds can also help to clear off student loans that can sometimes be a burden on the family.
An insurance policy also helps to diversify investments by not putting all the proverbial eggs in one basket.
- Easy Comprehension:
LIC term plans are quite easy to comprehend and simple to wrap one’s head around. The basic concept is that upon paying the premiums, you obtain a life covers. It is as simple as that.
- Additional benefits:
LIC also offers additional riders. This involves coverage for other family members or coverage in the case of a disease like cancer.
- For all ages:
The minimum entry age to buy an LIC term insurance policy is 18 years, and the maximum age is 60 years. Therefore, the policy can be bought by anyone young or old. However, the premiums are lower the earlier you buy it. Due to health issues and other financial constraints, the premiums for the term insurance plan go up steeply as you grow older.
- Online purchase:
LIC policies can be purchased online to avoid the hassle of dealing with the insurance agents or the paperwork. It is quite easy to understand, and the premiums can also be paid
- Claim settlement ratio:
The claims settlement ratio offered by the LIC term insurance plans is 98%. This is an exceptional figure.
- Tax benefits:
The tax benefits that are obtained as a result of this LIC policy are immense. The premiums can be availed under section 80C of the income tax act of 1961. These deductions are up to Rs. 1.5 lakhs. Exemptions can be availed on the maturity benefits that the insured persons choose to avail.
The death benefits paid on the policy also have tax exemptions up to a certain slab.
Different LIC term Insurance Plans:
- LIC Anmol Jeevan II Plan with a maximum maturity of 65 years.
The sum assured can range between a minimum of Rs. 6 Lakhs to a maximum of Rs. 24 Lakhs.
There is no limit on the premium amount.
Policy term is a minimum of 5 years.
- LIC AmulyaJeevan II Plan with a maximum maturity of 70 years
The sum assured is a minimum of Rs. 25 Lakhs with no upper limit.
There is no limit on the premium amount. It depends on the age of the policyholder and the policy term.
Policy term is a minimum of 5 years and a maximum of 35 years.
- LIC e-term plan with a maximum maturity of 75 years.
The sum assured is a median of Rs. 25 lakhs and Rs. 50 Lakhs for non-smokers.
There is no limit on the premium amount; however, it is to be paid
Policy term is a minimum of 10 years up to a maximum of 35 years.
Points to consider while purchasing a term insurance plan:
- Cover provided post the medical assessment.
- Claim settlement ratio of the bank or the insurance provider.
- Number of family members and whether the cover is extended to them
- Expected standard of living of the family upon the death of a member of the family.