LIC’s New Bima Bachat is a participating, non-linked policy that offers benefits of life assurance and savings to its policyholders. The premium for the plan is paid as a lump sum amount during policy inception. With this one-time premium, policyholders can enjoy assured benefits at the time of maturity of the policy.Read more
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Further, the money-back nature of LIC Bima Bachat policy ensures that the nominees assigned by the life assured at the outset of the policy receive the sum assured on death. In addition, the plan comes with provisions for survival benefits on the completion of specific policy years within the policy term.
Let’s look at important details about the plan to understand it better.
Policy Term - The life assured has the flexibility to choose from 3 different options, viz. 9 years, 12 years, and 15 years. The chosen policy term determines the maximum maturity age and the minimum sum that one can assure with the LIC Bima Bachat policy. Refer to ‘eligibility criteria’ below to figure out the specifics of the above pointers.
Eligibility Criteria - To be eligible to purchase this policy, you need to keep the following conditions in mind.
|Minimum Entry Age||15 years|
|Maximum Entry Age||50 years|
|Maximum Maturity Age||
|Minimum Sum Assured||
|Maximum Sum Assured||No limit|
|Premium Paying Term||Single|
Death Benefit - The death benefit payable in the first five years of the policy term is equal to the sum assured on death. In the event of death occurring after the completion of five years, an amount equal to the sum assured plus loyalty additions is paid to the beneficiaries.
The sum assured on death is defined as 1.25 times the single premium or the base sum assured (whichever is higher).
Survival Benefit - The life assured is entitled to receive a fixed percentage of the sum assured on surviving specific policy years during the policy tenure. For LIC Bima Bachat policy, survival benefit is defined as 15% of the basic sum assured, payable at the end of each policy year as defined below:
At the end of the 3rd and 6th year of the policy, on choosing a policy term of 9 years.
At the end of the 3rd, 6th, and 9th year of the policy, on choosing a policy term of 12 years.
At the end of the 3rd, 6th, 9th, and 12th years of the policy, on choosing a policy term of 15 years.
Maturity Benefit - The life assured is entitled to a sum assured on maturity along with applicable loyalty additions if they survive the entire duration of the policy term. This sum is equal to the single premium paid during policy inception.
Loyalty Additions - The fact that the LIC New Bima Bachat policy is a participating plan means that policyholders can enjoy extra earnings in the form of loyalty additions. However, please note that these are non-guaranteed additions and depend solely on the profits earned by LIC in a particular year.
With LIC Bima Bachat, loyalty additions shall only be payable on the death of the life assured post the completion of the first 5 policy years and on the maturity of the policy.
Optional Riders - The two riders that you can opt for to enhance your life cover are:
LIC’s Accidental Death and Disability Benefit Rider
LIC’s New Term Assurance Rider
Both the policies can be availed at policy inception and not thereafter.
Settlement Option - The settlement option is an opportunity to receive the maturity benefit in installments, instead of a lump sum payout. The installments can be made yearly, half-yearly, quarterly, or every month throughout 5, 10, or 15 years. LIC has set minimum installment amounts against each mode of installment. These are:
Rs.5,000 for monthly installments
Rs.15,000 for quarterly installments
Rs.25,000 for half-yearly installments
Rs.50,000 for yearly installments
Further, the option has to be exercised no later than 3 months from the date of maturity of LIC New Bima Bachat cover.
Death Benefit in Instalments - Policyholders can choose to receive the sum assured on death in installments to enable assigned nominees to manage the funds better. The installments can be done monthly, quarterly, half-yearly, or annually throughout 5, 10, or 15 years. Once this option is exercised by the life assured, the nominees cannot make any alterations.
Rebates on High Sum Assured - On assuring a sum above a certain limit, the life assured shall receive rebates on their single premium amount. These rebates vary per the policy term chosen and the sum assured, as depicted in the table below:
|Policy term - 9 years|
|Less than Rs. 75,000||Rs. 75,000 to Rs. 150,000||Rs. 150,000 and above|
|Policy term - 12 years|
|Less than Rs. 1 Lakh||Rs. 1 Lakh to Rs. 2 Lakhs||Rs. 2 Lakhs and above|
|Policy term - 15 years|
|Less than Rs. 150,000||Rs. 1,50,000 to Rs. 3 Lakhs||Rs. 3 Lakhs and above|
Surrender Value - Surrender value is the amount payable to the policyholder on surrendering a policy any time before the maturity date. With the LIC Bima Bachat policy, one can surrender it at any point in time while it is still in force. It is equivalent to the guaranteed surrender value or the special surrender value, subject to whichever is higher.
The guaranteed surrender value payable is highlighter below:
First Year of the Policy Term: 75% of the single premium
Subsequent Years of the Policy Term: 90% of the single premium minus the survival benefits
Loan - The life assured can apply for a loan, subject to the acquired surrender value, at any point after the completion of the first policy year. For LIC Bima Bachat policy, the loan amount has been set to 90% of the surrender value.
Free Look Period - A period of 15 days is allowed to the life assured to read through the terms and conditions of the LIC Bima Bachat Policy. Following this, if (s)he finds anything dubious, they have the liberty to return the policy to the insurer. On receiving the cancellation request, LIC refunds the single premium amount paid during inception.
Suicide Exclusion - If the life assured dies on account of suicide within 12 months from the time the risk commences, the policy shall stand void. LIC shall not entertain any claims apart from 90% of the single premium amount or the surrender value (whichever is higher).
LIC Bima Bachat has been gaining a lot of traction lately due to its features such as loan facility, rebates on the higher sum assured, and installment payouts, among others. Given the flexibility offered by the plan in various aspects (as discussed above), the policy might make a worthwhile investment. However, new buyers must conduct their research before making a purchase.
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