A Handy Guide to the Term Rider in LIC Policy

What is Term Rider in LIC?

The LIC Term Rider Policy is an add-on benefit to the base policy that provides the beneficiary with the Sum Assured in case of the sudden demise of the insured within the policy period. This can only be added to non-linked plans at the commencement of the base policy at a nominal cost. This means the rider can be linked only to traditional insurance policies and not to ULIPs. If the insured individual survives the term period, nothing shall be payable. The advantage is that such additional investments are subject to tax exemption or tax deductions.

Key Features of the LIC Term Rider 

LIC Term Insurance Rider come packed with a wide array of salient features to offer to its buyers. Understanding what is term rider in LIC can help policyholders customize their coverage for better protection. Stated below are the key features of the rider:

• For policies with regular or limited premium payment options, the amount payable on death will be the highest of the following:

  • The Term Assurance Rider Sum Assured

  • 7 times the Annualized Rider Premium

  • 105% of the Total Rider Premiums Paid up to the date of death

• For policies under the single premium payment option, the amount payable on death will be the higher of:

  • The Term Assurance Rider Sum Assured

  • 1.25 times the Single Rider Premium

• The Sum assured of the rider shall be less than or equal to the sum assured of the base policy.

• It is a nominal and affordable cost for a more extensive coverage

• The rider can be linked only to traditional LIC policies and not ULIPs. 

• Discounts while rider premium payment can be availed only if such discounts are attached to the base policy

• Such insurance policies with rider benefits attached are subject to tax deductions.

• The Sum assured ranges from a minimum of Rs 1 Lakh to a maximum of Rs 25 Lakh.

• No additional documents are required for rider benefits except for the ones for the base policy.

Eligibility Criteria for LIC Term Rider

Additional Details of the Term Rider in LIC

Grace Period

Same as under Base Plan

Terms and Conditions for Refund

As such, there is no surrender value attached to LIC Term Rider. Nonetheless, the rider premium may be refunded only if there is regularity in the rider’s premium paid and the base policy is surrendered. The terms and conditions for refund are stated below:

• No amount is subject to refund in case of the Regular Premium Plan

• A refund is applicable for Limited Premium Plan only if the amount has been paid for the minimum tenure of the term period. If the term period was for 10 years, the Sum should be paid for at least two years. If the term period was for more than 10 years, the amount should be paid for the tenure of 3 years. If these terms are met, 75% of a stipulated value would be refunded

• A refund can be calculated for a Single Premium Plan by multiplying 90% of the paid rider’s premium to the outstanding policy term and dividing the amount by the original rider tenure

Revival Benefit

The policy shall lapse if the policyholder does not pay the premium amount, even in the grace period. In such circumstances, the policyholder can avail of the revival benefit by making the arrear payment along with interest within two years of the first unpaid installment. The rider and the base policy co-exist and hence cannot be revived separately. 

Free-look Period

Under this provision, if an individual has bought a term rider and they are not happy with the terms and conditions attached to the same, they can unquestionably return the plan to the respective insurer within a specified duration mentioning their reason to do so along with the original term insurance policy documents and then are subject to a refund. 

Within 30 days from the date mentioned in the receipt of the policy documents, a person can opt for a refund. By doing so, the insurance company will cancel the rider benefit and generate the refund subject to deduction of admissible expenses.

Termination of Rider

The LIC's New Term Assurance Rider will terminate upon the earliest of the following:

i) The date the death benefit is approved under this Rider,

ii) The Rider's expiry date, or

iii) The date the Base Policy—under which this Rider is attached—either terminates or is converted into a paid-up policy.

Exclusions

Suicide Claim Provision:

This rider cannot be issued alone and shall be attached to the Base Plan. Suicide claim provision, as mentioned in the Base Policy, would apply to the rider.

Steps to Purchase the LIC Term Rider Online 

Below are the steps to purchase the LIC Term Rider online:

Step 1: Visit the official LIC website. 

Step 2: In the case of a new customer, the Insurance Selector tab will help choose the right option based on age, income, occupation, and insurance needs. This will help you determine the coverage period as well as the best policy term.

Step 3: Then click on Premium Calculator that can be used to calculate the premium amount for your base policy and rider.

Step 4: If everything looks favourable, the customer can go ahead with the payment via net banking, online payment modes, phone banking, etc.

Step 5: The policy documents can be mailed to the registered email-id for future references.

Step 6: In the case of an existing customer, the policy status can be checked on the insurer’s website. To check the policy status, one must complete the online registration and enroll the policy online.

Step 7: Customer care number is also mentioned on the insurer’s website to resolve any issues faced at the earliest.

Summing Up 

Choosing the appropriate insurance cover often comes down to the finer details. Riders like this one can quietly enhance the strength of your policy, offering added reassurance over time. Considering your long-term financial plans, it's worth reflecting on how such options might fit into your insurance policy. Always understand the terms and conditions attached to the policy before adding a rider and choosing a policy. 

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

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