LIC Term Rider

Let us discuss the Term rider in detail.

What is Term Rider in LIC?

The Term Rider Policy by the LIC of India 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.

LIC Term Rider benefit is you get added benefits on your base policy. Given below are these benefits.

• Extra Life Coverage: The complete rider sum assured is paid to your nominee if you pass away during the policy term on top of the base policy's death payout.

• Affordable: When you add a term rider to your term insurance policy, you need to pay a little extra premium for that rider. However, the cost is low and budget friendly for the same high life cover amount.

• Tax Benefits: You shall claim tax deductions on the premiums paid under Section 80C of the Income Tax Act.

• Lump Sum Payout: Apart from the death payout amount, you also get the rider payout amount as a lump sum. The total sum shall help your family cover immediate liabilities, loans or daily living expenses.

What are the Key Features of the LIC Term Rider?

LIC Term Insurance Rider comes packed with a wide array of salient features to offer to its buyers. Understanding what term rider in LIC is can help policyholders customize their term insurance 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.

What is the Eligibility Criteria for LIC Term Rider?

What are the 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.

What are the Optional Riders Offered by LIC?

Life Insurance Corporation of India (LIC) offers several riders that are optional additions to the base life insurance policy. For each rider, policyholders shall have to pay an extra premium. Some of the riders offered by LIC of India are described below.

• LIC Accidental Death and Disability Benefit Rider (ADDB Rider in LIC) gives a benefit payout if the policyholder dies due to an accident or ends up with a permanent disability due to an accident. The lump sum amount is given to the nominee. This amount is separate from the base policy’s sum assured.

• LIC Accident Benefit Rider (AB Rider in LIC) gives a lump sum benefit payout to the nominee if the policyholder dies due to an accident (within 180 days of the accident).

• LIC Premium Waiver Benefit Rider (PWB Rider in LIC) allows the policyholder to not pay premiums if they have suffered a disability or critical illness mentioned in the policy document. The future premiums are waived off but the policy remains active.

• LIC New Critical Illness Benefit Rider gives a benefit payout to the policyholder if they are diagnosed with a critical illness. The critical illness rider in LIC gives payout only for the critical illnesses mentioned in the policy document.

Summing Up

Choosing the appropriate insurance cover often comes down to the finer details. An LIC Term Riders shall quietly enhance the strength of your policy by offering added reassurance over time. With long-term financial goals in mind, it is important to think about how these options could be a part of your insurance policy. Before you add a rider and select a policy you should always know the terms and conditions of the policy.

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