A Handy Guide to the LIC Term Rider

An individual who has purchased life insurance is already a step ahead in securing their family's future. Insurance riders are extra benefits that can be added to the base policy for an additional amount.

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It amends the terms of the basic policy to provide additional coverage and financial security in times of need.

What is LIC Term Rider Policy?

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 that the rider can be linked only to traditional insurance policies and not to ULIP’s. 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 Policy 

LIC Term Insurance Riders come packed with a wide array of salient features to offer to its buyers. Stated below are the key features of the policy:

  • The Sum assured to the base policy shall be greater than or equal to the Sum assured to the rider benefit

  • If two or more insurance policies have been purchased together, the aggregate Sum assured to the rider benefit cannot exceed Rs 25 Lakh

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

  • The rider can be linked only to traditional insurance policies and not to ULIP’s

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

Such insurance with rider benefits attached are subject to tax deductions:

  • The Sum assured ranges from a minimum of Rs 1lakhs 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 Riders

To be eligible to purchase the LIC Term Rider Policy, the minimum age at entry of the insured individual should be 18 years old (completed), and the maximum age at entry of the insured individual should be 60 years old. The maturity age of the rider policy is up to 75 years old.

Tenure, Sum Assured, and Payment

The tenure for the LIC Term Rider Policy ranges from a minimum of 5years to a maximum of 65 years. The Sum assured ranges from a minimum of Rs 1lakhs to a maximum of Rs 25 Lakh. The mode and frequency of payment are the same as the base policy. The payment for both the rider premium and the base policy is to be made together.  There is nothing as paid-up value in the policy. This means that the rider benefit would cease to exist if the premiums are not paid. No additional documents are required for the same.

Terms and Conditions for Refund

As such, there is no surrender value attached to LIC Term Rider Policy. 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 and Free-look Period

Here is a rundown of revival benefit and free-look period under LIC Term Rider Plans:

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

If an Indian consumer has purchased the LIC Term Rider Policy but is not satisfied with the terms attached, they can generate a refund for the same. IRDA has created a provision for such cases known as the free look period. 

Under this provision, if an individual has bought a term rider policy 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 15 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.

Steps to Purchase the LIC Term Rider Policy Online 

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

Step 1:Visit the insurer’s site

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.

Over to you!

The base policy is not subject to customization, so an individual can opt for rider benefits to increase the overall financial coverage. 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.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
++Returns are 10 years returns of Nifty 100 Index benchmark

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