What is policy term in LIC?

Meaning of Policy Term 

To help you understand policy term better, let’s take you through the basic aspect of a life insurance policy. 

Life insurance is a promise between the insurance company and the policyholder to offer financial backing to the latter in case of emergencies. In exchange for this protection, the policyholder pays premiums as per the financial coverage promised to him. Now, there are different types of life insurance plans - ones that last for only a specific period or those that go on for the entirety of the policyholder’s life. 

The period for which these plans offer protection to the life assured is known as the policy term in life insurance. Policy term in LIC plans are no different. 

About Policy Term in LIC Plans

Here are some important details regarding the policy term in LIC plans - 

• Policyholders are given the choice to pick a policy term based on their needs. 

• During this period, if the life assured suffers from any unfortunate event such as his/her death, the nominees of the LIC policy can claim the benefits. 

• If death of the life assured occurs after the end of the policy term, no benefits apply unless the policy has been renewed. 

• The benefits of LIC plans are not only limited to the death of the life assured. Any total or permanent disability, accidental deaths, critical illnesses can also be covered if specific riders are added to the plan. 

• LIC plans offer a maturity benefit at the end of the policy term, except term insurance plan. 

• Some money-back plans come with survival benefits that are paid out on completing certain policy years within the policy term. 

• If the policyholder wishes to end their LIC cover before the policy term ends, they can do so on paying a minimum of 2-3 years’ premiums. This entitles the policyholder to a certain sum of money called the surrender value. 

How to choose the policy term for LIC plans?

Policy term is the duration for which you remain protected under a life cover. It should be chosen based on your current age, future goals such as savings, child planning, retirement age, existing medical conditions, among others. LIC child plans and annuity plans can help you serve these goals. 

Ideally the policy term should continue through your employment years. This compensates for a loss of income should anything happen to you. If you are the sole earning member of your family and in your late 30s to 40s, you should look for whole life covers that offer protection throughout your life. 

Policy Terms in LIC Plans by Type

Each type of insurance policy offered by the Life Insurance Corporation of India comes with a standard range of policy terms to choose from. Here’s a look at some policy terms associated with LIC plans.