LIC) offers a range of insurance products to cater to the diverse needs of individuals. One such product is the LIC term insurance policy, which provides financial protection to your family in case of an unfortunate event. In this article, we will delve into the working of LIC term insurance policies, their benefits, and why they are crucial for securing your family’s future.
How Does an LIC Term Insurance Policy Work?
LIC term insurance policies are pure life insurance plans that provide coverage for a specific term. Here’s how they work
Choose the Coverage Amount and Term
As a policyholder, you need to select the coverage amount, also known as the sum assured, and the policy term. The sum assured represents the financial protection your family will receive in the event of your demise during the policy term.
You are required to pay regular premiums throughout the policy term. The premium amount is determined based on various factors such as age, health condition, sum assured, and term selected. It is advisable to choose a premium that fits within your budget and ensures continuous coverage.
Coverage and Death Benefit
In the unfortunate event of the policyholder’s death during the term of the policy, LIC provides the death benefit to the nominee or beneficiaries. The death benefit is the sum assured chosen at the inception of the policy.
No Maturity Benefit
Unlike other insurance policies, LIC term insurance plans do not provide any maturity benefit if the policyholder survives the policy term. These policies are designed solely to provide financial security to the family in the event of the policyholder’s untimely demise.
Benefits of LIC Term Insurance Policy
LIC term insurance policies offer high coverage at relatively lower premiums compared to other types of insurance plans. This makes it an affordable option for individuals looking for extensive life coverage.
Flexibility to Choose Policy Term
You have the flexibility to choose the term of the policy based on your specific needs. You can align the policy term with your financial obligations, such as the duration of a loan or until your retirement age.
LIC provides optional riders like accidental death benefit, critical illness benefit, and disability benefit, which can be added to the base term insurance policy by paying an additional premium. These riders enhance the coverage and provide additional financial security.
Premiums paid towards LIC term insurance policies are eligible for tax benefits under Section 80C of the Income Tax Act. Additionally, the death benefit received by the nominee is also tax-free under Section 10(10D).
Claim Settlement Process
In the event of the policyholder’s demise, the nominee needs to follow the claim settlement process to receive the death benefit. Here are the general steps involved
The nominee must intimate LIC about the unfortunate event by submitting the claim intimation form along with the required documents, including the death certificate.
- Document Verification
LIC verifies the submitted documents and processes the claim. In case of any discrepancies, LIC may request additional documents or information.
- Claim Settlement
Once the verification is complete, LIC settles the claim by providing the death benefit to the nominee or beneficiaries mentioned in the policy.
Frequently Asked Questions (FAQs)
Can I surrender an LIC term insurance policy before the completion of the policy term?
No, LIC term insurance policies do not have a surrender value as they are pure protection plans without any savings or investment component.
Can I revive a lapsed LIC term insurance policy?
Yes, you can revive a lapsed policy within the revival period specified by LIC, subject to fulfilling certain conditions and paying the outstanding premiums along with any applicable interest or charges.
Can I convert an LIC term insurance policy into a different type of policy?
No, LIC term insurance policies do not offer conversion options. If you wish to switch to a different type of policy, you would need to purchase a new policy as per your requirements.
Can I increase the sum assured of my existing LIC term insurance policy?
No, the sum assured of an existing LIC term insurance policy cannot be increased. However, you can consider purchasing an additional policy to enhance your coverage.
Can I nominate multiple beneficiaries for an LIC term insurance policy?
Yes, you can nominate multiple beneficiaries and specify the percentage of the sum assured each nominee should receive in case of your demise.
LIC term insurance policies provide a simple and affordable means of securing your family’s financial future. By understanding how these policies work, their benefits, and the claim settlement process, you can make an informed decision to protect your loved ones from unforeseen circumstances. Remember to carefully assess your needs and consult LIC representatives to choose the most suitable term insurance policy for your specific requirements.