Life insurance is a contract between an insurance policyholder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). The policyholder typically pays a premium, either regularly or as one lump sum.
In addition to providing protection, life insurance can also be a part of a comprehensive financial plan. Many people believe that they don’t need life insurance if they don’t have dependents. The truth is, even without dependents, life insurance can be a great way to save for future goals such as retirement. Thus life insurance can play an important, and flexible, role.
LIC of India, the nation’s largest life insurance company, offers a wide range of life products for different eventualities. Let’s look at the most common varieties:
1. Term Life Plans
Term assurance provides life insurance coverage for a specified term and is life insurance in its most basic and cheapest form. You pay premium in lumpsum or regularly over a period of time, for a sum assured for a specified period chosen by you (the term), which is the amount of money your beneficiary receives if you die unexpectedly during the specified term chosen by you.
Term life policies, such as LIC’s Anmol Jeevan II and LIC’s Amulya Jeevan II, guarantee a sum assured payable on death during the chosen policy term.
LIC’s e-Term plan is an online only term plan and an easy and cost-effective way to protect your family. This plan is available through online application process only and no intermediaries are involved.
2. Endowment Plans
Endowment is a combination of protection and savings whereby the money will be paid on your survival to the end of the specific term chosen by you or is paid to your nominated beneficiary in case of your unfortunate demise during the term. Thus, your dependents are protected in case of your unexpected death, and you also get a return on the premiums paid at the end of the term.
While buying LIC’s endowment plans, you can choose whether you would like to pay a regular premium (LIC’s New Endowment Plan), single premium (LIC’s Single Premium Endowment Plan) or pay premium for a term less than the full policy term (LIC’s Limited Premium Endowment Plan/LIC’s Jeevan Labh).
LIC offers many variations in endowment type plans fulfilling your different needs such as periodic return of money, annual income benefit, automatic increase in death cover, receiving (i.e. Maturity Benefit or Death Benefit) in instalments etc.
In case you wish to receive money at periodic intervals during the term of the policy, you can opt for LIC’s New Money Back plans. Besides providing life cover during the term (20 & 25 years) of the policy, survival benefits at specified durations linked to the sum assured during the term of the policy are available. On maturity, the balance sum assured along with accrued bonuses is payable. In case you have lump sum money to invest and desire to receive payments at periodic intervals, then you can opt for LIC’s New Bima Bachat. On maturity, the lump sum premium paid along with Loyalty addition, if any, is payable.
If you wish to receive claim amount in instalments, you can opt for settlement option vide which you can receive the claim amount in instalments over the chosen period (5/10/15 years) or chosen frequency (yearly/half yearly/quarterly/monthly).
LIC’s Jeevan Lakshya provides for Annual Income benefit that will help to fulfil the needs of the family, in case of unfortunate death of Policyholder any time before maturity and a lump sum amount at the time of maturity irrespective of survival of the Policyholder. In case you wish to increase your risk cover automatically, you can take LIC’s Jeevan Pragati wherein the risk cover automatically increases every five years during the term of the policy.
Though most of LIC’s plans are available for minors also, there are few plans specifically designed for children only. New Children’s Money Back Plan provides life cover during the policy term, and survival benefits as a percentage of sum assured, payable after every two years starting from age 18 years to 22 years. In addition to it, LIC’s Jeevan Tarun allows you to choose between the four available options so as to decide the proportion of survival benefits (0%, 5%, 10% and 15%) to be availed each year from age 20 years to 24 years. On maturity at the age of 25 years, the balance sum assured along with the accrued bonuses will be payable.