Can LIC of India policy act as a back up for Term Insurance policy from private companies?

POSTED BY Harsh ON November 25, 2012 11:25 pm ONE COMMENT

Hello Friends,

I am asking a commonly asked question and seems to know the answer. But I have been confused by my LIC agent, please help.

I have a four year old Jeevan Mitra Policy (Triple Cover) with Sum Assured of 2 lakh (maybe 6 lakh considering its cover) due for premium payment this month. just 4 months ago I took a term insurance from Aviva with sum assured of 1 crore.

Premium for both of them is almost same – around 8k. I also have critical illeness rider with Aviva for 10lakhs sum assured for additional 3.5K premium.

##NOW the confusion part: I was hell bent on discontinuing LIC policy considering it gives very less cover and I have enough coverage from term insurance. but the LIC agent told me that you can’t trust private insurers and shud have a back of LIC in case anything happens to you. He reasons for just 8k you have a back up in case Aviva wont respect your claim in case of loss of life.

My liabilties include 26L home loan and a kid to support that’s why I covered myself.

Do you think I should listen to LIC agent? I have taken every care while taking Aviva policy – health check up, family history, declaring all policies etc.

Please do help. many thanks in advance.

One reply on this article “Can LIC of India policy act as a back up for Term Insurance policy from private companies?”

  1. Bond Bhai says:

    An agent is just another person who you can get “information” from. You never “trust” an agent to make a decision. You get the information/details from agents and do your own analysis and then make a decision. An agent gets commission for any product he sells, in this case you are his source of income. The commission is sometimes as high as 40%! If you do cancel, he will lose a source of income. So, based on his “vested” interest he is going to say all sorts of nonsense to retain you (like a private company will never honor your Term insurance etc).

    And why would Aviva not respect a claim? If everything is in order and as per the policy, there should be no issues honoring the claim at all! Go ahead and cancel the Policy (after you have made sufficient research whether the product is really a loss or not).

    Also, if you really cannot “trust” a private company like Aviva, you can split it 50-50, say 50% in SBI Life/HDFC etc and the other with Aviva.

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