LIC’s New Bima Bachat is a participating non-linked savings cum protection plan, where the premium is paid in a lump sum at the outset of the policy. It is a money-back plan which provides financial protection against death during the policy term with the provision of payment of survival benefits at specified durations during the policy term.
In addition, on maturity, the single premium shall be returned along with Loyalty Addition, if any. This plan also takes care of liquidity needs through its loan facility.
Features of this Policy – (Table 916)
- This policy is a single premium policy with a money-back and bonus option.
- This policy can be taken for a period of 9 yrs, 12 yrs, and 15 yrs.
- Policyholders who opt for higher sum assured are offered rebates by the Corporation.
- On completion of the policy term, the one-time premium is returned back to the policyholder along with the applicable loyalty bonus.
Benefits of the Policy –
a) Death Benefit –
The death benefit payable in case of death of the Life Assured before the Date of Maturity shall be as under –
- On death during the first five policy years -“Sum Assured on Death”.
- On death after completion of five policy years but before stipulated Date of Maturity -“Sum Assured on Death” along with Loyalty Addition if any.
Where “Sum Assured on Death” is defined as higher of Basic Sum Assured or 1.25 times of Single Premium.
Single-Premium referred above shall not include any taxes, rebates, extra premium and rider premium, if any. The Death Benefit shall be paid in a lump sum or in installments, as specified in Policy Document.
b) Survival Benefit –
On the Life Assured surviving to the end of the specified durations during the policy term, a fixed percentage of Basic Sum Assured shall be payable . The fixed percentage for various policy terms is as below –
- For policy term, 9 years – 15% of the Basic Sum Assured at the end of each of 3rd& 6th policy yea.
- For policy term, 12 years – 15% of the Basic Sum Assured at the end of each of 3rd, 6th& 9th policy year.
- For policy term, 15 years – 15% of the Basic Sum Assured at the end of each of 3rd, 6th, 9th& 12th policy year.
c) Maturity Benefit –
On Life Assured surviving the stipulated Date of Maturity, “ Sum Assured on Maturity” along with Loyalty Addition, if any, shall be payable. Where “Sum Assured on Maturity” is equal to Single Premium for Base Policy excluding extra premiums, taxes and rider premium(s), if any.
The Policyholder/Life Assured shall have an option to receive the Maturity benefit in a lump sum or in installments (Settlement Option), as specified in the Policy Document.
d) Rider Benefits –
There are two riders are available under this policy –
- LIC’s Accidental Death and Disability Benefit Rider
- LIC’s New Term Assurance Rider
These riders are available only at the inception of the policy on payment of additional premium.
e) Loyalty Addition –
Depending upon the Corporation’s experience the policies shall participate in the profits and shall be eligible for Loyalty Addition. The Loyalty Addition, if any, is payable on death after completion of five policy years and on policyholder surviving to maturity, at such rate, and on such terms as may be declared by the Corporation.
Eligibility Conditions of the Policy –
Is there any loan facility in the policy?
Yes, there is a loan facility available under the Policy within the surrender value of the policy –
- The loan can be availed anytime after the completion of one policy year.
- The maximum loan that can be granted shall be 90% of the Surrender Value of the Policy.
- The loan during the minority of Life Assured can be availed by the Proposer provided the loan is raised for the benefit of the minor Life Assured.
Is there a possibility if I can surrender the policy?
Yes, the policy can be surrendered by the policyholder at any time during the policy term. On surrender of the policy, the Corporation shall pay the Surrender Value equal to higher of Guaranteed Surrender Value and Special Surrender Value.
The Guaranteed Surrender Value allowable shall be as under –
- First-year – 75% of the ‘Single premium for Base Policy’.
- Thereafter – 90% of the ‘Single premium for Base Policy’ minus Survival Benefits already paid.
Single-Premium for Base policy referred above shall not include taxes, rider premium(s) & extra premium if any. No Surrender Value will be available on Rider(s) if any.
Can I return the policy, if I didn’t like the terms and conditions of the policy?
Yes, the policy can be returned to the corporation within 15 days from the date of receipt of the Policy Document by the Policyholder, stating the reason for objections. This 15 days period is called the Free Look Period.
On receipt of the same, the Corporation shall cancel the policy and return the amount of premium deposited after deducting the proportionate risk premium (for Base Policy and Rider, if opted for) for the period of cover and charges for medical examinations, special reports, if any and stamp duty.
Is there any tax benefit under this policy?
- Premium – The premiums paid are eligible for tax deduction under Section 80 C of the Income Tax Act, 1961.
- Survival or Maturity Benefits – The payouts received are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
- Death Benefits – The Claim amount paid on the death of the life insured is also completely tax-free.
Is there any option if death benefits can be taken in installments?
Yes, the option to receive Death Benefit in installments is allowed over the chosen period of 5 or 10 or 15 years instead of a lump-sum amount. This option can be exercised by the Policyholder during the minority of the Life Assured or by Life Assured aged 18 years and above, during his/her life time; for full or part of Death benefits payable under the policy.
Is there any settlement option available for maturity benefit?
Settlement Option is an option to receive Maturity Benefit in installments over the chosen period of 5 or 10 or 15 years instead of a lumpsum amount. This option can be exercised by the Policyholder during the minority of the Life Assured or by Life Assured aged 18 years and above, for full or part of Maturity proceeds payable under the policy.
Exclusions under the policy –
Suicide Exclusion –
If the Life Assured (whether sane or insane) commits suicide at any time within 12 months from the date of commencement of risk, under such case an amount which is higher of 90% of Single Premium for Base Policy (excluding any taxes, extra premium & rider premium other than term assurance rider, if any) or the Surrender value available as on date of death shall be payable.
Note – The Corporation will not entertain any other claim under this policy.
Conclusion –
So, by now you know each and every important detail about this policy. Do let me know if I have missed any important points in the comment section. Please feel free to ask any doubts regarding this policy.