Importance of LIC Term Plan

Slug: It is the easiest, and most necessary, thing to get an LIC Term Plan. Here’s how to get it.

Within a month of having our first salary credited to our bank account, most of us are advised by our parents to begin to think of purchasing life insurance plans. And what a great task to saddle us with at such a juncture! Thank god for the simple life insurance products, with the simplest being a term plan—and our vote going to the LIC Term Plan. A term insurance is a simple life insurance aimed at providing cover (security) for a term (specific period of time). Typically, such plans offer death benefit to the family of policyholder if s/he dies within the policy term of an active policy.

Best features of LIC Term Plan

While simplicity is the hallmark of an LIC Term Plan, it’s not its only great feature. An LIC Term Plan is also remarkable in that –

  • It attracts the lowest premiums: The premium for an LIC Term Plan is peanuts compared to similarly valued plans from other companies or other plans. For example, an LIC Term Plan of 25 years for Rs. 25 lakh sum assured for a 30 year old young working male will attract an annual premium of less than about Rs. 5,000. Keeping the death benefit same, the annual premium of an endowment policy without profits will easily be more Rs. 30,000.

A Term Plan is best for people with moderate income but who need large covers to secure the financial future of their family. In that line of logic, people embarking on business ventures should save on costs by buying term insurance for security at a low cost. However, one must note that there is no maturity benefit payable under a term plan as these are pure protection plans with no savings components in them.

  • It is flexible: Most LIC term plans are easily available without being tasked with a medical examination. LIC term plans offer you the flexibility of choosing the sum assured most appropriate to you. Along with it you also get to choose the policy term and frequency of your premium payments i.e. yearly or half-yearly as per your convenience.

Meanwhile, in an LIC Term Plan, when you cease paying the premium the risk cover stops as does the plan and nothing is paid back. As simple as that!

  • It comes with Tax Benefit: The premium paid for your LIC Term Plan insurance is eligible for tax benefit under section 80C. The death benefit paid to your nominees is also tax-free under section 10 (10D) of the Income Tax Act, 1961.

Ways to Calculate Premium

The next step is to know how to calculate the premium of an insurance plan, especially a term plan in our case. The best way for a layperson to calculate premium is to use an online premium calculator and you will have a quote within ten minutes.

Typically you will be asked for details such as:

  1. Personal details like gender, age, marital status, number of children, occupation and income, and other insurance plans. Since medical history and habits (such as smoking and drinking) affect your longevity, expect queries on those lines as well.
  2. The sum assured you have in mind and the policy term.

Take these two steps and you will receive the quote for your personalised LIC Term Plan.

How to Buy LIC Term Plan Online?

LIC began offering online term plans many years ago, and has not looked back since. Get on Coverfox.com, look up the life insurance segment and get to term insurance calculator > give the required details about yourself, your income, your lifestyle habits, choose the required sum assured along with the period you want yourself covered for and get an instant quote and that’s all there is to it.  

LIC the brand

Being state-owned is not the only contributing factor to LIC market leader status, there is also its highest claim settlement record in the industry. Investors need to remember that term insurance plan is vital to healthy financial planning and the brand you insure with is as essential. So always go for the best.