LIC recently launched an OFFLINE new term plan called LIC Yuva Term (Plan 875). Which is best among LIC Yuva Term, LIC Digi Term, or the LIC Tech Term plan?
LIC’s Digi Term is a Non-Par, Non-Linked, Life, Individual, Pure Risk Plan, which provides financial protection to the insured’s family in case of his/her unfortunate death during the policy term. This is a non-par product under which benefits payable on death are guaranteed and fixed irrespective of actual experience. Hence the policy is not entitled to any discretionary benefits like bonus etc. or share in Surplus. This plan offers special rates for women.
This plan shall be available OFFLINE only and can be purchased from the agents.
LIC Yuva Term (Plan 875) – Eligibility
Let us now check the eligibility of LIC Yuva Term (Plan 875)
- Minimum Age at entry – 18 years
- Maximum Age at entry – 45 years
- Minimum Age at Maturity – 33 years
- Maximum age at Maturity – 75 years
- Minimum Basic Sum Assured – Rs.50,00,000
- Maximum Basic Sum Assured – Rs.5,00,00,000
- Policy Term – 15 to 40 years under Regular/Single/Limited Premium of 10 years (20 to 40 years under Limited Premium of 15 years).
- Premium Payment Term – Regular, Limited Premium of 10 years, Limited Premium of 15 years and Single Premium.
- Option to receive Death Benefits in instalments over a period of 5 or 10 or 15 years instead of a lump sum amount under an in-force policy. This option can be exercised by Life Assured during his/her lifetime; for full or part of Death benefits payable under the policy. The amount opted by the Life Assured (i.e. Net Claim Amount) can be either in absolute value or as a percentage of the total claim proceeds payable.
- This policy will not offer any paid-up, surrender, or loan facilities as it is a term life insurance.
LIC Yuva Term (Plan 875) – Benefits
The benefits of LIC Yuva Term (Plan 875) are as follows.
Death Benefit –
The death benefit payable on the death of the Life Assured during the policy term after the date of commencement of risk but before the date of maturity provided the policy is in force and the claim is admissible shall be “Sum Assured on Death”.
Under Regular Premium and Limited premium payment, “Sum Assured on Death” is defined as the highest of:
- 7 times of Annualised Premium; or
- 105% of “Total Premiums Paid” up to the date of death; or
- Absolute amount assured to be paid on death.
Under Single premium payment, “Sum Assured on Death” is defined as the higher of: - 125% of Single Premium; or
- Absolute amount assured to be paid on death.
The death benefit payable under this plan depends on which option you have chosen at the time of buying the policy.
Option 1 (Level Sum Assured) means the sum assured will remain the same throughout the policy period – The amount to be paid on death will be an amount equal to Basic Sum Assured, which shall remain the same throughout the policy term.
Option 2 ( Increasing Sum Assured) – Under this feature, the sum assured to be paid on death will remain equal to the Basic Sum Assured up to the completion of the fifth policy year. After that, it increases by 10% of the Basic Sum Assured each year from the sixth policy year till the fifteenth policy year till it becomes twice the Basic Sum Assured. This increase will continue under an in-force policy till the end of the policy term; or till the Date of Death; or till the fifteenth policy year, whichever is earlier. From the sixteenth policy year and onwards, the sum assured to be paid on death remains constant i.e. twice the Basic Sum Assured till the policy term ends.
For example – Let us say you purchased Rs.1 Cr policy, then the sum assured payable at death during the first 5 years is Rs.1 Cr. From 6th year onwards, it will increase at the rate of 10% of Rs.1 Cr. During this year, the death benefit will be payable as per the incremental ratio (6th year – Rs.1,10,00,000, 7th year – Rs.1,20,00,000, and so on up to 15th year). After the 15th year, the sum assured payable at death will turn to double the basic sum assured you purchased (Rs.1 Cr). After this, there will not be any increment in sum assured. Instead, it will remain the same throughout the policy period.
Maturity Benefit –
On survival of the life assured to the end of the policy term, no maturity benefit is payable.
LIC Yuva Term (Plan 875) – Premium Illustration
Let us now look into the premium illustration of this plan.
Now I tried to compare the premium of LIC Yuva Term (Plan 875) with existing LIC Term Life Insurance of LIC Tech Term for a sum assured of Rs.50,00,000, term 20 years, age of the policyholder as 30 years, yearly premium, and level sum assured option, then the premium quoting for online purchase is Rs.5,250. You noticed that the premium is cheaper for LIC Tech Term (Rs.5,250) compared to LIC Yuva Term (Plan 875) (Rs.5,950) means a difference of 700. THIS IS THE COMMISSION OF AN AGENT IN THIS LIC Yuva Term (Plan 875) you have to pay!!
LIC Yuva Term (Plan 875) – Should you buy?
This plan is launched not to customers but to cater to its agents’ force. LIC already has an online term plan (Tech Term). Also, along with LIC Yuva Term (Plan 875), it launched an online term plan with the same features and benefits called LIC Digi Term (Plan 876). Hence, we can easily say that this plan is launched to cater to its agents’ force but not to the buyers.
I have already done the review of LIC Digi Term (Plan 876). You can refer to the same “LIC Digi Term (Plan 876) – Eligibility, Benefits and Review. As the difference is only in the premium due to the online and offline features of both these plans, I thought it is better to have a premium comparison of LIC Digi Term (Plan 876) and LIC Yuva Term (Plan 875). The below table illustrates the premium difference.
Due to its agents’ commission involvement in the LIC Yuva Term (Plan 875), you will end up paying a higher premium than the LIC Digi Term (Plan 876). Hence, I strongly suggest you stay away from LIC Yuva Term (Plan 875) and if you wish to go ahead with LIC’s term plan, then better to choose LIC Digi Term (Plan 876).
