LIC discontinued its earlier Tech Term Plan and launched its new version as LIC New Tech Term Plan Plan No. 954 (with effect from 23 November 2022). What are the differences between old tech term plan and new tech term plan in terms of premium, benefits and eligibility?
LIC’s new take-term is a non-linked, non-participating, individual, pure risk premium life insurance plan. This online plan provides financial protection to the family of the life assured in case of his unfortunate death during the policy term. The scheme will be available online only directly through the website.
Key features of LIC New Tech term plan are as follows –
Flexibility to choose from two benefit options: Level Sum Assured and Increasing Sum Assured. Flexibility to choose between single premium, regular premium and limited premium payment. Select the Policy Term/Premium Payment Term. Option to pay benefits in instalments. Special rates for ladies. Benefit of High Sum Assured Discount. Option to enhance coverage by opting for Accident Benefit Rider on payment of additional premium for rider benefit. LIC New Tech Term Plan – Eligibility
Let us look at the eligibility of LIC New Tech term plan.
Under Single Premium, the minimum premium will be Rs.30,000/-. Under regular and limited premium mode, the minimum premium will be Rs.3,000/-.
A grace period of 30 days is available for annual and half-yearly premium payment options.
LIC New Tech Term Plan – Benefits
As it is a term insurance plan, it has two advantages. One is Death Benefit and the other is Survival Benefit.
Death Benefit payable on 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 the “Sum Assured on Death”. For Regular Premium and Limited Premium Payment policies, the “Sum Assured on Death” is defined as the higher of the following:
7 times the annualized premium; or 105% of the “total premiums paid” till the date of death; or the full amount payable on death.
For a single premium policy, the “Sum Assured on Death” is defined as the higher of:
Single premium payable on death 125% of the Sum Assured. where,
a) “Annual Premium” shall be the premium payable in the year chosen by the policyholder, inclusive of taxes, rider premium, underwriting additional premium and loading for modal premium, if any, and
b) “Total Premiums Paid” means the aggregate of all premiums received excluding any additional premiums, any rider premiums and taxes.
c) The Absolute Sum Assured to be paid on death will depend on the Death Benefit option chosen at the time of taking this policy and is as follows:
For Option 1 – Level Sum Assured
The Absolute amount paid on death will be an amount equal to the Basic Sum Assured, which will remain the same throughout the policy term.
For Option 2 – Increasing Sum Assured
The entire amount payable on death will remain equal to the Basic Sum Assured till the completion of the fifth policy year. Thereafter, it increases every year by 10% of the Basic Sum Assured from the 6th policy year to the 15th policy year, till it becomes double of the Basic Sum Assured. This increase will continue till the end of the policy term under the policy in force; or till the date of death; or up to 15th policy year, whichever is earlier. From the sixteenth policy year onwards, the absolute amount payable on death remains constant, i.e. twice the Basic Sum Assured till the end of the policy term.
For example, Rs. X will be Rs. X By the end of 5th policy year, Rs. 1.1X during the 6th policy year, 1.2X during the 7th policy year, thus increasing from 10% of the Basic Sum Assured each year to 2X in the 15th policy year. From the sixteenth policy year and onwards, the Absolute Sum Assured to be paid on death will be 2X.
The Death Benefit option once chosen cannot be changed later.
Riders Available in LIC New Tech Term Policy # Accidental Rider
If this rider is opted for, then in case of accidental death, the Accident Benefit Rider Sum Assured will be payable in lumpsum along with the death benefit under the base plan.
The premium under this rider shall not exceed 100% of the premium under the base plan. The Accident Benefit Sum Assured shall not exceed the Basic Sum Assured under the policy.
# Option to take death benefit in installments:
This is an option to receive the death benefit in installments over a period of 5 years instead of a lump sum amount under the policy in force. This option can be exercised by the Life Assured during his lifetime; For full or part of the death benefit payable under the policy. Sum chosen by the Life Assured
(i.e. net claim amount) can be either in absolute value or as a percentage of the total claim amount payable.
Installments will be paid at yearly or half-yearly or quarterly or monthly intervals, as opted for, subject to a minimum installment amount for different modes of payment:
Monthly – Rs 5,000, Quarterly – Rs 15,000, Half-yearly – Rs 25,000 and Yearly – Rs 50,000.
If the Net Claim Amount is less than the amount required to provide the minimum premium amount as per the option exercised by the Insured, then the Claim Amount will be paid in lump sum only.
To exercise the option to receive the death benefit in instalments, the Life Assured may exercise this option during his life time, while specifying the Net Claim Amount, in the policy currency, for which the option is to be exercised. Thereafter the death claim amount will be paid to the nominee as per the option chosen by the life assured and no change will be allowed by the nominee.
How to Buy LIC New Tech Term Plan Online?
Step-by-step process to buy LIC’s new take-term online:
1) Log-on to our website (www.licindia.in) to buy this product online. Click on ‘Buy Policies Online’. Select LIC’s new technology-term plan.
2) Click on ‘Buy Online’. Select your desired Sum Assured, Sum Assured Option (Level/Increasing), Policy Term, Premium Payment Option (Regular/Limited/Single) and Premium Payment Mode (Yearly/Half Yearly) for Regular and Limited Premium Payment Options, Date of Birth, Gender and smoking status.
3) After filling the details, a premium calculator will calculate the premium or the chosen parameters.
4) Enter other details such as name, address, occupation, qualification etc. displayed on the screen and complete the proposal form online.
5) Pay the premium online and fulfill the underwriting requirements, if any.
Difference between LIC Tech Term and LIC New Tech Term
In terms of features, LIC earlier offered a single premium feature. This time, he pulled it off. Everything else looks the same.
The biggest surprise is the premium change. Long ago, I wrote a post on the term plans available in LIC. You can check it on “LIC Term Insurance Plan 2020 – Features and Benefits”. There I have taken the example of a 24 year old youth who has opted for Rs 1 crore life insurance with premium payment option of 36 years (60 years of his age) and has not opted for any rider. For that, the premium showed Rs 9,346. However, when I calculated the premium with this new technical term, the premium is showing Rs 10,614. If GST is added then it is showing Rs 12,525. Check the below screen for the same.
Therefore, it is confirmed that by launching the new term plan and discontinuing the old version, LIC has indeed increased the premium. All other key benefits remained the same.
LIC New Tech Term Plan – Should You Buy?
# As all the features are same and only premium is enhanced as compared to previous version, you don’t need to get fancy with new launch. Instead, cross-check with private players and choose the one that is convenient for you.
# The coverage of the policy is up to the age of 80 years. Even if you do not need life insurance till the age of 80 years, but LIC has added this feature to give competition to private players. So, it’s an attractive move.
# The Increasing Sum Assured option has certain limitations. Because even if you have opted for increasing the Sum Assured, this increasing Sum Assured is not applicable for the first 5 years. Also, this increasing Sum Assured will keep on increasing from the 6th year till the end of the policy term; or till the date of death; or up to 15th policy year, whichever is earlier. Once it reaches this limit, the available sum assured is twice the base sum assured chosen by you. So, be careful while choosing this option.
Overall, we can call this new tech term policy as an old policy with new increased premium.