New LIC term plans – same old story

by Manikaran Singal on February 11, 2014 Total Views: (95)


LIC has launched new LIC term plans as per the new guidelines issued by IRDA. One of the new guidelines for life insurers were to follow the mortality tables of 2006-08 as per IRDA’s Indian assured lives mortality 2006-2008. (Read : new guidelines for life insurers)

Since LIC was following an age old mortality rates, so the term insurance premium or mortality charges in general   was very high. The new LIC term plans now offers some reasonably better premium quotes at least as compared to their earlier versions. Let’s check this out in detail.

lic term plans

 

LIC term plans – in brief

 

LIC has 2 term plans in its kitty.  LIC Anmol Jeevan and LIC Amulya Jeevan. The name is similar to the earlier term products.  From the core, both of these are pure term insurance policies with only death benefit and no maturity benefit. The main differences in these 2 products are the minimum /maximum sum assured, maximum cover ceasing age and also the term of the plan.

Feature comparison of LIC term plans

 

lic term plans

LIC term plans – Premium comparison with other Insurers

As these days you can get online term plans which are comparatively much cheaper, so this comparison is between LIC term plans and some popular online term plans for a sum assured of Rs 24 lakh and Rs 1crore with a maximum term of 25 years. All comparison will be of a healthy, non-smoker male. And the premium quotes are exclusive of service tax

lic term plans

*Maximum cover ceasing age is 65 years, so term of 25 years is not available ; Birla easy protect doesn’t offer cover below Rs 50 lakh

Now the above calculation clearly shows that how costly the LIC term plans still are as compared to other insurance company’s term policies. Many would argue that the comparison of online plans with offline plans is not right , but as far as I know you can buy the online plans mentioned above of HDFC and Birla through agent also (means these plans are available offline too)and thus there would be hardly any difference in the online and offline approach.

(also read : LIC Money Back Plans review)

LIC Term plans – Conclusion

The premium rates of Both of new LIC term plans has considerably reduced as compared to their earlier versions but still even in this new avatar these plans are way too costly in comparison to others.  I always advise on having an adequate insurance coverage through term insurance plans being a cheapest option available. So, those of you who are avoiding term policies saying that you don’t trust private players and LIC policy is costly, they can go ahead now.  And for those who are not in love with LIC yet, they should consider the other cheaper options available.

Manikaran Singal

Founder and Chief Financial Planner at Good Moneying Financial Solutions
He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER and SEBI Registered Investment adviser. An ex banker , having a decade long experience in financial services industry he manages clients across the globe. He’s an active member of Financial Planners’ Guild India ( An association of practicing SEBI registered Investment advisers). He's very passionate in the financial planning space and with a view to spread financial literacy among masses he writes blog articles and also contributes and quoted in various media publications like Money control, Indian express, Business Bhaskar, Dainik Bhaskar, Money mantra magazine etc. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at info@goodmoneying.com

Latest posts by Manikaran Singal (see all)

Recommended for you:

{ 10 comments… read them below or add one }

Anonymous February 12, 2014 at 6:05 am

Sir, Very nice article. Thank you. I would like to know why is LIC not offering the term plans as online products as it is the pure protection plan and thereby reduce the burden on customers as they may not have to pay agent commission which i believe is about 25-40% .

Reply

Manikaran Singal February 15, 2014 at 6:30 am

Thanks for your appreciation.
With the rising competition and increasing awareness among people for online term plans , I think LIC will soon launch its online term plan. Now as you know that LIC has the largest agent force and online term plans offers very less commission so may be they are delaying online plans due to some opposition from agent community.
Still there are many other good and well established corporates which offers a very cost effective online term plans, so people can chk with them

Reply

B February 15, 2014 at 8:26 am

Why are you comparing on line plans of others (not sure about birla though) with LIC?? not may people with online purchase. pls compare with offline plans of other players with LIC….
though not a LIC fan… i think it is being pasted badly by all EXPERTS !!!

Reply

Manikaran Singal February 15, 2014 at 10:11 am

Mr B, u can buy many plans available online through agent too. I guess agent is the main difference between offline and online plans, right? Birla easy protect and HDFC click 2 protect as compared above with LIC are available through agents also. That’s why i don’t find any reason to not compare it with online plans.

Reply

B February 15, 2014 at 12:33 pm

u r correct presence/absence of agent is the main difference…..
“online plans can be bought though agents also”…….Thanks… thats a news for me…..
but will the premium increase if online plans are bought through agents????
if not that there is no reason not to buy these plans through agents……….

Reply

Manikaran Singal February 17, 2014 at 5:18 am

HDFC click 2 protect charges 2.5% extra on premium if bought through agents, i don’t know if they charge the same if you visit there local branch and ask for the policy. Birla easy protect does not charge anything extra, and i think this policy is available through agents only. ICICI I care as far as i know does not charge anything extra if bought through there local office people.
See…you have to explore a bit. Decide on the policy you want to buy and then lookout for the premium if bought through agents or direct.

Reply

B February 15, 2014 at 8:27 am

By no means the title ” the same old story” is correct…. the premiums have reduced considerably….

Reply

Manikaran Singal February 15, 2014 at 10:14 am

Same Old story only depicts that even after taking the new mortality rates, the premium costs are way too higher than other available policies.

Reply

B February 15, 2014 at 9:21 am

My calculation says that the premiums have been decreased by 0.77 times in amuly ajeevan.. (including ST)….

Reply

Manikaran Singal February 15, 2014 at 10:16 am

I can’t comment on the number of times but yes compared to earlier versions premiums have definitely reduced

Reply

Leave a Comment

Previous post:

Next post: