The biggest insurance company of India the LIC has come with another insurance plan. The LIC Bima Diamond plan is the new Money Back insurance policy from LIC. It is a non-linked, traditional money back insurance policy. This plan is launched on the occasion of the diamond jubilee celebration of the LIC. The LIC has completed 60 years in 2016. This plan is open up to 31 August 2017.
With the launch of the LIC Bima Diamond policy, the LIC has also declared special one time Diamond Jubilee Bonus. This bonus is in addition to Simple Reversionary bonus, Final additional bonus and Loyalty additions. The diamond jubilee bonus would be from Rs 5 to Rs 60 per thousand. The actual bonus amount depends upon the policy.
LIC Bima Diamond Plan Features
As I have told the Bima Diamond Plan of LIC is endowment traditional plan. It means this plan would give some guaranteed return. Along with this you would get the bonus and loyalty additions. However, you must check out the return on this policy. The Endowment plans are notorious for their low returns. These are the features of LIC Bima Diamond Policy.
Life Cover
The LIC Bima Diamond Plan gives insurance cover during the policy period and even after that. However sum assured differs according to premium payment period. There are three types of death benefit.
- If death happens during first five years of the policy, the family would get the promised sum assured
- If the death happens after five years the family would get the promised sum assured and loyalty additions if any.
- If the policyholder dies after the end of policy but during the extended cover period, the family would get 50% of the sum assured.
Money-Back
As this is a moneyback endowment plan. LIC Bima diamond plan gives a fixed amount after a fixed interval. In fact, You will get a fixed percentage of sum assured after every 4 years. Most of the LIC policies had moneyback feature after 5 years. In a 16-years policy, you would get moneyback 3 times.
These are the rates of moneyback after every 4 years. Note, this moneyback is given from the sum assured hence your basic sum assured would be less on maturity.
- For policy term 16 years: 15% of Basic Sum Assured at the end of 4th, 8th and 12th policy year
- For policy term 20 years: 15% of Basic Sum Assured at the end of 4th, 8th, 12th and 16th policy year
- For 24 year policy: 12% of Basic Sum Assured at the end of 4th, 8th, 12th, 16th and 20th policy year
Maturity Benefit
Along with the money back after every 4 years, the LIC Bima Diamond Plan gives the maturity benefit at the end of the the policy. In fact, this maturity benefit is the remaining amount of basic sum assured.
Suppose the sum assured of 16-year policy is Rs 10 lacs then you would get Rs 1.5 lac after every 4 year that is three times. At the time of maturity, you would get the remaining 5.5 lacs as maturity benefit.
Thus the maturity amount of different tenure is as follows. It is the percentage of basic sum assured.
16-year policy – 55%
20-year policy – 40%
24-year policy – 40%
Extended protection
The LIC bima diamond plan gives you the benefit of extended protection. It means you would keep getting life cover even after the policy tenure ends. The period of extended cover would be the half of the policy tenure. Suppose, you choose a 16-year tenure policy. In this case your life cover would be for 24 years ( 16+8 years). The life cover for extended tenure would be half of the basic sum assured.
Automatic Life Cover
You would get life cover even after non-payment of the premium. This is termed as the auto cover. The period of auto cover is also decided on the basis of premium paid.
- If you have not paid the premium for at least 3 years, there would not be any auto cover.
- Premium paid for 3 years but less than 5 years, there would be auto cover for 6 months.
- If you have paid premium for at least 5 years, the auto cover would be for 2 years.
Bonus of LIC Bima Diamond Plan
This plan does not give any regular annual bonus. The simple reversionary bonus is not applicable to this plan.
Loyalty Additions
The LIC Bima Diamond plan gives loyalty additions after the payment all the premiums or on death after 5 years. LIC declares loyalty addition time to time. It depends upon the surplus of the LIC. Loyalty addition is also factored in while calculating the surrender value of the LIC Bima Diamond Plan.
Minimum Sum Assured
The minimum sum assured for the LIC Bima Diamond Plans should be Rs 1 lac.
Maximum Sum Assured
The LIC Bima diamond plan does not give you much flexibility of sum assured. You can’t have sum assured of more than Rs 5 lacs. Sum assured should be in multiples of Rs 20 thousand.
Premium Paying Terms
The premium paying term of this policy is less than the policy tenure. For the policy of 16 years, the premium paying term is 10 years. For the policy of 10 years, the premium paying duration is 12 years. You have to pay the premium for 15 years for the policy of 24 years.
Minimum Age at Entry
The LIC Bima diamond is a traditional moneyback plan. Hence, It is also presented for the children. You can take this policy for your son or daughter who is below the age of 18. The minimum age for this policy is 14 years.
Maximum Age To buy LIC Bima Diamond Plan
The maximum age depend upon the tenure of the policy.
Policy Tenure (Years) | Maximum Entry Age (Years) |
16 | 50 |
20 | 45 |
24 | 41 |
Premium of LIC Bima Diamond Plan
This plan charges a high premium. I am giving you the sample premium for Rs 5 lacs sum assured. Premiums are given for all the three tenures. Note, these premium amounts are excluding service tax.
Annual Premium of Sum Assured Rs 5 lacs |
|||
Different tenures (in Rs) | |||
Age | 16 | 20 | 24 |
20 | 43,900 | 37,075 | 30,025 |
30 | 44,450 | 37,850 | 30,875 |
40 | 46,125 | 39,850 | 33,025 |
Rebate on Premium
1. Because of Frequency of Premium Payment
You would also get some rebate if you pay the premium yearly and half yearly. Thus the above-quoted premium would slightly come down if you pay yearly or half yearly.
Annual Payment – 2%
Half yearly Payment – 1%
Quarterly, monthly – Nil
2. Because of High Sum Assured
It also gives some rebate on premium if the sum assured is high.
Basic Sum Assured | Rebate |
Below 2 lacs | Nil |
2 – 4.8 lacs | 2.5%0 of basic sum assured |
5 lacs | 3%0 of basic sum assured |
Other Important Features
Optional Rider
You can take two riders along with the LIC Bima Diamond plan. You have to pay extra for the rider. The rider sum assured can’t exceed the basic sum assured of the LIC Bima Diamond plan.
- Accidental Death and Disability Benefit Rider
- New Term Assurance Rider
Lapse And Revival of Policy
After the due date of policy, you get a grace period of 30 days (15 days for monthly payments). If you don’t pay the premium even during the grace period, the LIC Bima diamond plan gets lapsed. After the policy lapse, you get ‘auto cover’ up to 2 years.
After the policy lapse, you get the chance to revive the policy. You have two years to revive the policy. The revival of the policy can be done by paying the unpaid premium along with the interest. LIC decides the interest rate every year. You can also revive the rider along with the LIC diamond plan.
However, you should note that LIC takes the final decision of revival. It can also change the original terms and condition if there is a reason to do this.
Paid-Up Policy
If you don’t revive the policy up to two years of non-payment, the LIC never gives you full basic sum assured and future bonus. Rather you would get only the paid up value of the policy on maturity. The basic sum assured for the death cover is also reduced to the paid up value.
The calculation of paid up value is done on the basis of premium paid.
Surrender Value
You can also surrender the LIC Bima diamond plan anytime. As a result, you get the surrender value of the policy. The surrender value is always less than the paid-up value as you get it immediately.
However, you should not forget that any policy does not give the surrender value if you have not paid the premium for at least three years.
Loan on Policy
You can also take a loan from the LIC against this policy. The interest rate of LIC is generally very low. For FY 2016-17, it is fixed at 10%.
The maximum loan amount is based on the surrender value of policy.
Status of Policy | Maximum Loan
(Percentage of Surrender Value) |
In Force (All the due Premium Paid) | 90% |
Paid Up policy | 80% |
LIC Bima Diamond Plan Benefits
- This plan gives you regular return. So it can be used for the child education.
- You pay for less period while life cover is available for long periods. If you pay the premium for 12 years the life cover would be up to 24 years.
- It gives necessary life cover to those as well who has missed the premium payment. So a temporary adversity would not leave you unprotected.
SnapShot of LIC Bima Diamond Insurance Policy
- Money Back every 4th year
- Extended cover period for half of the policy term after end of policy term
- Auto cover for 2 years if at least 5 full year premium is already paid by the life assured.
- Minimum Sum assured- Rs. 100000
- Maximum Sum Assured- Rs. 500000
- Policy term- 16-10, 20-12 and 24-15
- Minimum entry age- 14 yrs (Completed)
In this post, I have only told you the features of LIC Bima Diamond Plan. I have not evaluated the plan in this post. Before taking any final decision on LIC Bima Diamond policy, you must read the review of LIC Bima Diamond Plan. Particularly, you should go through the rate of return from this policy. You must know that whether this policy gives a better return than PPF , EPF or NSC.