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LIC New Term Assurance Rider Plan

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LIC New Term Assurance Rider Plan – An Overview

The Life Insurance Corporation of India has established itself as one of the leading insurance providers over the years. The biggest mystery of life is its uncertainty, and it pays to be prepared for any unforeseen unfortunate event that may occur. Life insurance plans are a way of creating a financially protected future for oneself and their loved ones.

Simple term plans only provide protection for the policy tenure and does not offer any maturity benefits or bonuses. Generally, basic term plans are simple, have a lower premium compared to other plans, do not offer investment or a savings option, and also have far fewer intrinsic benefits compared to other plans. However, the LIC of India offers a lot of add on benefits or riders that can be bought along with a basic term plan, to obtain additional benefits or coverage.

The LIC New Term Assurance Rider Plan is an add-on benefit that can be bought along with a basic plan. This term assurance rider provides protection or cover to the policyholder, for the entirety of the policy tenure and offers a death benefit to the nominees in case of the unfortunate demise of the policyholder before the end of the policy tenure.

What is the LIC New Term Assurance Rider Plan?

This is a new add-on benefit offered by the LIC that has to be bought along with a basic plan. It only provides a death benefit that will be equal to or less than the maximum sum assured that is offered for the base policy.

This option is only a rider and has to be bought as an add on, along with another plan, and cannot be bought as a standalone. The main advantage of this term assurance rider is that it offers an added death benefit to the base plan, at a very nominal cost.

It is essential to know that the LIC of India offers a "free look period" of 15 days, which means the policyholder can cancel the plan within 2 weeks of buying the policy and upon receipt of documents, provided no claims have been made within then. This provides the policyholder enough time to assess the usefulness of the chosen plan and rider with regards to their needs.

Features and Benefits of the LIC New Term Assurance Rider Plan

LIC New Term Assurance Rider plan comes packed with a set of key features and core benefits. These are described below:

Features of the New Term Assurance Rider by LIC

Here is a rundown to the salient features of the New Term Assurance Rider by Life Insurance Corporation of India (LIC of India):

  • The LIC New Term Assurance Rider Plan is a pure term rider that only offers a death benefit
  • It comes with low and affordable premiums
  • The rider has to be bought with a base plan and not as a standalone
  • The rider has to be bought at the time of buying the base plan
  • This rider can be added to traditional life insurance plans and not to ULIPs (Unit Linked Insurance Plans)
  • This rider does not offer a maturity benefit to the policyholder in case he or she outlives the policy term
  • The maximum term assurance rider sum assured will be equal to, or less than the sum assured offered for the base policy to which it is attached and will not be more than 25 Lakh
  • Grace Period: The LIC offers a grace period of 30 days for premium payment in case of quarterly, half-yearly, and annual premium payment frequencies and a grace period of 15 days for monthly premium payments
  • If the base plan offers discounts in the premium based on the premium paying frequency, the same shall be applicable for the rider also
  • Cooling-off Period: LIC offers a cooling-off period of 15 days within which the policyholder can cancel the rider if he or she is dissatisfied with it. The cooling-off period is the same as the free look period and starts from the day of purchase of the base plan. The premium paid for the rider will be returned to the policyholder after the deduction of relevant expenses
  • The premium payment term and the premium payment frequency for the rider will be similar to that of the base plan
  • The LIC New Term Assurance Rider premiums have to be paid along with the applicable taxes, only along with the premium for the base policy, and cannot be paid separately
  • Once the benefit has been claimed, the further premium cannot be charged towards this rider
  • The additional premium paid for buying this rider will not be taken into account for calculating the death benefit of the base policy and also for calculating the surrender value of the base policy
  • Termination of the LIC New Term Assurance Rider: This new term assurance rider will terminate under the following conditions:
    • Upon early death of the policyholder before completion of the policy term, wherein a death benefit shall be paid to the policyholder's nominee
    • Upon the date of expiry of the LIC New Term Assurance Rider
    • Upon termination of the base plan to which the new term assurance rider has been attached
    • Upon surrender of the base plan

Core Benefits of the New Term Assurance Rider

Benefits offered by the new term assurance rider by Life Insurance Corporation (LIC) of India are as follows:

Death benefit

Upon the death of the policyholder, before policy tenure ends, the nominee will get a rider sum assured, which is the death benefit. The death benefit will be 105% of the total premiums paid up to the date of death of the policyholder.

Maturity benefit

The LIC New Term Assurance Rider Plan does not offer any maturity benefits if the life assured outlives the policy term.

Tax benefit

The premiums paid are subject to tax exemption as per Section 80C, and the claims received are exempt from taxation according to Section 10(D) of The Income Tax Act, 1961. The tax benefit is, however, subject to changes in the tax laws of the country.

Surrender benefit

The base plan is applicable for a surrender benefit, and a surrender value will be paid to the policyholder upon surrendering the plan, subject to certain terms and conditions. The LIC New Term Assurance Rider alone has no surrender value as such but the premium paid for the rider will be refunded to a certain extent, depending upon the plan type and the premium payment mode. Any plan is eligible for a surrender value only if surrendered after 2 completed years of policy term with all the premiums paid up until that point.

Surrender value for the various types of plans:

  • In the case of Single pay plans- 90% of the premiums paid if the plan is surrendered after 2 completed years of the policy term, with full premium payments
  • In the case of Limited pay plans- 75% of the premiums paid if the plan is surrendered after 3 completed years of the policy term, with full premium payments done
  • In case of regular premium plans, no amount will be refunded to the policyholder upon surrender of the plan

Inclusions of the LIC New Term Assurance Rider Plan

The following are the inclusions of the LIC New Term Assurance Rider Plan:

  • An assured term assurance rider benefit that is equal to or less than the maximum sum assured in the base plan
  • A savings component, as this rider can also be added on to any type of investment cum protection plans
  • Rebate for premium payment mode and high sum assured:
    • For premium payment mode rebate: Will be the same as that of the base plan
    • For high sum assured: No rebate will be offered

Exclusions of the Plan

Here is a rundown to the key exclusions of the New Term Assurance Rider Plan by LIC of India:

  • The LIC New Term Assurance Rider Plan is simply an add on, and as such does not come with any specific exclusions, however, the exclusions applicable to the base plan will also be applicable to the rider
  • Suicide Claim Provision Exclusions – Since this rider is not issued as a standalone and is attached to a base plan, the suicide claim provision mentioned in the base plan will be applicable to the new term assurance rider as well.
  • 80% of the premiums will be paid to the nominee if the suicide occurs within 12 months from the date of purchase of the policy along with the new term assurance rider
  • Higher of 80% of the premiums paid till the death of the policyholder or the surrender value that is available, if the suicide occurs within 12 months of the revival of the policy

Eligibility Criteria for the LIC New Term Assurance Rider Plan

The following table shows the eligibility criteria for applying for the LIC New Term Assurance Rider Plan. Only those fulfilling these criteria will be eligible to apply for the new term assurance rider plan of LIC.

Parameters

Eligibility Criteria

Age at Entry

Minimum: 18 years

Maximum: 60 years

Maximum Maturity Age

75 years

Policy Term (PT)

5 years – 35 years

Premium Paying Term (PPT)

As long as the base policy term

Premium Payment Frequency

Monthly/ Quarterly/ Half-yearly/ Annually

Premium Amount

Depends on the policyholder's age, the sum assured the policy term and the PPT.

Sum Assured

Minimum: 1 Lakh

Maximum: 25 Lakh

Claim Process for the LIC New Term Assurance Rider Plan

The claim process for the death benefit should be started within 90 days from the date of death of the policyholder.

An intimation of death, along with the death certificate, must be sent in writing to the LIC office where the policy was bought. In case of any delay in intimation of the death of the policyholder by the claimant, the corporate office may condone the delay provided the reason for delay proved to be beyond his/ her control.

The necessary documents must also be submitted to the office of the corporation where the policy is serviced for processing the death claim.

Documents required to Claim under the LIC New Term Assurance Rider Plan

The below-mentioned documents are necessary for submitting a claim under the LIC New Term Assurance Rider Plan:

  • Death benefit claim form duly filled and signed
  • Proof of death: Death certificate
  • Documents supporting any medical treatment obtained prior to death (if any applicable)
  • Original policy document
  • School/ college/employer's certificate, whichever is applicable to the insurance providers' satisfaction
  • Proof of age of the life assured if the age is not admitted under the policy
  • Apart from these documents, any other document required as mandated under statutory provisions also needs to be submitted

How to buy the LIC New Term Assurance Rider Plan?

Any LIC insurance plan can be bought either online or offline.

Online purchase of a LIC plan and the LIC New Term Assurance Rider:

From the official LIC website online

Step 1: Visit the official website of the LIC of India.

Step 2: Browse through the various life insurance policies listed and choose a base plan that fits the policyholder's needs.

Step 3: Enter the required personal information when prompted by the website.

Step 4: Click on the "I agree" box provided at the end of the page.

Step 5: Enter the required policy details such as policyholder's name, age, the sum assured, policy term, etc. Upon clicking on the "calculate premium" button, the website will calculate the premium that needs to be paid and generate the result.

Step 6: Click on "proceed." On the next page, a list of the riders or add-ons offered by the LIC of India for the chosen plan will be generated. Choose the LIC New Term Assurance Rider and any other add-ons that may be required.

Step 7: Upload the necessary documents.

Step 8: Read the terms and conditions of the policy and agree to them

Step 9: Make sure that the information provided is true and correct

Step 10: Enter the bank details

Step 11: Proceed to the online payment process. Payment can be made through NEFT or credit/ debit cards or internet banking, e-wallets, etc.

Once the payment has been successfully made, the policyholder will be sent the policy documents.

Offline purchase of a LIC plan along with the LIC New Term Assurance Rider can be further done in the following two ways:

  • From an authorized LIC agent or insurance broker, with legitimate credentials
  • Directly from the nearest LIC office

Note: Online policies come at a lower price compared to offline plans. Furthermore, most insurance providers offer additional discounts or benefits on online purchase of a plan.

*Terms and conditions are applicable for such offers.

Required Documents to Apply for the Plan

The LIC will request a set of documents from the policyholder while purchasing an insurance policy. Depending upon the method in which the policy is being bought, these documents can either be uploaded online (for purchasing the policy online, from their official website) or couriered to the nearest corporation branch, submitted to the office in person, submitted via a LIC agent (in case of offline purchase of a plan).

These are the documents that are necessary to apply for an insurance policy:

A duly filled and signed policy form

ID Proof:

  • Aadhar card
  • Passport

Address Proof:

  • Aadhar card
  • Passport
  • Voter's ID
  • Driver's license
  • Ration card
  • Electricity/ telephone bill
  • Bank statement or passbook with the latest entries made for the last 6 months.

All of these documents are accepted as address proof by the LIC of India.

Income proof:

These documents are essential to calculate the life cover that the insurer needs to provide the policyholder.

  • Salary slips from the last 3 months
  • Income tax returns/ Employer certificate
  • Bank statement from the last 6 months

Renewal Process of the LIC New Term Assurance Rider Plan

Renewal of a policy and revival of a policy are two slightly different things:

Renewal means, paying a premium to keep the plan and the add-on benefit in force. For example, if a policy's expiry date is July 11th, the renewal premium needs to be paid before July 11th to retain the insurance cover and benefits offered by the policy. If renewal premiums fail to get paid over a continuous period, the policy may need to be revived or may even lapse.

The revival of a plan will need to be done if the policy premiums fail to get paid and the policy lapses. Any insurance policy should be revived within 2 years of non-payment of premiums from the last due date of the premium payment. Beyond this revival period, the policy will lapse.

Payment of Renewal Premiums:

These can be done either online or paid directly at the LIC office.

Steps to pay renewal premiums online:

Step 1: Go to the official website of the LIC of India.

Step 2: From the drop-down menu, choose premium payment.

Step 3: Two options will be displayed: 1) Pay direct (without login)

            2) Through the customer portal

Payment through the customer portal requires the policyholder to create an online account and provide login credentials.

The direct pay option does not require such login information and allows for direct payment of premiums.

Choose the more convenient option from the two.

Pay Direct Method

Step 1: Under the "Pay direct" option, the policyholder will be prompted to enter the customer details and choose the policy and enter the premium details before payment can be made.

Step 2: The details need to be entered correctly and promptly, or else the page will time out, and the entire process needs to be started from the beginning again.

Step 3: Enter the ‘Captcha’ code displayed and select the "I agree" option and then click submit.

Step 4: The next page will prompt the customer to validate the details entered in the previous step. Click on "Submit".

In case premium payment needs to be done for more than one policy, the details of the other policies can be entered by scrolling down the page.

Step 5: The next page will show the total number of policies that the customer is paying premiums for and the total amount to be paid. The "Check & pay" option has to be chosen to proceed to the payment page.

Step 6: The payment page will provide 3 payment options-

  • a) Net banking/ e-wallets/ credit cards/ debit cards/ American Express cards
  • b) Standard Chartered Bank UPI
  • c) Axis Pay UPI

Choose the payment mode and proceed to pay.

Through Customer Portal Method

Under the "Through customer portal" option, the policyholder can register themselves as a new user if they do not already have an online LIC customer account or they can directly log in as a registered portal user by clicking on the "registered portal users" option

Step 1: Upon selecting this option, the page will prompt the policyholder to log in using their user ID and password to proceed to premium payment or to sign up or register as a new user.

To register one, certain mandatory personal details need to be entered, such as date of birth, mobile number, email ID, policy number and premium amount excluding taxes. After registering/ creating a user account, the policyholder must log in using the registered ID and password.

Step 2: Click on the "online payments" option, the page will direct the customer to the premium payment portal.

Step 3: Choose all the policies for which the premiums need to be paid and click on the "check & pay" button.

Step 4: The portal will re-confirm certain details like policy number, premium amount, mobile number, and mail ID

Step 5: Choose the preferred payment mode from the given choices and proceed to pay

The revival of the New Term Assurance Rider

The revival of the new term assurance rider involves:

  • A lapsed plan or rider can be revived by paying the unpaid arrears of premium along with interest, within the revival period, that is, within 2 years from the date of the first unpaid premium, but before the cover ceasing age under the rider
  • The term assurance rider cannot be revived in isolation and can be revived only along with the base plan
  • Satisfactory evidence must be provided to ensure continued insurability for the revival of the plan
  • The interest rate that needs to be paid for revival will be that which is fixed by the Corporation from time to time

LIC New Term Assurance Rider Plan - FAQs

  • Q1. Does the term assurance rider have paid-up value?

    Ans. No, there is no paid-up value for the LIC New Term Assurance Rider.

  • Q2. What will happen if the policyholder outlives the policy term?

    Ans. As this term assurance rider does not come with a maturity benefit, no amount will be payable to the policyholder if he/ she outlives the policy term.

  • Q3. Is there a provision of a loan under this new rider?

    Ans. No, there is no such provision to take out a loan under the LIC new term assurance rider.

  • Q4. What is the advantage of paying LIC premiums through net banking or phone banking?

    Ans. The advantages of paying LIC premiums through net banking or phone banking are:

    • Premium payments can be made anytime, anywhere, provided a good internet connection is available
    • Eliminates the need to visit a LIC branch in person to make payments
    • It saves a lot of time and avoids the need to wait in queues
    • Reduces the chance of non-payment of a premium, as the bank or the authorized service provider will automatically debit the amount from the registered account on the due date
    • Demand draft and pay order charges can be eliminated by this method
    • The registered bank will send a periodic email or SMS reminders about the due premium dates and their payment status
    • The hassle of courier charges or postal charges can be avoided in this method
    • The policy details and due dates can even be added to the net banking page of the authorized bank and can be viewed whenever needed
  • Q5. How much service charge will be deducted for using this facility?

    Ans. The LIC policyholders can avail of this facility, absolutely free of cost. The LIC of India has agreements with the banks and service providers that have been authorized to provide this facility and so the customer will not be charged for utilizing this facility.

  • Q6. Which are the authorized organizations that can collect LIC premiums?

    Ans. The following are the authorized banks:

    • Federal Bank
    • ICICI Bank
    • HDFC Bank
    • Citibank
    • UTI Bank
    • Bank of Punjab
    • Corporation Bank

    The authorized service providers are:

    • com
    • com
    • com

    They are available only in certain cities.

  • Q7. In which cities are the authorized service providers available?

    Ans. Authorized services providers are available in the following cities:

    BillDesk.com – Mumbai, Delhi, Bangalore, Chennai, Kolkata, Pune, Ahmedabad, Baroda, and Surat

    They have tie-ups with certain banks like IDBI Bank, Bank of Baroda and ABN- AMRO Bank.

    TimesofMoney.com – Mumbai, Delhi, and Bangalore

    BillJunction.com – Mumbai, Delhi, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Ahmedabad

  • Q8. How can I pay the premiums for the insurance policy through my bank or service provider?

    Ans. This needs to be done online, and the steps are as follows:

    Step 1: Log in to the official website of the authorized bank or the service provider being utilized.

    Step 2: The specific date on which the premium payment has to be made should be specified so that the account will be debited of the required amount exactly on that date every time.

    Click on the consent for the payment option. In the case of multiple bank accounts, anyone account can be specified.

    The bank will debit the amount from the account, consolidate the payments and send it to the LIC as a banker's cheque or pay the order.

    Instructions will be sent to the registered bank branch, by the authorized service provider, through the Reserve Bank of India's Electronic Clearance System. The bank will debit the amount from the policyholder's registered account and credit it to the service provider's account, which will then remit the amount to the LIC.

    Autopay facility and phone banking facility are offered by some service providers.

  • Q9. What are the plans or policies for which premiums can be paid through this facility?

    Ans. Policies that are eligible for premium payment through this facility:

    • Policies that are serviced in networked branches and those policies that can be accessed through the LIC's Metro Area Network (MAN) or Wide Area Network (WAN)
    • Policies with quarterly, half-yearly or annual modes of premium payment

    Policies that are not eligible for premium payment through this facility:

    • Single premium mode of premium payment and monthly premium payment policies are not eligible for payment through this facility
    • Policies that have lapsed and policies that have to be revived are not eligible for this payment facility. Renewal or revival of a policy cannot be done via this facility
  • Q10. What are some things that need to be considered before availing of this premium payment facility?

    Ans. Some things that need to be taken into consideration before availing of this premium payment facility are:

    • If the policyholder has registered for net banking or phone banking, with the authorized bank or service provider, making cash payments at the counters needs to be avoided as payment may be made twice
    • The renewal premium receipts will be sent to the address provided by the policyholder. So, it is essential to provide the correct address. Any change in address has to be updated immediately
    • It is important to keep all the premium payment receipts safe for legal reasons, and in case the receipt has not been received, a premium payment certificate can be obtained from the LIC branch servicing the policyholder
    • The online transactions made via net banking facility go through a decentralized database structure. Therefore, there may be a short time lag between deduction of the premium amount from the policyholder's account and the reflection of the premium credited to the insurer's account and the subsequent update of the premium payment status online
  • Q11. Why should I buy the LIC New Term Assurance Rider?

    Ans. Basic term plans only provide financial protection to the policyholder for the policy tenure. They do not come with a savings component. The New Term Assurance Rider from LIC will offer financial protection for the policyholder's loved ones, in case of the unfortunate early demise of the life insured, before the policy term ends, in the form of a death benefit.

  • Q12. Is death due to COVID-19 included in the policy for death claim?

    Ans. Yes, given the current situation, the LIC has included death due to COVID-19 under the death claim clause of its policy. The LIC of India has so far settled 16 death claims under COVID-19.

Written By: Paisawiki - Updated: 12 April 2021