LIC’s Bima Ratan Plan, a New Savings Life Insurance Plan

Life Insurance Corporation (LIC) is India’s largest insurer. On 27-May-2022, LIC launched a new savings life insurance plan called Bima Ratna which is a non-participating, non-linked and individual plan. This will cater for the Indian market by providing both protection and savings. This plan provides financial aid to deceased families or dependents when the deceased is insured through this plan. When an insured dies during the policy tenure, the insurer will do periodical payments to the nominee(s) for a specified duration as per the plan. You can buy the LIC’s Bima Ratna through Corporate Agents, POSP-LI, Brokers, Insurance Marketing Firms (IMF) and CPSC-SPV. You can even avail loan against this plan.

What are the 10 main features of the LIC’s Bima Ratna?

1. Death benefit – On the death of the insured during the policy term, LIC provides a death benefit amount along with accrued guaranteed additions. In this plan, on the death of the insured, the sum assured can be either as high as 125% of the basic sum assured or 7 times the annual premium but never less than 105% of the total premium paid to date. But if it is the death of a minor, the death benefit will be the total of all premiums excluding rider premiums and taxes, and no interest will be paid.

2. Survival benefit – If the plan is for X years then at the end of (X-2) year and (X-1) year each payout of 25% of the basic sum assured is made. When the plan is for 15 years, at the end of each 13th and 14th year, a payout of 25% of the basic sum assured is made.

3. Maturity benefit – When the insured lives through the policy tenure, on the date of maturity, he/ she is paid the agreed sum assured on maturity (50% of Basic Sum Assured) together with accrued guaranteed additions.

4.  Guaranteed additions – As per the policy, for the first 5 years, LIC will add Rs 50 as guaranteed additions for every Rs 1000 of basic sum assured and Rs 55 per Rs 1000 of basic sum assured through the 6th to 10th year. Similarly for the next 15 years which is from the 11th to 25th year, Rs 60 is added to every Rs 1000 basic sum assured. The Guaranteed Additions payout is conditioned as

• The Guaranteed Addition in the year of death shall be for the full policy year when the death is under an in-force policy.

• The Guaranteed Addition shall stop accumulating if the premium is not paid on time.

• When policy is surrendered or paid up, the Guaranteed Addition for the year where the last premium is received will be directly proportional to the premium received for that year.

5. Eligibility conditions and restrictions  –

• The minimum sum assured should be Rs 5 lakh and in multiples of Rs 25000 and no maximum limit.

• When the policy is brought through POSP-LI/CPSC- SPV, the Policy term will be 15 or 20 years, otherwise, it can be 15 / 20 / 25 years.

• The premium paying term is 4 years lesser than the policy term, i.e., 11 years for 15 years policy term.

• For a policy term of 15 years, the minimum age of completion is 5 years but is just 90 days for 20 and 25 years policy terms.

• For a policy term of 15 years, the maximum age is 55 years while it is 50 and 45 years for 20 and 25 years policy terms respectively.

• When brought from POSP-LI/CPSC-SPV, the age can be 65 years minus the policy term.

• The policy with policy terms of 15 years and 20 years matures at the minimum age of 20 years. And it is 25 years for a policy term 25 years.

• 70 years old is the maximum age for maturity.

6. Date of commencement of risk – If the insured is a minor, the risk will begin earliest of either 2 years from the date of commencement or on the policy anniversary coinciding with or immediately following the 8th year birthday of the insured. And the risk will commence immediately for insured who are above 8 years of age.

7. Settlement options – When in force or Paid-up policy, Maturity benefit can be paid in instalments over 5 years and not lump-sum payments.

• This can be used for minors below the age of 8 or adults above the age of 18 years.

• Even some portion of the amount can be chosen for this action and defined as a percentage or absolute value.

• Monthly, quarterly, half-yearly or yearly instalments can be chosen.

• The minimum monthly instalment is Rs 5000, while quarterly it is Rs 15000, half-yearly is Rs 25000 and yearly is Rs 50000.

• If the minimum instalment amount condition is not satisfied, the lump sum will be paid overriding the instalments option.

8. Premium payment – Monthly premiums can be paid only when through NACH. Else can be quarterly, half-yearly or yearly but paid regularly or deduced directly through salary.

9. Grace period – The grace period for payment of premiums including riders is allowed. It is 15 days for monthly premiums and 30 days for rest. During the grace period, as per the terms of the policy, the policy is in force with the risk cover without any interruption. If the premium is not paid by the end of the grace period, the policy lapses.

10. Revival – Before the date of maturity there is a chance to revive a lapsed policy but within 5 consecutive years.