LIC New Bima Bachat Plan
LIC New Bima Bachat Plan Summary
LIC’s New Bima Bachat Plan is a traditional savings plan offering liquidity during the plan tenure by paying money-back benefits at specific intervals. Thus, the plan provides insurance coverage, savings, and liquidity through cash-backs. The plan can be bought by paying only a one-time premium and Loyalty Additions are added at the end of the policy term depending on the company’s performance.
| Launch Date | Plan Details | Premium Payment Term | Bonus |
| 7th January 2014 | Table No. 816 | Single | Loyalty Additions only |
Key Features
- A one-time premium is required to buy the plan.
- Money-back benefits are given after every 3 years.
- Loyalty Additions are added depending on the insurer’s business performance.
- Loans can also be taken under the plan for meeting any financial contingency after the plan has completed one year. The loan amount can be upto 60% of the Surrender Value of the plan.
Benefits
On maturity Single Premium and accumulated Loyalty Additions are paid. (Loyalty additions depend on the insurer’s profit which is dictated by the Insurance Company’s market performance.)
If the insured dies during the tenure of the plan the Sum Assured and accumulated Loyalty Additions till the date of death are paid irrespective of the money-back benefits already received.
Survival Benefits – 15% of the Sum Assured payable as money backs start from the 3rd policy year and are payable every 3 years thereof. So, the respective money-backs for corresponding terms are as follows:
- Term 9 years – in the 3rd and 6th policy year
- Term 12 years – in the 3rd, 6th, and 9th policy year
- Term 15 years – in the 3rd, 6th, 9th and 12th policy year.
Depending on the performance of the company, Loyalty Additions are paid on maturity or death provided that the policy has completed at least 5 years.
Variants
To buy LIC’s New Bima Bachat Plan, one has to submit the following documents:
- Plan Proposal Form duly filled in and signed
- Cheque for the Single premium
- A passport sized photograph
- A valid Identity Proof
- A valid Address Proof
- Date of Birth Proof
- Valid income proof
How to buy the LIC New Bima Bachat Plan
The plan is an offline plan which can be bought only through the company intermediaries like agents or brokers. One can also buy the plan by visiting the company’s branches or by contacting the company executives.
How it works
The policyholder chooses the Sum Assured and the Term of the plan when buying the policy. Based on these and your age, you will have to pay a Single Premium. You have the option of selecting from the 3 policy term options – 9 years, 12 years of 15 years.
The Survival Benefits for the terms would be as follows:
- For a Policy Term of 9 years - 15% of Sum Assured is payable at the end of 3 and 6 years. A total of 30% of Sum Assured is payable
- For a Policy Term of 12 years - 15% of Sum Assured is payable at the end of 3, 6 and 9 years, a total of 45% of Sum Assured is payable
- For a Policy Term of 15 years - 15% of Sum is payable at the end of 3, 6, 9 and 12 years, a total of 60% of Sum Assured is payable
If the insured survives the entire term of the plan, the Single Premium paid and Loyalty Additions are also paid to the insured. This is called the Maturity Benefit.
If the insured dies during the term of the plan, the Death Benefits is paid to the nominee as follows:
- If the insured dies within the first 5 Policy Years, the Nominee would receive the entire Sum Assured, irrespective of the Survival Benefits already paid
- If the insured dies after the first 5 Policy Years, the Nominee would receive the entire Sum Assured, irrespective of the Survival Benefits already paid + Loyalty Addition
Example – Suppose Abhi of age 35 buys a policy of Rs. 5 lakhs (Sum Assured) for a term of 12 years. He will have to pay a Single Premium of Rs. 3,64,415. It comes to Rs. 3,78,081 after taxes.
Scenario 1 – Abhi survives till the end of the policy term.
Since it is a 12-year policy, he would receive Survival Benefit payments at the end of the 3rd, 6th, and 9th policy year as follows:
- 3rd policy year – 15% of Sum Assured = 15% of Rs. 5,00,000 = Rs. 75,000
- 6th policy year – 15% of Sum Assured = 15% of Rs. 5,00,000 = Rs. 75,000
- 9th policy year – 15% of Sum Assured = 15% of Rs. 5,00,000 = Rs. 75,000
Also, when the plan matures after 12 years, the Single Premium paid which is Rs. 3,64,415, and Loyalty Additions would be paid to him.
Scenario 2 – Abhi dies after 7 years of buying the plan
In such a scenario, he would have received the following Survival Benefit payments:
- 3rd policy year – 15% of Sum Assured = 15% of Rs. 5,00,000 = Rs. 75,000
- 6th policy year – 15% of Sum Assured = 15% of Rs. 5,00,000 = Rs. 75,000
Additionally, the Sum Assured of Rs. 5 lakhs would be paid irrespective of any money-back benefits already received. The Loyalty Additions accumulated would also be paid as the policy has completed 5 years.
Tax Benefit
- Premiums Paid – Only plans which meet the criteria of Sum Assured being greater than 10 times the premiums paid are eligible for tax exemptions. This plan does not meet that criteria. So only a limited part of the single premium paid by you will be tax free. In the above example, Rs. 3,64,415 is the premium for a cover of Rs. 5 lakhs. So only a value of Rs. 50,000 (10% of Rs. 5 lakhs) of the premiums paid will be tax free under Sec 80C
- Maturity Benefits – Since the Premium is more than 10% of the Sum Assured, the benefits accruing under this plan will be taxable
- Death Claims - There is no limit on the amount of claim received and the entire claim would be tax-free.
Eligibility
This plan can be bought only by resident Indians. NRIs cannot buy the New Bima Bachat plan. Other eligibility criteria include the following:
| Minimum | Maximum | |
| Entry Age (Nearest Birthday) | 15 years | For Term 9 years - 66 years For Term 12 years – 63 years For Term 15 years – 60 years |
| Maturity Age (Nearest Birthday) | NA | 75 years |
| Plan Term | 9, 12 or 15 years | |
| Premium Payment Term | Single Pay | |
| Sum Assured | For Term 9 years –Rs. 35,000 For Term 12 years – Rs. 50,000 For Term 15 years – Rs. 75,000 |
No Limit |
Surrender Value
If the policyholder wants, he can surrender his policy and avail the Surrender Value. If surrendered within the first year of the plan, 70% of the premium paid is paid back as the surrender value. If the plan is surrendered any time after the completion of the first year, 90% of the premium paid is returned as surrender value.
If the policyholder is not happy with the plan, he can cancel the policy within 15 days of the plan issuance. This period is called the free-look period. Upon cancellation, the premium paid net of any applicable expenses would be returned.
Exclusions
If the insured dies due to suicide within 12 months of policy inception only 90% of the single premium paid is refunded.
FAQs
Does the plan have any riders?No the plan does not have any additional riders.
What is the rate of Loyalty Additions?Loyalty Additions are not guaranteed by the insurer. They depend on the insurer’s profit which is dictated by the Insurance company’s market performance.
When can one apply for a loan under the plan?Once the policy completes one full year since the date of issuance, one can easily apply for a loan under the plan.
Can I cancel the plan any time after I buy it?Yes, you can cancel/surrender the plan any time after purchasing it but the benefits received would be low. If you cancel within the first 15 days of policy issuance, you are cancelling within the free-look period of the policy and you get the premium refunded after the deductions of minor charges. If you surrender the plan after the first 15 days and within a year of policy issuance, 70% of the single premium is refunded as the Guaranteed Surrender Value. Any time after the completion of the first policy year, 90% of the single premium is returned if the policy is surrendered.
We welcome any queries or comments on this plan. Please share it in the comments section and we would be glad to share our thoughts on the same.
Claim Process
How to make a maturity or surrender claim?
A maturity claim is easy to make. The policyholder would have to fill and sign the claim discharge form and submit it to the insurer for availing the maturity benefit along with original policy document, NEFT Mandate Form and age proof if age was not admitted earlier.
In case of surrender, the policyholder should inform the company in writing to avail the surrender value.
How to make a death claim?
In case of a death claim, the nominee should fill up the claim discharge form and submit it to the company along with:
- Original policy document
- NEFT Mandate Form for direct settlement of claim into the nominee’s bank account
- Proof of Title which is the nominee’s Identity Proof
- Proof of Death - death certificate
- Medical treatments availed prior to death
- Proof of age if age was not admitted in the policy
- Police inquest report, newspaper cuttings reporting the accident, copy of driving license for road accidents, post-mortem report, etc. might be required in case of an accidental or unnatural death.
