LIC New Tech Term Plan – New online term plan

LIC closed its earlier Tech Term Plan and launched its new version as LIC New Tech Term Plan Plan No.954 (effective from 23rd November 2022). What are the differences between the old Tech Term Plan and to New Tech Term Plan in terms of premium, benefits, and eligibility?

LIC’s New Tech-Term is a Non-Linked, Non-participating, Individual, Pure Risk Premium Life Insurance Plan. This Online plan provides financial protection to the insured’s family in case of his/her unfortunate death during the policy term. This plan shall be available Online only directly through the website.

Key Features of LIC New Tech Term Plan are as below –

• Flexibility to choose from two benefit options: Level Sum Assured and Increasing Sum Assured.
• Flexibility to Choose from Single Premium, Regular Premium and Limited Premium Payment.
• Choose the Policy Term/Premium Paying Term.
• Opt for payment of benefit in installments.
• Special rates for women.
• Benefit of high sum assured rebate.
• Option to enhance coverage by opting for Accident Benefit Rider on payment of additional premium for the rider benefit.

LIC New Tech Term Plan – Eligibility

Let us look into the eligibility of the LIC New Tech Term Plan.

Note –

Under Single Premium, the minimum premium shall be Rs.30,000/-. Under Regular and Limited Premium modes, the minimum premium shall be Rs 3,000/-.

The grace period of 30 days is available for yearly and half yearly premium paying options.

LIC New Tech Term Plan – Benefits

As it is a term insurance plan, there are two benefits. One is the death benefit and another is the survival benefit.

Death Benefit

Death benefit payable on the death of the life assured during the policy term after the date of commencement of risk but before the date of maturity provided the policy is in force and the claim is admissible shall be “Sum Assured on Death”. For Regular premium and Limited premium payment policies, “Sum Assured on Death” is defined as the highest of:

• 7 times of Annualised Premium; or
• 105% of “Total Premiums Paid” upto the date of death; or
• Absolute amount assured to be paid on death.

For Single premium policy, “Sum Assured on Death” is defined as the higher of:

• 125% of Single Premium
• Absolute amount assured to be paid on death. Where,

a) “Annualized Premium” shall be the premium payable in a year chosen by the policyholder, excluding the taxes, rider premiums, underwriting extra premiums and loadings for modal premiums, if any, and

b) “Total Premiums Paid” means total of all the premiums received, excluding any extra premium, any rider premium and taxes.

c) Absolute amount assured to be paid on death shall depend on Death Benefit Option chosen at the time of taking this policy and is as under:

For Option 1 – Level Sum Assured

Absolute amount assured to be paid on death shall be an amount equal to Basic Sum Assured, which shall remain the same throughout the policy term.

For Option 2 – Increasing Sum Assured

Absolute amount assured to be paid on death shall remain equal to Basic Sum Assured till completion of fifth policy year. Thereafter, it increases by 10% of Basic Sum Assured each year from the sixth policy year till fifteenth policy year till it becomes twice the Basic Sum Assured. This increase will continue under an inforce policy till the end of policy term; or till the Date of Death; or till the fifteenth policy year, whichever is earlier. From sixteenth policy year and onwards, the Absolute amount assured to be paid on death remains constant i.e. twice the Basic Sum Assured till the policy term ends.

For example, the Absolute amount assured to be paid on death under a policy with Basic Sum Assured of Rs. X will be Rs. X till the end of fifth policy year, Rs. 1.1X during the sixth policy year, 1.2X during seventh policy year, increasing so on by 10% of Basic Sum Assured each year till it becomes 2X in a fifteenth policy year. From the sixteenth policy year and onwards, the Absolute amount assured to be paid on death will be 2X.

The Death Benefit Option once chosen cannot be changed later.

Riders available in LIC New Tech Term Policy

# Accidental Rider

If this rider is opted for, in case of accidental death, the Accident Benefit Rider Sum Assured will be payable as lumpsum along with the death benefit under the base plan.

The premium under this Rider shall not exceed 100% of the premium under the Base plan. The Accidental Benefit Sum Assured shall not exceed the Basic Sum Assured under the policy.

# Option to take Death Benefit in installments:

This is an option to receive Death Benefits in installments over a period of 5 years instead of lump sum amount under an inforce policy. This option can be exercised by Life Assured during his/her lifetime; for full or part of Death benefits payable under the policy. The amount opted for by the Life Assured
(i.e. Net Claim Amount) can be either in absolute value or as a percentage of the total claim proceeds payable.

The instalments shall be paid in advance at yearly or half-yearly or quarterly or monthly intervals, as opted for, subject to minimum instalment amount for different modes of payments being as under:

Monthly – Rs.5,000, Quarterly – Rs.15,000, Half- Yearly – Rs.25,000 and Yearly – Rs.50,000.

If the Net Claim Amount is less than the required amount to provide the minimum installment amount as per the option exercised by the Life assured, the claim proceed shall be paid in lump sum only.

For exercising option to take Death Benefit in installments, the Life Assured can exercise this option during his/her lifetime while in currency of the policy, specifying the Net Claim Amount for which the option is to be exercised. The death claim amount shall then be paid to the nominee as per the option exercised by the Life Assured and no alteration whatsoever shall be allowed to be made by the nominee.

How to purchase LIC New Tech Term Plan online?

Step-by-step process to buy LIC’s New Tech-Term Online:

1) Log-on to our website (www.licindia.in) for buying this online product. Click on ‘Buy Policies Online’. Select plan LIC’s New Tech-Term.

2) Click on ‘Buy Online’. Choose your desired Sum Assured, Sum Assured option (Level/Increasing), Policy Term, Premium Payment option (Regular/Limited/Single) and Premium Payment Mode (Yearly/Half-yearly) for Regular and Limited Premium Payment option, Date of Birth, Gender and Smoking status.

3) After filling in the details, a premium calculator will calculate the premium or the chosen parameters.

4) Enter other details such as Name, Address, Occupation, Qualification etc. displayed on the screen and complete the proposal form online.

5) Pay premium online and fulfil the underwriting requirements, if any.

Difference between LIC Tech Term and LIC New Tech Term

In terms of features, earlier LIC offered single premium feature. This time, they removed it. Rest everything seems to be same.

The biggest surprise is the PREMIUM change. Long back, I wrote a post on available LIC’s Term Plans. You can refer to the same at “LIC Term Insurance Plans 2020 – Features and Benefits. There I have taken an example of 24 years young guy opting for Rs.1 Cr of Life Insurance with a premium payment option of 36 years (60 years of his age) and not opted any riders. For that, the premium showed Rs.9,346. However, when I calculated the premium with this new tech term, the premiums are showing as Rs.10,614. If you add the GST, then it is showing as Rs.12,525. Refer the below screen for the same.

Hence, it is confirmed that by launching the new term plan and closing the older version, LIC actually increased the premium. The rest of all the major benefits remained the same.

LIC New Tech Term Plan – Should you buy?

# As all features remained the same and just the premium is increased from the earlier version, you no need to be fancy with the new launch. Instead, cross-check with private players and opt for the one which is comfortable for you.

# Coverage of the policy is up to 80 years of age. Even though Life Insurance is not required up to 80 years of your age, but LIC added this feature to compete with private players. Hence, this is an attractive move.

# Increasing Sum Assured option has certain limitations. Because even though you have opted for increasing sum assured, for the first 5 years, this increasing sum assured is not applicable. Also, this increasing sum assured will continue to increase from 6th year onwards for up to the end of the policy term; or till the Date of Death; or till the fifteenth policy year, whichever is earlier. Once it reaches this limit, the sum assured available is twice the basic sum assured you have opted for. Hence, BE CAUTIOUS while choosing this option.

OVERALL WE CAN CALL THIS NEW TECH TERM POLICY AN OLD POLICY WITH THE NEW INCREASED PREMIUM.