LIC Term Insurance Plans: Coverage, Benefits, and How to Choose

Over time, financial planning has evolved. Yet, the main goal of financial planning has remained constant – safeguarding a family’s financial security. Many individuals choose life insurance term plans because they offer pure risk protection without any investment component. Families who prefer government-owned insurance companies choose LIC term plans because of their reliable and enduring nature.

The primary function of term insurance is to deliver financial protection, which distinguishes it from investment-linked insurance products. The solution provides substantial life coverage at low costs, which enables families to handle their costs while paying back their debts and staying financially secure during tough times.

Before forming any broad conclusions, it is important to understand how these plans work in practice. This guide explains LIC term insurance plans in detail, covering their structure, available product variants, and key evaluation criteria. The aim is to help readers make informed decisions based on policy features and factual information rather than assumptions.

Table of Contents

• Understanding the LIC Life Insurance Term Plan
• Key Features and Benefits of LIC Term Plans
• Detailed Overview of LIC Term Insurance Plans
  • LIC Tech Term (Plan No. 854)
  • LIC Jeevan Amar (Plan No. 855)
  • LIC Saral Jeevan Bima (Plan No. 859)
  • LIC Jeevan Kiran (Plan No. 870)
• Available Riders to Enhance Coverage LIC Term Plans
• Factors to Consider Before Choosing a LIC Term Plan
  • Human Life Value (HLV) Calculation
  • Policy Tenure Selection
  • Premium Payment Mode
  • Online vs Offline Purchase
• Application and Claim Process
  • Application process
  • Claim Settlement Process
• Conclusion
• FAQs

Understanding the LIC Life Insurance Term Plan

A term insurance is basically a contract that says the insurance provider pays a predetermined amount to the designated beneficiary when the policyholder dies during the active term of the insurance policy. The policyholder will not receive any maturity benefit at the end of the policy term, except when they choose a Return of Premium (ROP) policy option.

The primary objective of a life insurance term plan is financial protection. It ensures that if the primary earner passes away during the policy term, the family can continue their standard of living, pay off debts (like home loans), and fund future goals such as children’s education. LIC offers multiple term assurance variants suited to a wide range of individuals, from digitally inclined buyers to those who prefer traditional offline channels.

Key Features and Benefits of LIC Term Plans

LIC term plans are designed with specific features that distinguish them from standard insurance products.

Before diving into the details of the individual plans, it is necessary to recognize the main benefits of a life insurance term plan.

• Government Guarantee: According to Section 37 of the LIC Act, 1956, the amount guaranteed by LIC (bonuses included) is backed by the Central Government of India. This gives a level of safety that private companies cannot legally boast about.
• High Claim Settlement Ratio (CSR): LIC consistently maintains one of the highest claim settlement ratios (CSR) in the industry. In the year 2022-23, LIC had a death claim settlement ratio of 98.52%, which means there is a very good chance for claims to be paid.
• Payment Options for Premiums are Flexible: Policyholders can select from Regular Pay (pay throughout the term), Limited Pay (pay for a shorter duration, like 5 or 10 years), or Single Premium (a one-time payment).
• Different Premium Rates: Premium rates are determined based on underwriting factors such as age, health profile, and lifestyle, ensuring pricing reflects individual risk characteristics.

Detailed Overview of Top LIC Term Plans

LIC currently offers a focused suite of term assurance plans. Each lic life insurance term plan has distinct eligibility criteria and payout structures tailored to different needs.

LIC Tech Term (Plan No. 854)

This is a non-linked, non-participating, online-only pure risk premium plan. It is generally the most cost-effective option because there is no intermediary or agent commission involved.

• Entry Age: 18 to 65 years.
• Sum Assured: Minimum ₹50 Lakhs; No upper limit (subject to underwriting).
• Policy Term: 10 to 40 years.
• Key Feature: It offers the option of “Level Sum Assured” (payout remains constant) or “Increasing Sum Assured” (coverage increases by 10% annually from the 6th to the 15th year). This is vital for combating inflation.

LIC Jeevan Amar (Plan No. 855)

Jeevan Amar is the offline counterpart to the Tech Term plan. It functions similarly but is sold through LIC agents.

• Suitability: This lic life insurance term plan is suitable for individuals who prefer personalized service and assistance with documentation and claim settlement through an agent.
• Flexibility: Like Tech Term, it allows the policyholder to choose between receiving the death benefit as a lump sum or in installments over 5, 10, or 15 years. This installment option provides a structured income stream for beneficiaries who prefer phased payouts over a lump sum.

LIC Saral Jeevan Bima (Plan No. 859)

This is a standard term insurance product mandated by the Insurance Regulatory and Development Authority of India (IRDAI). It has uniform features across all insurers to reduce confusion.

• Sum Assured: Minimum ₹5 Lakhs to Maximum ₹25 Lakhs.
• Documentation: The underwriting requirements for this LIC life insurance term plan are generally more flexible, particularly regarding income documentation.
• Target Audience: It is ideal for individuals with lower income brackets or those who do not have standard income documentation (ITR/Salary slips) required for larger covers.

LIC Jeevan Kiran (Plan No. 870)

Jeevan Kiran is a relatively new entrant and differs significantly because it is a “Return of Premium” (ROP) plan.

• How it works: If the policyholder survives the policy term, the total premiums paid (excluding taxes and rider premiums) are returned to them.
• Trade-off: The premium for this LIC life insurance term plan is significantly higher than a pure term plan (Tech Term). It appeals to individuals who prefer receiving their premiums back at maturity rather than opting for a pure risk cover.

Available Riders to Enhance Coverage

A base term policy covers only death. However, life also involves risks beyond death, such as accidents or critical illnesses.

You can strengthen your lic life insurance term plan by attaching the following riders for a nominal additional premium:

• Accident Benefit Rider: Provides an additional sum assured if death occurs due to an accident.
• Accidental Death and Disability Benefit Rider: Offers a payout in case of accidental death or if the policyholder suffers total and permanent disability due to an accident. In case of disability, future premiums may be waived, depending on rider terms.
• Critical Illness Rider: While not always available with every term plan, some LIC policies allow riders that pay a lump sum upon diagnosis of specified critical illnesses.

Factors to Consider Before Choosing a Plan

Selecting appropriate insurance coverage should be a strategic and well-calculated decision rather than an emotional one.

To ensure your lic life insurance term plan adequately protects your family, evaluate the following parameters:

Human Life Value (HLV) Calculation

Do not pick a random figure like ₹50 Lakhs or ₹1 Crore. Your coverage should ideally be 15 to 20 times your annual income. This corpus aims to generate sufficient returns, if invested prudently, to help replace your income for your dependents.

Policy Tenure

The tenure should extend until your retirement age (usually 60 or 65). There is generally no need to insure yourself beyond the age where you stop earning, as term insurance is meant to replace income. Buying a policy up to age 80 or 85 can increase the premium significantly without providing proportional utility.

Premium Payment Mode

While “Limited Pay” (paying off all premiums in 5-10 years) may seem attractive, it can be mathematically more expensive in terms of Net Present Value (NPV). “Regular Pay” (paying annually until the policy ends) is often the most cost-efficient method for a salaried individual.

Online vs. Offline

If you are comfortable with digital documentation, the online lic life insurance term plan (Tech Term) usually offers a rebate on premiums compared to offline plans (Jeevan Amar) because distribution costs are lower. However, if your family struggles with paperwork, the offline route via an agent might provide better claim assistance.

The Application and Claim Process

Full transparency during the application stage is one of the most important factors in ensuring smooth claim settlement.

Application Process

When applying for a life insurance term plan:

• Disclosure: Disclose all medical history, smoking habits (including occasional usage), and existing insurance policies. Non-disclosure is the primary reason for claim rejection.
• Medical Tests: Undergo the medical examination if requested. A policy issued after a medical test is harder for an insurer to contest later.

Claim Settlement Process

In the unfortunate event of a claim, the nominee must:

• Intimate LIC via the branch or online portal.
• Submit the Death Certificate, original policy bond, and claimant’s statement (Form 3783).
• Provide bank account details (NEFT mandate) for the transfer of funds.
• For accidental death, an FIR and Post Mortem Report are mandatory.

Conclusion

An LIC life insurance term plan still holds an important place in the financial planning of Indian households. It provides a combination of risk-cover and the confidence of a government-backed institution. Regardless of whether you choose the cost-effective Tech Term or the Return of Premium variant like Jeevan Kiran, the key consideration is ensuring that the Sum Assured adequately covers your financial obligations and your family’s future needs.

Insurance is not a means to make money; rather, it is a mechanism for financial protection. By taking into consideration your life stage, financial dependents, and budget, you can pick the particular LIC policy that will be a dependable foundation of financial support for your family.