LIC Micro Bachat

LIC Micro Bachat Plan (Table No. 951) is a traditional, non-linked, participating micro-insurance plan that offers dual benefits of protection as well as savings. As the name suggests ‘micro bachat’ meaning ‘small savings’, this plan is designed to provide financial support to the family in case of unfortunate death of the policyholder. If the policyholder survives the policy tenure, a lump sum amount at the time of maturity is payable. The plan also provides loan facility to take care of liquidity needs. The plan is ideal for the low-income groups.

It is a newly launched product by LIC India, which is available at an affordable price with lots of benefits. Benefits such as  Maturity benefit Surrender benefit are available once the payment of 5 full years premiums are paid.

Under this policy, the insured can also avail loan during the policy tenure, provided full payment of premiums for at least 3 years. In case of an active insurance plan, 70% of the loan can be availed on the total premium paid. Whereas in case of a paid-up policy, loan for a 60% of the amount can be availed.

The interest rate for the loan will be around 10.42% (per annum) annually. However, it offers a rebate of full one month for the payment of premium. As it is a life insurance policy, the policyholder will also get tax benefits on the premiums paid under Section 80C of the Income Tax Act, 1961.

Key Features of LIC Micro Bachat Plan

• This plan offers dual advantages of insurance and savings in a single plan.

• It fulfills the liquidity needs of the policyholder by providing loan facility.

• Cost-effective and different riders are available as options to the customers.

• Tax benefits are applicable to the paid premiums and the amount received on maturity.

• No medical examination is required at the time of purchasing the plan.

• The plan also offers various benefits and loyalty addition bonuses.

Benefits of LIC Micro Bachat Plan

Maturity Benefit

The Sum Assured on maturity along with the Loyalty Addition will be payable if all due premiums have been paid and the policyholder survives till the end of the policy term. The ‘Sum Assured on Maturity’ is equal to the Basic Sum Assured and the loyalty additions is declared by Life Insurance Corporation of India.

Death Benefit

In case of death during the policy term and if all due premiums have been paid, on death during the first five years and after the completion of five policy years but before the date of maturity 'Sum Assured on Death' will be payable. The death benefit will not be less than 105% of all the premiums paid as on the date of death.

Surrender Benefit

The policy can be surrendered at any time after 1 successful year of the policy. To avail the surrender benefit, the insured must have paid for at least one full policy year. On surrender of the in-force/paid-up policy, LIC will pay the surrender value, which is higher of the Guaranteed Surrender Value or Special Surrender Value.

Loyalty Addition

The plan is eligible for Loyalty Addition, if any, at the rates and terms declared by the LIC. In case of death of the insured or during the maturity claim in respect to in-force policies, Loyalty Addition will be payable but only after completing 5 years of the policy.

Loan Facility

The policyholder can avail loan during the policy term after completing 3 years of the plan so as to meet the liquidity requirements of the policyholder. Also, the loan will be only applicable subject to the terms and conditions as the Corporation may specify from time to time. The maximum loan availed as a percentage of surrender value for in-force policies is upto 70% and the maximum loan availed as a percentage of surrender value for paid-up policies is upto 60%.

Auto Cover Period

Auto cover period under a paid-up policy is available. The auto cover period will start from the first unpaid premium, including Grace Period. If at least 3 full years but less than 5 full years (i.e. between 3-5 years) premiums have been paid and any subsequent premium is not duly paid, Auto Cover Period of 6 months will be applicable as per the terms. If at least 5 full years premiums have been paid under a policy and any subsequent premium is not paid, Auto Cover Period of 2 years will be available.

Revival Benefit

A lapsed policy of the insured can be revived within 2 consecutive years from the date of first unpaid premium and is allowed under applicable product regulations before the date of Maturity.

Grace Period

With this plan, the insured will get a grace period of 30 days but not less than 30 days. In the case, if the insured is unable to pay the premium on-time, the payment can be done within the next 30 days.

Free Look Period

If the Policyholder is not satisfied with the ‘Terms and Conditions’ of the policy, then he/she can return the policy to the company within 15 days from the date of issuance stating reasons for the objection.

Eligibility Criteria of LIC Micro Bachat

*Note :The total Basic Sum Assured under all policies under this plan for a single life will not exceed Rs. 2 lakhs.

Optional Riders of LIC Micro Bachat

There are two optional benefits in the form of riders that the insured can avail by paying an additional premium. The insured can choose any rider from the list.

i) Accidental Death Rider

The insured can add this rider anytime within the premium paying tenure of the base plan provided the outstanding premium payment tenure is minimum 5 years. Under this rider, in case of accidental death, the Accident Benefit Sum Assured will be payable as a lump sum along with the death benefit.

ii) Disability Benefit Rider

The insured can add this rider any time within the premium paying term of the base plan provided the outstanding premium payment term is minimum 5 years. If the insured go with this rider then in case of any disability due to an accidental, the Disability Benefit Rider Sum Assured will be payable.

Sample Premium Rates

Following are some of the samples in tabular form so that you can get an idea of the premium rates applicable per Rs. 1,000 Basic Sum Assured (excluding taxes):

For example: Priya is 35 years old now and buys LIC micro bachat plan of a Sum Assured of Rs. 1 lakh for a policy term of 15 years. The amount of premium that Priya have to pay according to the above table will be (52.20х(1,00,000/1,000))=Rs. 5,220 along with the applicable taxes above this amount.

*Note: The premiums may vary depending on the age of the insured, Policy Term and the Sum Assured. If the mode of premium payment is annual, the premiums may vary from Rs. 2,524 p.a. to Rs. 17,612 p.a.

Mode Rebate

High Basic Sum Assured Rebate

Exclusions of LIC Micro Bachat Plan

Suicide:- The cover is not applicable in case of suicide under the policy guidelines.

i) If the Life Assured commits suicide within the initial 12 months of the policy, then the company will not be liable to offer the claim amount. However, 80% of the premiums paid, provided the policy is inforce.

ii)  If the Life Assured commits suicide in 12 months from the date of revival, an amount will be payable which is higher of 80% of the premiums paid till the date of death or the surrender value. The company will not entertain any additional claim.

Conditions for Termination of the Policy

The policy can be immediately and automatically terminate on the earliest occurrence of any of the following events:

• Date on which death benefit is paid.

• Date on which surrender benefits are settled under the policy.

• After maturity amount is paid.

• In the case of delay in the payment of loan interest.

• After two years expiration from the date of policy lapse, where the insured has not revived the policy.

• After the payment of free look period cancellation amount.

Documents Required for Claim Process

Death Claim

Documents that claimant has to submit at the time of filing the claim in case of death of the policyholder are:

• Claim Forms

• Original Policy Documents

• NEFT details

• Birth proof

• Death certificate

• Medical treatment prior to death

• School/college/employer's certificate

• Proof of age of the Life Assured shall also be submitted

Within 90 days from the date of death, an intimation of death along with the death certificate must be notified in writing to the company.

Maturity/Surrender Claim

In case of maturity claims, the insured have to submit:

• A discharge form

• Original policy documents

• NEFT details

• Proof of age, if the age is not admitted earlier.

In addition to the above, any requirement mandated under any statutory provision will require.