Should you invest in LIC Bima Bachat?

Business

oi-Roshni

By Roshni Agarwal

Published: Wednesday, July 31, 2013, 10:29 [IST]

LIC Bima Bachat plan is a conventional single premium money back policy that offers life cover in addition to return on investment in the form of money-back. The policy is available for the term period of 9, 12 and 15 years. The premium amount is decided on the basis of the term of the policy and age of the insured person.

In case an individual is primarily seeking a life cover then in that case he certainly need not go for LIC Bima Bachat policy and should infact opt for a term plan, which would provide coverage many more times over. However, if you are seeking returns at regular intervals in addition to other benefits then this offering of LIC is surely a good bet.

Returns and Benefits of investing in LIC Bima Bachat

1. Survival Benefit: Money-Back after every 3 years

LIC Bima Bachat policy holder is entitled to receive money-back equivalent to 15% of the sum assured after every three years during the term of the policy.

2. Maturity Benefit

In case the insured person outlives the term of the policy then the full single premium excluding extra amount is paid along with loyalty addition. There is no clear guideline with regard to the computation of loyalty amount and is however presumed that it is approximately Rs. 35 for every premium payment of 1000.

3. Death Benefit

In case of death of the Insured during the term of the policy, the nominee is entitled to receive sum assured and accrued bonus.

4. Investment in insurance plan covered u/s 80C that provides tax benefit

The premium amount paid for the policy is allowed for deductions u/s 80C of the Indian Income Tax Act. With this, taxable salary gets reduced by the premium amount and eventually tax liability of the concern gets reduced.

5. Rebate in Insurance premium available in case of high Sum Assured value

For Sum Assured value upto Rs 50,000 no rebate is available on premium. For sum assured value between Rs 50,000- Rs.1lakh, Bima Bachat policy offers a rebate of 5% on premium amount. For sum assured value in the range of Rs.1 lakh - Rs.2 lakh, 7% rebate is available and for sum assured of Rs. 2 lakh and above, the policy offers a rebate of 8% on premium amount.

6. Loan facility

LIC Bima Bachat is the sole money back policy offering loan facility. At present, loan against LIC Bima Bachat policy is provided @ 9% per annum payable half-yearly.

7. Surrender facility

The policyholder can also surrender the policy if required only after the completion of one policy year.

In that case, Surrender value of the policy = 90% of the single premium paid.

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