The Hindu Business Line : LIC Bima Gold

The Prime Minister, Dr Manmohan Singh, and the Finance Minister, Mr P. Chidambaram, at the launch of LIC's money-back plan, in Lucknow, recently. - Subir Roy

TO COINCIDE with its 50th anniversary, LIC launched a money-back plan, Bima Gold. A look at some of the key features of this policy.

Plan details

The policyholder would have to pay premiums over the entire duration of the plan. A certain percentage of the sum assured is paid out at regular intervals during the currency of the plan. For example, in the case of a 16-year plan, 15 per cent of the sum assured is paid out during the fourth, eighth and twelfth policy year.

On the plan's maturity, the policyholder will receive all the premiums paid, with the exception of rider premiums, less the amount already paid out in the intervening years. Loyalty additions, if any, are also paid out.

The total payout under this plan is a departure from some of the other money-back plans, under which the policyholder, at maturity, would cumulatively receive the entire sum assured and accrued bonuses. Under Bima Gold, if the loyalty additions, which are not guaranteed, are not reckoned with, the policyholder would receive at maturity the entire premium paid over the plan's tenure. This is similar to the payout in the case of a term plan with a return of premium option. Should an unfortunate development befall the policyholder during the term of the plan, the beneficiary will receive the sum assured. This amount would be paid out regardless of the payments made earlier.

Given the nature of the payouts, premiums under this plan are lower compared to other money back plans offered by LIC itself. To illustrate, a 35-year-old person pays a premium of about Rs 3,800 per annum for a sum assured of Rs 1 lakh over a 20-year term; that figure stands at about Rs 6,400 in the case of a regular money back plan.

Rider option

The Accidental Death and Disability rider can be appended to the basic plan. In the case the policyholder's death is caused by an accident, the sum assured under this rider would be paid out, apart from the basic sum assured. In the event of the policyholder suffering permanent disability due to an accident, the rider sum assured would be paid in monthly instalments over a 10-year period.

Other features

Bima Gold plan has an auto-cover facility, under which risk cover for the policyholder continues even if there is a slip-up in premium payments. This facility is available for a period of two years reckoned from the date of the first unpaid premium. However, during the auto-cover period, the accident benefit rider would not be applicable.

The policy acquires guaranteed surrender value after three years' premiums are paid; the policy also becomes paid-up after premiums are paid for three years. Loans can be taken against the policy after the policy has paid-up value. Rebates are also available depending on the value of the sum assured and the mode of premium payment.

Readers are requested to compare products featured under this column with similar ones offered by other players

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