LIC Term Insurance Offering 1 Crore Coverage

Over the past few years, term insurance plans have become increasingly popular considering the extensive benefits they offer (high sum assured, nominal premiums, multiple term insurance riders, and various customisation options over death benefit payout and premium payment frequency). As a result, multiple new private players have emerged in the market, offering top-notch policies with lucrative perks. While the newer generations are leaning towards these new players, some old and evergreen insurers still continue to reign the market, even if it’s only for their extensive track record.

One such evergreen life insurance provider is Life Insurance Corporation of India or LIC, which is the country’s oldest and largest public sector life insurer with a vast pool of clients. While the insurer offers products across all genres of life insurance plans, their term insurance policies will be our topic of discussion for the day, specifically the ones that offer ₹1 crore coverage.

Now, while considering the shooting inflation and the rising cost of inflation, accompanied by the age and number of your dependents, justifies the purchase of a term insurance policy with ₹1 crore coverage, the question is, should LIC be the credible life insurer that you approach?

(P.S. Please remember that your ideal term insurance cover amount needs to be calculated since it varies from one policyholder to the other and is largely dependent on your income slab, age, existing financial responsibilities, and current financial bandwidth.  You can always calculate the ideal cover amount using a free tool!)

Let’s get a quick overview of the Life Insurance Corporation of India or LIC, its metrics and overall operational proficiency, and the best LIC term insurance plans offering ₹1 crore coverage.

Best LIC term insurance plans with 1 crore coverage

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Life Insurance Corporation of India (LIC): A Quick Overview

Life Insurance Corporation of India (LIC) started its operations back in 1956, making it the oldest public sector life insurance provider. The insurer offers a wide variety of financial products, including endowment plans, ULIPs, pension plans, micro insurance plans, and term insurance policies. The brand’s extensive track record and extensive product portfolio have gained it a vast client pool. Currently, the insurer's metrics stand at -

• Claim Settlement Ratio (CSR)  of 98.71% (the industry average is  97.74%)
• Amount Settlement Ratio (ASR) of 95.1 (the industry average is  90.9%)
• Complaint Volume of 10.5 (the industry average is 72.8)

However, this popularity of the insurer can be quite misleading because much of it can be attributed to the fact that

• once, LIC had the monopoly in the life insurance industry in India, and
• a majority of the older generation still put their faith in the insurer since they are not quite aware/literate about the recent players and their enhanced operational proficiency.

On the other hand, LIC’s popularity has taken a substantial hit with the growing marketing and performance endeavours from top life insurers in the market. Additionally, the absence of comprehensive term insurance policies, lack of term insurance riders in the policies, and pricey plans have put LIC on the backfoot.

However, if you are still a brand loyalist and in the market for a term insurance policy offering ₹1 crore coverage, you need to start by analysing the insurer first, based on its credibility metrics -

Should you buy an LIC term insurance policy offering 1 crore coverage?

When you plan to purchase a term insurance plan, you must remember that this is a long-term financial commitment between the insured and the insurer, often involving a substantial cover amount (in crores). Thus, you need an insurer that is well-reputed for its hassle-free claim settlement track record that can be determined by taking a look at the operational metrics of LIC –

(P.S.: We have taken the data of the last 3 years to make sure that your insight about the insurer is based on its consistency in performance.)

1. Claim Settlement Ratio of LIC - The first metric that you need to look at is the Claim Settlement Ratio or CSR, which is given by -

(Total number of claims settled by an insurer across a year / total number of claims raised to the insurer in the year) * 100

If an insurer's CSR is 97 or above, the provider is good to go. However, if it drops below 80, you better start looking for another provider.

In the case of LIC, the CSR track record of the last 3 years is as follows -

Insight: LIC’s CSR is better than the pre-set benchmark of 97, and the numbers have only gotten better over the years. This is a promising start. However, please remember that while CSR is a crucial metric in determining the credibility of the insurer, it isn’t the only factor to be considered when you choose a term insurer.

 2. Amount Settlement Ratio of LIC—The Claim Settlement Ratio is easy to manipulate. The insurer can simply settle multiple small claims and ignore ones with a larger death benefit payout. Unfortunately, if you only rely on an insurer's CSR, you will never be able to see through it.

Hence, you also need to take a look at the Amount Settlement Ratio of an insurer, which is calculated by -

(Total amount of the claim settled/ Total amount of the claims filed) * 100

To ensure that you have a credible term insurance provider in your sight, its ASR must be 90 and above. Currently, the ASR numbers of LIC are as follows -

Insight: LIC’s Amount Settlement Ratio is well above the 90% benchmark, which is a great sign for its existing policyholder as it indicates that the insurer’s claim settlement potential is exceptional. This also signifies that the insurer has promising sustainability for the foreseeable future, which is extremely important in the case of long-term financial commitments like term insurance plans.

  3. Complaint Volume of LIC— To gain a deeper insight into the claim settlement experience of existing policyholders, you need to examine a provider's complaint volume. This is given by the number of complaints registered against the insurer for every 10,000 claims settled.

Since term insurance plans usually don’t have a pre-mature payout (unless there is a Critical Illness/Terminal Illness rider involved), the complaints registered are mostly about the policyholder's claim settlement experience.

Needless to say, the lower the number of complaint volume, the more credibility the insurer gains (context: the lowest complaint volume across the term insurance industry is 2.3).

Take a look at the complaint volume track record of LIC -

Insight: Considering that the industry-best complaint volume from 2020 - 2023 is 2.3, you would expect a number that is much closer to this. While LIC’s complaint volume numbers have decreased significantly, we are still concerned about the high numbers that they have reflected over 2020 - 2022.

  4. Total Business of LIC - When buying a term insurance plan, you would want to approach a provider with an extensive track record and high business volume. This would indicate a high client volume and the fact that they have entrusted a substantial cover amount - which can be quite reassuring for potential policyholders.

Insight: Considering how LIC is the oldest life insurance provider in the industry, such high business volume is not exactly surprising, but it is surely reassuring.

Now that you have a better understanding of LIC as an insurer, it’s time to take a look at the best LIC term insurance plans offering ₹1 crore coverage.

What are the best LIC term insurance plans offering 1 crore coverage?

1. LIC's New Tech Term: The LIC's New Tech Term policy is not exactly a comprehensive pick. The plan doesn’t have much to offer. Here’s a quick look at the features of this plan -

• The death benefit is a minimum of ₹50 lakhs. The maximum sum assured depends on your eligibility and the discretion of the insurer’s underwriting team.
• The death benefit under this policy can be of two types - the Level sum assured (the coverage remains constant across the policy period and is disbursed upon the policyholder’s death) and the Increasing sum assured (the base coverage increases by 10% annually from the 6th policy year, continuing until it reaches 200%, the policyholder passes away, or the 15th policy year ends, whichever comes first)
• In the case of women policyholders, there is a substantial discount on the premiums.
• There are different premiums for the smoking and non-smoking portfolios of policyholders.
• Accidental Death Benefit is offered as a rider, under which the beneficiaries receive an additional sum if the policyholder passes away as a result of an accident.

Drawback: The premiums (for smokers and non-smokers) are significantly higher than those of other plans (from other insurers). There is a single rider available with the policy, leaving very little room for customisation. Additionally, this is an online-only term insurance plan, so if you are a traditional brand loyalist expecting to purchase this plan offline, this policy won’t be available to you!

  2. LIC's New Jeevan Amar - This is an online version of LIC's New Tech Term, and most of the features are the same, apart from a few exceptions -

• The death benefit is a minimum of ₹25 lakhs. The maximum sum assured varies based on your eligibility and the insurer’s underwriting team.
• This policy is only available online.

Drawback: This is neither an affordable nor a comprehensive health insurance plan. There is a single available rider and the policy is only extended over the online platform of the insurer in question.

A quick glance at the aforementioned couple of LIC’s term insurance policies offering ₹1 crore coverage, and you will know that these are not exactly top picks for any sum assured. If you really want some of the term insurance plans offering ₹1 crore coverage, take a look -

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What are the top 5 term insurance plans offering 1 crore coverage in 2024?

1. Max Life Smart Secure Plus - Max Life offers an excellent term insurance plan that stands out for its comprehensiveness and affordability. It includes:

• Accidental Death Benefits
• Zero Cost Term Plan Options
• Inflation-Linked Cover Increase
• Waiver of Premiums for Total and Permanent Disability or Critical Illness
• Critical Illness Rider
• Top-Up Option
• Total Permanent Disability Rider
• In-Built Terminal Illness Rider
• Maturity Benefits via Premium Returns

The plan is particularly appealing for smokers, as it offers lower premiums compared to other options in its category.

Drawbacks: The in-built terminal illness benefit provides only a partial sum assured upon diagnosis of a terminal illness, as declared by a doctor with a prognosis of a few months to live. The insurers do not disburse the full sum assured.

  2. HDFC Life Click2Protect Super - HDFC's Click 2 Protect Super is a highly customisable and comprehensive term insurance plan. Its features, combined with HDFC's credibility, make it an excellent choice for a ₹1 crore term policy. Key riders include:

• Zero Cost Option: If you choose this rider and terminate the policy at a specified date, the provider returns all premiums paid, minus GST and rider premiums. This feature is built-in.
• Accidental Death Benefit: Pays an additional amount if the policyholder dies in an accident.
• Critical Illness Benefit: Covers 60 or 19 critical illnesses (depending on the variant), providing an extra sum for treatment or other uses.
• Waiver of Premium: Keeps the policy active without further premiums if you become permanently disabled or diagnosed with a critical illness.
• Total Permanent Disability: Provides a replacement income if you become permanently disabled, ensuring household expenses are covered.
• Inflation Protection: Adjusts the coverage amount to account for inflation, enhancing the policy's value over time.

Drawbacks: The plan is a tad pricey.

  3. Bajaj Allianz Smart Protect Goal - The Bajaj Allianz Smart Protect Goal is a comprehensive policy offering several benefits, including:

• Critical Illness Rider
• Maturity Benefits via Premium Returns

However, a few caveats make it a questionable choice.

Drawbacks: The Bajaj Life Smartt Protect Goal plan's Critical Illness Rider lacks the Accelerated option. Only the standard CI rider is available, with the CI amount over and above the base sum assured. The plan also does not include a terminal illness benefit, top-up option, or Waiver of Premium.

  4. ICICI Prudential iProtect Smart - The ICICI Prudential iProtect Smart offers four payout options: Lump sum, Income, Lump sum plus Income, and Increasing Income. It has four variants: Life, Life Plus, Life & Health, and All-in-One. These variants are comprehensive, affordable, and feature-rich, each with specific riders that make them unique.

Key features of the ICICI iProtect Smart policy include:

• Life Stage Option: Increases the initial cover amount during major life events like marriage or childbirth, providing higher coverage when needed.
• Smart Exit Benefit: Allows for a full refund of premiums paid (excluding GST and rider premiums) if you cancel the policy mid-term, though certain conditions apply.
• Accelerated Critical Illness Benefit: Pays a lump sum if diagnosed with any of the 34 listed critical illnesses, deducted from the base amount, reducing the final payout to beneficiaries.
• Accidental Death Benefit: Provides an additional amount over the base sum if the policyholder dies in an accident, beneficial for those with frequent travel.
• Waiver of Premium: Waives future premiums if the policyholder becomes permanently and totally disabled due to an accident, keeping the policy active.
• Terminal Illness Benefit: Offers a lump sum or monthly instalments if diagnosed with a terminal illness, as certified by doctors.

Drawbacks: The insurer needs to up its overall operational efficiency.

  5. TATA AIA Sampoorna Raksha Supreme - The TATA AIA Sampoorna Raksha Supreme is a flagship plan known for its affordability and comprehensive coverage. It includes an in-built terminal illness perk, life stage benefits, top-up sum assured, and premium payment flexibility. This plan comes in four variants based on payout options: Life Option, Life Plus Option, and Life Income Option.

The plan offers several riders:

• Accidental Death Benefits: Provides an additional lump sum if the policyholder dies due to an accident.
• Accidental Total and Permanent Disability Benefits: Offers an extra sum if the policyholder becomes totally and permanently disabled from an accident.
• Criticare Plus Benefits: Pays a lump sum upon diagnosis of any of the 40 listed critical ailments, over and above the sum assured.
• Criticare Benefit: Pays a lump sum for any of the 40 listed critical ailments, which is part of the base sum insured, reducing the final payout.

(The Criticare Rider is available only with the Sampoorna Raksha Supreme Vitality policy.)

Drawbacks: For Sampoorna Raksha Supreme, the policy requires a minimum income eligibility of ₹10 lakhs, limiting the pool of policyholders. Despite the absence of some riders, it remains a strong option from TATA AIA. For Sampoorna Raksha Supreme Vitality, the sum assured is capped at ₹2 crores.