One of the primary concerns that individuals have is the financial well-being of their family after they pass away. They worry about the financial crunch left behind by the absence of their monthly income. Pure financial tools like life insurance policies surfaced to cater to this concern. As these plans grew, so did the number of insurers offering them and the customisation of these policies. While some were pure financial protection tools (like term insurance plans), some were market-linked and fetched returns (like ULIPs, Endowment plans, and more), and some were a combination of both.
Despite the emergence of new insurers, some old, traditional brands still have a strong foothold in the industry, including Life Insurance Corporation of India (LIC). While Gen X, Z, and millennials have grown financially fond and reliant on new insurers for investment-related products, traditional insurers like LIC remain popular, as do some of its pure protection plans, like LIC Tech Term Plan.
The LIC Tech Term Plan is a term insurance policy (available online only) with a basic structure and a few benefits. Against the backdrop of new and comprehensive policies from credible term insurance providers, the current concern is whether purchasing LIC Tech Term Plan is a smart financial move.
Let’s explore the features of this policy to find out!
Quick Verdict on LIC Tech Term Plan
The LIC Tech Term Plan may not be a good pick, because while the plan offers built-in features like - death benefit (50 lakhs - no cap), special rates for women policyholders and smoking/non-smoking profiles, that’s ALL it offers as built-in perks.
Additionally, unlike the best term insurance plans that come with a host of riders (3+), this policy has only one rider to offer - the Accidental Death Benefit. Thus, you have very little room for customisation.
Hence, despite LIC’s extensive insurance history, credible metrics, and long-standing popularity, the LIC Tech Term Plan has better competitor policies from other credible insurers.
LIC Tech Term Plan: Brief Overview
LIC, or Life Insurance Corporation of India, commenced its operation in 1956 and is one of the country’s oldest and largest public sector life insurers with a vast client base. The insurer offers extensive financial products, including whole life insurance, term insurance, endowment plans, ULIPs, and more. Here is a quick look at the metrics of LIC that reflect its credibility -
- 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)
Despite such metrics, the insurer is not such a popular choice among millennials and Gen Z, considering LIC has failed to catch up with the evolving financial trends of the population. Moreover, the lack of comprehensiveness in its policies, accompanied by its slightly expensive premiums, has contributed to its deteriorating popularity.
Much like any other policy from LIC, the LIC Tech Term Plan lacks the expected comprehensiveness of a term insurance policy. The policy doesn’t have many perks, such as built-in features, and it doesn't offer multiple customisation options via riders. The plan has a couple of variants based on the presence or absence of an in-built perk of increasing covers and a single rider, Accidental Death Benefit.
However, in case you have taken a look at the best term insurance plans, you can easily compare and find a list of missing perks, including Waiver of Premium, Terminal Illness Benefit, Return of Benefits, or Accidental Total and Permanent Disability Benefit.
But, if you are one with brand loyalty, looking at LIC’s metrics data over the last 3 years, and looking for a basic term insurance plan, the LIC Tech Term Plan can be a pick for you. Here is a quick look at its features -
LIC Tech Term Plan: Table of Features
| FEATURES | DETAILS |
|---|---|
| Variants | Level Sum Assured | Increasing Sum Assured |
| Coverage | 50 lakhs (minimum) - No specific upper limit |
| Entry age | 18 years |
| Available Riders | Accidental Death Benefit |
Should You Buy LIC Tech Term Plan?
- LIC as an insurer: LIC, or Life Insurance Corporation of India, once was synonymous with financial products like life insurance plans, term insurance policies, whole life plans, and more. However, we currently have a long list of credible life insurance providers offering comprehensive, heavily customisable, and affordable policies. Hence, LIC’s products are not a popular choice or recommendation.
On the other hand, LIC’s plans are neither comprehensive nor pocket-friendly and come with very limited term insurance riders. Naturally, plans from this stable may not be a good pick.
2. In-built features of the plan: As a standard vanilla term insurance policy, policyholders have a list of common expectations in its in-built feature list. Unfortunately enough, the LIC Tech Term Plan meets none of these expectations with its minimal in-built features -
- Death benefit: Much like any term insurance plan, this policy offers a death benefit option. Under this option, the beneficiary receives the cover amount in a lump sum or instalments if the policyholder passes away during the policy tenure. However, there are two plan options in the case of the death benefit -
- Level Sum Assured: In the case of Level Sum Assured, the cover amount is constant and was chosen during the policy purchase.
- Increasing Sum Assured: The cover amount for the policy increases by 10% of the basic sum assured from the 6th year of the policy to the 15th year of the plan. This increase continues until the boost reaches double the sum assured or the 15th year (when the double sum assured becomes constant) of the policy or the end of the policy tenure or the policyholder's death, whichever is earlier.
- Special premium charges for women: If the policyholder is a woman, there is a substantial rebate on the LIC Tech Term Plan premiums.
- Different rates for smoking and non-smoking profiles: Similar to any other term insurance plan, the premiums for smoking and non-smoking profiles differ. While the premiums for non-smokers are relatively low(than that of smokers), the premiums in both cases are higher than that to be paid towards other top-notch term insurance plans from credible insurers.
3. Available Riders: When purchasing term insurance policies, we usually have a long list of riders that customise the product to fit our tailored medical and financial requirements. Unfortunately, in the case of the LIC Tech Term Plan, there is a single-rider option:
- Accidental Death Benefit: If the policyholder passes away due to an accident, LIC offers an additional sum over and above the basic cover amount. This amount is paid as a lump sum.
What’s Unique About the LIC Tech Term Plan?
The LIC Tech Term Plan offers nothing unique. The built-in features are limited to death benefits, with an option to increase inflation-based coverage. This policy has a single rider: the Accidental Death Benefit. Additionally, while the policy offers extensive coverage of 50 lakhs and above (the upper limit is based on the underwriter’s decision), the premiums are higher than those of the other policies in its category.
Conclusion
The LIC Tech Term Plan is not a comprehensive, affordable, or customisable policy. Term insurance policies are usually popular because of their affordability and customisation over diverse riders. However, the LIC Tech Term Plan defies all these requirements, thus encouraging you to opt for one of the industry best term insurance plans, instead of the Tech Term plan.