On the occasion of its Diamond Jubilee year, LIC has launched a new money back plan – LIC Bima Diamond (Money Back Plan 841). This is a closed ended plan and available for sale until August 31, 2017. UIN: 512N307V01
It is a with profit, limited premium payment, money back plan with policy term of 16, 20 or 24 years while the premium paying terms are 10, 12 & 15 years respectively. It is non-linked plan i.e. it is not ULIP or your money will not be linked to equity market movements.
Whats Unique about this new policy
Money Back after 4 years interval – This policy provide money back after every 4 years. Most of the LIC policies had money back feature after 5 years interval.
Extended Coverage – After the premium is paid for the complete term, half of the policy term is extended without any additional premium.
Auto Coverage Period – Life Risk cover (upto 2 years) is provided even if the premium is not paid (on certain conditions).
Despite of these unique features, you should not go for this policy – read the rest of the Article and Summary.
Details of LIC BIMA Diamond Plan
|Minimum Age at Entry||14 years|
|Maximum Age||Policy Term||Max Entry Age|
|Premium Paying Terms||Policy Term||Premium Payment|
|Minimum Sum Assured||Rs 1 Lakh|
|Maximum Sum Assured||Rs 5 Lakh|
Benefits of LIC BIMA Diamond Plan
Life Cover – The LIC Bima Diamond Plan gives insurance risk cover during the policy period and also after that . There are three types of death benefit.
- If death happens during first 5 years of the policy, the family would get the full sum assured.
- If the death happens after five years the family would get the full sum assured and loyalty additions if any.
- If the policyholder dies after the end of policy but during the extended cover period, the family would get 50% of the sum assured.
|Money Back Benefit||Policy Term||Premium Payment|
|16||15% of Basic Sum Assured at the end of 4th, 8th and 12th|
|20||15% of Basic Sum Assured at the end of 4th, 8th, 12th and 16th|
|24||12% of Basic Sum Assured at the end of 4th, 8th, 12th, 16th and 20th|
|Maturity Benefit||Policy Term||Maturity Benefit|
Bonus for LIC Bima Diamond Plan – This plan does not give any regular annual bonus i.e. no simple reversionary bonus for this plan. However, this plan participate in the profit of LIC and you may get loyalty addition. The LIC Bima Diamond plan gives loyalty additions after paying all the premiums or on death after 5 years.
Extended protection – You will get the extended life cover even after the completion of the policy for half of the policy tenure. For e.g. if you have a policy for 16 years, you will get cover for 24 years ( 16 years +8 years free).
Automatic Life Cover – You would get life cover even after not paying the premium. This is termed as the auto cover. If you pay premium for 3 years, you get auto cover for 6 months. If you have paid premium for 5 years, you get auto cover of 2 years.
|Annual Premium of Sum Assured Rs 5 lacs|
|Different tenures (in Rs)|
Rebate on Premium (Payment frequency)
- Annual Payment – 2%
- Half yearly Payment – 1%
- Quarterly, monthly – Nil
Rebate on High Sum Assured
|Basic Sum Assured||Rebate|
|Below 2 lacs||Nil|
|2 – 4.8 lacs||2.5% of basic sum assured|
|5 lacs||3% of basic sum assured|
You can take two riders along with the LIC Bima Diamond plan. You have to pay extra for the rider. The rider sum assured can’t exceed the basic sum assured of the LIC Bima Diamond plan.
- AccidentalDeath and Disability Benefit Rider
- New Term Assurance Rider
LIC Bima Diamond Returns Calculator
Historically LIC Moneyback policies give returns of approx 5% only. I will post the detailed calculation soon.
Should I go for this policy
I am not a fan of traditional life insurance policies. In my view, both investment and insurance should not be mixed.
For life insurance, it is better to take a term insurance plan. For investments, you should consider investing in Equity mutual funds.
Even if you want to go with LIC policies as long term investment, the main drawback of this policy is that the maximum sum assured in Rs 5 lakhs, which is not huge.
Historically, these LIC policies give a return of 5-7% which is also not guaranteed. The premium you pay – if you buy a term insurance and put the balance amount in FD, you might get more return and risk coverage.
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