LIC e-Term Review – Online Term Plan – Do not Buy

LIC launched its online term plan that is, e-Term Plan in 2014, a while after the private players like HDFC and ICICI had launched their online term plans. Before getting into LIC e-Term review, let us start with the basics

What is a Term Plan?

A Term Plan is a policy that provides insurance cover for a specified period of time. If you die during the defined period, then the amount will be payable to your family. The policy offers insurance cover at an affordable cost and you can buy a policy for a higher cover at a lower premium. However, the plan provides no benefits on maturity.

What is the cost of a Term Plan?

Under the Amulya Jeevan Plan II, LIC charges Rs. 14,639 per year, for a Rs. 50 Lakh policy, for a defined period of 25-35 years. In case of the individual’s death before the stipulated time, the nominee will receive the amount of Rs. 50 Lakhs. If the individual survives the term plan period, he/she will not get any benefit. This is similar to a Car insurance, where the benefit is payable if there is a claim, otherwise the premium is lost.

What is an Online Term Plan?

A Term Policy sold online without the involvement of a third person or an agent, is called an Online Term Plan. The premium rates in these policies are much lower compared to the other Term policies. This is because:

1. The company saves the cost incurred for the agent’s commission.
2. Most individuals applying for the Online Term Policy are young, educated and exclusively concerned about their health.
3. Most of these individuals have a Health Insurance Policy and they can afford the best treatment.

What are the options under Online Term Plans?

Aegon Religare started the first Online Term Plan in 2009. Most private companies took after Aegon Life and started offering their own online term policies. The table below gives a comparative premium rate of Rs. 1 Crore Online Term Policy, offered by different companies for non-smoking males.

Age -35 Years, Term- 25 Years, Sum Assured – 1 Crore (Non-Smoking males)
Name of the Company	Name of Plan	Premium
LIC	eTerm	21061
ICICI Prudential Life	iProtect Smart	11918
HDFC Life	3D Plus Life	11891
Max Life	Online Term Plus	10384
SBI Life	eShield	13228
TATA AIA Life	Sampoorna Raksha	11328
Aegon Life	iTerm	9512

 

From the above table, we can conclude that LIC Online Term Plan is approximately 77% costlier than the HDFC and SBI Life premium rates, and double the rate of companies like Aegon Life.

What is LIC e-Term?

LIC e-Term is an online term plan by LIC. Individuals belonging to the age group of 18-60 years can qualify to purchase the LIC Online Term Plan. The policy offers Terms from 10-35 years and provides coverage until the age of 75 years. The premium is to be receivable annually, that is on yearly basis only. The policy offers 2 different rates for smokers and non-smokers. The minimum sum assured for non-smoker category is 50 Lakhs while for the aggregate category the sum assured is 25 Lakhs

If you do not want to purchase the Online Term Plans from the private players, you can opt for the LIC Online Term Plan. However, keeping the family’s interest and needs in mind, it is essential that you buy an Online Term Plan of a sufficient value.

How to buy the LIC Online Term Plan?

You can click on the link below, to calculate your Premium and buy the LIC Online Term Plan

LIC Online Term Plan – Click to buy E-Term

Individuals choosing to opt for a digital mode of payment will get 8 % discount in the first-year premium payable to the company.

Points to bear in mind while buying a LIC Online Term Plan

Since, there is no agent involved in the procedure, you have to fill the Proposal Form all by yourself. It is important to enter your personal information honestly as required.

It is paramount and mandatory that your insurance company should be informed of any health problems that you may have. If you have undergone any treatment in the past or you have a habit of drinking or smoking, you need to disclose the information to the company i.e. all the material information needs to be disclosed or your claim may be rejected.

Let the Nominee know about your Policy

Term plans are for the benefit of the family and if you die in any circumstance, your family can avail the benefit to support themselves. Nominating the right individual is extremely important as they have to claim the money from the insurance company. In addition, your nominee should be kept well informed about the term plan you opted.

LIC e-Term Review  

Now, should you go for LIC e-Term plan or choose the term plan from a private insurer, here is the LIC e-Term review

• LIC policies are sold on the basis of trust. People believe that LIC will honor the claim even if they haven’t declared the material information, which is not the case now a days.
• The premium of LIC e-Term plan is 77% costlier as compared to the premium of private insurance companies and double in some cases. It doesn’t make sense to pay more amount for the same sum assured
• There is no option to pay monthly, quarterly or half yearly premium. Where many companies are promoting 1000/- per month, LIC is still stuck with the annual premium.
• Earlier, people used to blindly trust LIC because of their claim settlement ratio. Now a days, all the life insurance companies have more or less same claim settlement ratio. Max Life offered an even better claim settlement ratio than LIC last year.

You can check the claim settlement ratio here:

IRDA Claim Settlement Ratio

I would suggest you to buy online term insurance from private companies. However, if you are not comfortable with private life insurers, you can definitely go with LIC.

Whether you purchase it from private company or LIC, term insurance should be a must for everyone with dependents.

Does LIC e-Term cover accidental death?

Yes, LIC e-Term covers accidental death. Though, there is no option of buying any accidental rider with the plan.

So, what is your view on LIC e-Term review. Also, Share your opinions or experiences with the LIC e-Term Plan.