Is LIC’s online term plan for you?

While most private insurers have gone online, LIC has abstained from offering online term plans for some time now. But the behemoth recently flagged off its first online term policy. The plan is nearly 35 per cent cheaper than the offline version. Given that LIC has the industry’s highest claim settlement ratio (97.7 per cent) and that holds a 72 per cent market share even a decade after the entry of private insurers, should you go for LIC’s e-term plan?

The plan is a pure term plan. Upon death of the policyholder, the sum assured will be paid to the nominee as long as the policy is in force.

The maximum age at entry is 60 years and the cover ceases at 75 years. The premium has to be paid annually; a quarterly payment option is not available now. You will have to undergo a medical test.

This plan is cheaper compared to LIC’s own offline term insurance plan.

However, compared to the online term policies of some private insurers, it is more expensive. For a ₹50 lakh sum assured, a 31-year-old male (non-smoker) will have to shell out a premium of ₹4,000 to ₹4,500 in case he takes the policy from an insurer such as Max Life, Aegon Religare or Bharti AXA.

But for LIC’s e-term plan, he will have to cough up ₹8,820, almost double that.

But don’t brush aside LIC’s online plans right away. Here are three reasons why the plan might actually suit you.

For one, though it may seem costlier, it is not prohibitively expensive and is still cheaper than online term plans from a few others, such as ICICI Prudential. For a ₹50 lakh sum assured, the premium under ICICI’s online term plan for a 31-year-old male is ₹10,130.

Secondly, if you are a smoker, you may actually consider LIC’s online plan, because their premium here is not higher than others by a big sum.

For a ₹50 lakh sum assured, a male of 31 years would pay a premium of ₹10,000-10,500 in the case of HDFC Life and ICICI Prudential Life and ₹13,545 in the case of SBI Life.

With LIC’s e-term plan, the premium is ₹11,910. Thirdly, a non-smoker may get a lower premium if he opts for a sum assured of above ₹50 lakh as the differential rates become applicable only for a sum assured more than ₹50 lakh.

Given these advantages and the claim settlement record of LIC, the new online term plan is a good offer.

If you currently have a term plan with a private life insurer and want to switch to LIC’s plan, don’t rush to close your old plan or leave the premium unpaid. Log on to LIC’s website, fill up the basic details, take the medical test and wait for policy issue. Once the policy papers come are in your hands, you can close the earlier plan.

Otherwise, you run the risk of a period with no coverage.