The LIC Amritbaal Plan is a unique savings and life insurance policy designed to meet the educational and financial needs of your child in the future. It is a non-linked, non-participating insurance plan, meaning it is not affected by stock market fluctuations, and it doesn’t participate in LIC’s profit-sharing. The plan guarantees the benefits to policyholders without any bonuses. The primary aim of the plan is to help accumulate a substantial corpus for your child’s future expenses, including higher education and other significant financial needs.
Let’s break down this plan in simpler terms, covering its key features, benefits, and how it works.
Key Features of LIC Amritbaal Plan
- Guaranteed Additions: The plan offers a guaranteed addition of Rs. 80 for every Rs. 1,000 of the Basic Sum Assured throughout the policy term. This addition boosts the policy’s value each year.
- Flexible Premium Options: You can choose between two premium payment options:
- Single Premium: Pay the premium in one go.
- Limited Premium: Pay premiums over a limited number of years—5, 6, or 7 years.
- Maturity Age Flexibility: You can choose the maturity age for your child, which can be between 18 and 25 years. This flexibility allows you to plan according to your child’s future needs.
- High Sum Assured Rebate: If you opt for a higher sum assured, LIC offers attractive rebates, reducing your premium cost.
- Loan Facility: If you need funds during the policy term, you can avail of a loan against your policy. This ensures liquidity during emergencies without having to surrender the policy.
- Premium Waiver Benefit Rider: By paying an additional premium, you can opt for this rider, which waives future premiums if the proposer (usually the parent) passes away during the policy term. This ensures that your child’s policy continues even if you are no longer there.
- Settlement Option: You have the option to receive maturity benefits in installments instead of a lump sum. This ensures a steady flow of income when your child needs it, for 5, 10, or 15 years.
Eligibility and Restrictions
- Entry Age: The plan is available for children as young as 30 days and up to 13 years old. This ensures that you can start planning for your child’s future early on.
- Maturity Age: The minimum maturity age is 18 years, and the maximum is 25 years. You can select the maturity age depending on when your child might need the funds, such as for higher education or starting a career.
- Sum Assured:
- Minimum Sum Assured: Rs. 2,00,000.
- Maximum Sum Assured: There is no upper limit on the sum assured, but it is subject to LIC’s underwriting policies.
Benefits of LIC Amritbaal Policy
The plan offers multiple benefits, which can be categorized as follows:
1. Death Benefit
- In case of the unfortunate demise of the life assured (the child), the nominee will receive a death benefit. There are two options to choose from:
- Option I: The death benefit is either 7 times the annualized premium or the Basic Sum Assured, whichever is higher.
- Option II: The death benefit is either 10 times the annualized premium or the Basic Sum Assured, whichever is higher.
- For single premium policies, the death benefit will be:
- Option III: 1.25 times the single premium or the Basic Sum Assured, whichever is higher.
- Option IV: 10 times the single premium or the Basic Sum Assured, whichever is higher.
Along with the death benefit, the accrued Guaranteed Additions will also be paid.
2. Maturity Benefit
- If the life assured (your child) survives until the end of the policy term, they will receive the maturity benefit. This includes the Basic Sum Assured along with the Guaranteed Additions accumulated over the years.
3. Guaranteed Additions
- The guaranteed additions of Rs. 80 per Rs. 1,000 Basic Sum Assured will accrue each year during the policy term, significantly increasing the final payout.
4. Loan Facility
- After the policy has been in force for at least two years (or after three months in the case of single premium plans), you can avail of a loan. The loan amount can be up to 90% of the surrender value for an in-force policy or 80% for a paid-up policy.
5. Surrender Benefit
- If you need to surrender the policy, the surrender value will be higher of the Guaranteed Surrender Value or the Special Surrender Value. The Guaranteed Surrender Value increases over time, making it a beneficial feature for policyholders who need to exit the plan early.
Payment of Premiums
The LIC Amritbaal Plan offers two ways to pay the premiums:
- Single Premium: You can make a one-time payment for the entire policy.
- Limited Premium: You can spread the payments over 5, 6, or 7 years. The premium can be paid on a yearly, half-yearly, quarterly, or monthly basis, depending on your convenience.
Grace Period for Premium Payments
If you choose the Limited Premium option, the plan offers a grace period:
- 30 days for yearly, half-yearly, and quarterly premium payments.
- 15 days for monthly premiums.
During this grace period, the policy continues to provide coverage without any interruption. However, if you fail to pay the premium within this grace period, the policy will lapse.
Sample Premiums
To give you an idea of how much the premium might cost, let’s look at an example for a policy with a Basic Sum Assured of Rs. 5,00,000 and a term of 20 years:
- Limited Premium Payment:
- For 5 years: Rs. 99,625 annually under Option I and Rs. 1,00,100 under Option II.
- For 6 years: Rs. 84,275 annually under Option I and Rs. 84,625 under Option II.
- For 7 years: Rs. 73,625 annually under Option I and Rs. 73,900 under Option II.
- Single Premium Payment:
- For Option III: Rs. 3,89,225.
- For Option IV: Rs. 4,12,600.
These premiums are for standard lives aged 5 years. The exact premium may vary depending on the policy term, entry age, and other factors.
Rebates on Premiums
The LIC Amritbaal Plan offers two types of rebates:
- High Sum Assured Rebate: If you choose a higher Basic Sum Assured, you are eligible for a rebate on your premium. This rebate varies depending on the amount of the sum assured and the maturity age.
- Online Purchase Rebate: If you buy the plan online without any assistance from an agent, you will receive a 10% rebate on the Limited Premium option and a 2% rebate on the Single Premium option.
Revival of Lapsed Policies
If your policy lapses due to non-payment of premiums, LIC allows you to revive the policy within 5 years from the date of the first unpaid premium. However, this is only possible before the policy matures. To revive the policy, you must pay all overdue premiums along with interest.
The revival is subject to LIC’s approval, and they may require additional information or documents to assess the continued insurability of the life assured.
Paid-Up Value
If you have paid premiums for at least two full years and then stop paying premiums, the policy will not lapse. Instead, it will become a paid-up policy. This means the policy will continue, but the benefits (death and maturity) will be reduced in proportion to the number of premiums paid.
Surrender Value
If you decide to surrender the policy, you will receive a Surrender Value. There are two types of surrender values:
- Guaranteed Surrender Value (GSV): This is calculated as a percentage of the premiums paid. It increases with the number of years the policy has been in force. For single premium policies, the GSV is 75% of the premium paid during the first three years and 90% after that.
- Special Surrender Value (SSV): LIC may declare a Special Surrender Value from time to time, which could be higher than the GSV. If the SSV is higher, you will receive that amount.
Loan Facility
The LIC Amritbaal Plan allows you to take a loan against your policy, which is especially helpful in times of financial need. The loan amount can be up to:
- 90% of the surrender value for in-force policies.
- 80% of the surrender value for paid-up policies.
The interest rate on the loan is tied to government securities and may vary each year. Currently, the interest rate is around 9.5% per annum, compounded half-yearly.
Example:
Ravi, a 40-year-old government employee, faced an unexpected medical emergency and needed Rs 3 lakh urgently. Instead of breaking his fixed deposits or taking a personal loan at a high interest rate, Ravi decided to take a loan against his LIC Amritbaal policy. He had already paid premiums for 10 years and had accumulated a significant surrender value.
By taking a loan against the policy, Ravi was able to meet his financial requirements without compromising the death or maturity benefits. He continued paying the premiums regularly, and the policy remained in force.
Settlement Option for Death Benefit
In the unfortunate event of the life assured’s death, the nominee can opt to receive the death benefit in installments over 5, 10, or 15 years instead of a lump sum payment. This option provides financial stability for the nominee during a difficult time.
The minimum installment amounts are:
- Rs. 5,000 per month.
- Rs. 15,000 per quarter.
- Rs. 25,000 per half-year.
- Rs. 50,000 per year.
If the death benefit is less than the amount required to meet the minimum installment, the nominee will receive the amount in a lump sum.
Termination of Policy
The policy will terminate upon the occurrence of any of the following events:
- Payment of the death benefit.
- Payment of the surrender value.
- Payment of the final maturity installment under the settlement option.
- Non-revival of a lapsed policy within the revival period.
Example 1: A Young Professional’s Journey with LIC Amritbaal Plan
Case Study: Arjun, 25 years old
Arjun, a 25-year-old IT professional, decided to invest in the LIC Amritbaal Plan. He chose a policy term of 25 years with a sum assured of Rs 10 lakh. Arjun’s goal was to secure his family’s future while also accumulating a corpus for his retirement.
- Premium Payment:
Arjun opted for a limited premium payment term of 15 years, meaning he would only have to pay premiums for 15 years, even though the policy term was 25 years. - Maturity Benefit:
By the time Arjun reaches 50, the policy will mature, and he will receive the sum assured of Rs 10 lakh along with the bonuses declared by LIC over the years. - Death Benefit:
In the unfortunate event of Arjun’s demise during the policy term, his family would receive the death benefit, ensuring their financial security.
Example 2: Secure Future for a Middle-Aged Businessman
Case Study: Rajesh, 45 years old
Rajesh, a 45-year-old businessman, wanted to secure a portion of his earnings for his children’s education and future needs. He opted for the LIC Amritbaal Plan with a sum assured of Rs 20 lakh.
- Premium Payment Term:
Rajesh chose a premium payment term of 10 years and a policy term of 20 years. This allowed him to finish paying premiums by the time he turned 55, ensuring that his financial commitments didn’t extend into his retirement years. - Maturity Benefit:
When Rajesh reaches 65, his policy will mature, and he will receive the sum assured along with the accrued bonuses, providing him with a significant corpus for his retirement and his children’s education. - Loan Facility:
During the policy term, Rajesh faced a cash crunch in his business. Instead of liquidating his investments, he took a loan against the LIC Amritbaal Plan, ensuring his business continued smoothly while the policy remained intact.
Example 3: Protecting Family’s Future – A Homemaker’s Investment
Case Study: Meera, 38 years old
Meera, a homemaker, wanted to contribute to the family’s financial security. She took the LIC Amritbaal Plan with a sum assured of Rs 5 lakh.
- Premium Payment:
Meera opted for a premium payment term of 10 years with a policy term of 20 years. The premiums were affordable for her since she chose to pay them quarterly. - Maturity Benefit:
After 20 years, Meera would receive the sum assured of Rs 5 lakh along with bonuses. This would help her create a savings corpus for her personal financial needs. - Death Benefit:
If Meera passes away during the policy term, her family would receive the sum assured along with bonuses, ensuring they have a financial cushion.
Steps To Buy LIC Amritbaal Policy Online
Here are the simple steps to buy the LIC Amritbaal Policy online:
- Visit LIC’s Official Website: Go to www.licindia.in, the official website of the Life Insurance Corporation of India.
- Navigate to Online Plans: On the homepage, click on the ‘Buy Policy Online’ option, usually listed under ‘Products’. This will lead you to various online policies available for purchase.
- Select the LIC Amritbaal Policy: From the list of policies, look for the LIC Amritbaal Plan. Click on the policy to get detailed information about it, including benefits, eligibility, and premium options.
- Calculate Your Premium: Use the online premium calculator available on the site. Enter your child’s details, such as their age, sum assured, and policy term. The calculator will show the estimated premium for both single and limited premium payment options.
- Fill in the Proposal Form: After selecting your premium and sum assured, fill out the online proposal form with personal information, nominee details, and the required documents.
- Make the Payment: Choose your payment method—net banking, debit/credit card, or UPI. Complete the payment to purchase the policy. You will receive an acknowledgement of payment along with the policy details.
- Receive Policy Documents: Once the payment is confirmed, you will receive the policy document via email or courier. Keep these documents safe for future reference.
Conclusion
The LIC Amritbaal Plan is a well-rounded insurance plan that not only provides life coverage for your child but also helps in building a financial corpus for their future needs. With guaranteed additions, flexible premium payment options, and a loan facility, it ensures that you are prepared for any future financial challenges while securing your child’s future.
FAQs
Q. Who can purchase the LIC Amritbaal Plan?
The plan can be purchased by the parent or guardian of a child who is at least 30 days old and up to 13 years of age. The policyholder can be anyone wanting to secure the child’s future, but the life assured must be the child.
Q. What is the risk commencement date under the LIC Amritbaal Plan?
For children under 8 years of age, the risk starts two years after the policy’s commencement date or when the child turns 8, whichever is earlier. For children 8 years and older, the risk commences immediately after the policy is issued.
Q. What happens if the policyholder dies before the child reaches maturity?
If the parent or proposer dies, and the Premium Waiver Benefit Rider has been opted for, future premiums are waived off. The policy continues to be in force, and the child (the life assured) still receives all the planned benefits.
Q. Can the child take over the policy when they turn 18?
Yes, once the child (life assured) turns 18, the policy automatically vests in them. They then become the policyholder and can decide on any policy-related actions.
Q. What are the policy term options available under the LIC Amritbaal Plan?
For Limited Premium payment options, the minimum policy term is 10 years, and the maximum is 25 years. For Single Premium policies, the minimum term is 5 years, and the maximum is 25 years.
Q. Is there a waiting period for death claims?
Yes, if the plan is purchased through Point of Sales Persons (POSP-LI) or Common Public Service Centers (CPSC-SPV), a 90-day waiting period applies. During this time, only accidental death is covered. Non-accidental death during this period results in the refund of premiums paid.
Q. What is the free-look period under the LIC Amritbaal Plan?
You have a 30-day free-look period from the date you receive the policy document. During this period, if you are not satisfied with the terms and conditions, you can return the policy and get a refund of your premium after deducting certain charges like risk premium, stamp duty, and medical expenses.
Q. Can the policy be revived if it lapses?
Yes, if the policy lapses due to non-payment of premiums, it can be revived within 5 years from the date of the first unpaid premium. You must pay all overdue premiums along with interest. The revival is subject to LIC’s approval based on the health and insurability of the life assured.
Q. Is the LIC Amritbaal Plan eligible for tax benefits?
Yes, premiums paid under the LIC Amritbaal Plan are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. Additionally, the maturity and death benefits are tax-exempt under Section 10(10D), subject to prevailing tax laws.
Q. Can the policyholder change the mode of premium payment?
Yes, under the Limited Premium option, the policyholder can change the mode of premium payment (from yearly to half-yearly, for example) during the policy term, subject to certain conditions set by LIC.
Q. What happens if the policyholder stops paying premiums after 2 years?
If at least two full years’ premiums have been paid and the policyholder stops paying further premiums, the policy acquires a paid-up value. This means that the policy will continue but with reduced benefits in proportion to the premiums already paid.
Q. Are loans available against the LIC Amritbaal Plan?
Yes, loans are available under the policy after paying two full years of premiums in the Limited Premium option or three months after policy issuance for the Single Premium option. The loan amount can be up to 90% of the surrender value for in-force policies and 80% for paid-up policies.
Q. Can the maturity or death benefit be taken in installments?
Yes, both the maturity and death benefits can be taken in installments over 5, 10, or 15 years instead of a lump sum. The minimum installment amount varies depending on the payment mode.
Q. What happens if the life assured (child) dies before the policy’s maturity?
If the life assured passes away after the risk commencement date, the death benefit is paid to the nominee (usually the parent or guardian), along with the accrued Guaranteed Additions.
Q. Can the nominee change the installment option after the life assured’s death?
No, once the policyholder or life assured selects the installment option for the death benefit, the nominee cannot change it. The payments will continue as per the original option chosen.
Q. Can this plan be purchased online?
Yes, the LIC Amritbaal Plan can be purchased online through the official LIC website. Buying the plan online provides a rebate of 10% on Limited Premium and 2% on Single Premium policies.
Q. Is the policy eligible for revival after foreclosure?
Yes, if the policy is foreclosed due to non-payment of loan interest or if the loan exceeds the surrender value, it can be revived within the revival period by paying all due amounts, subject to LIC’s approval.
