Policy Term in LIC – What do you Mean by Policy Term in Life Insurance Corporation (LIC) of India?

Policy term is a pivotal aspect of any insurance plan, and it implies the duration during which an insurance policy stays active. Policy term in Life Insurance Corporation (LIC) of India means the number of years for which a LIC policy stays in force. 

The extent of the wide-ranging coverage of LIC policies goes from 20 to 40 years or even a lifetime in some cases. In this post, Let us look at the policy term’s meaning and significance in LIC policies.

Meaning of Policy Term 

For a better understanding of the policy term, it is essential to understand the basic characteristics of a life insurance policy. What does a life insurance plan offer, and how does it benefit a policyholder?

A life insurance plan is like an agreement between an insurance company and a policyholder. As per this agreement, the insurer or the insurance company offers monetary support to the insured or the policyholder during emergencies like sudden demise, disability and critical illness (of the insured). In return for this support or protection, the policyholder will pay an amount called a premium, depending on the coverage offered under the plan.

Life insurance policies are of different types. For instance, some plans cover the insured for a particular period. On the other hand, there are plans that last a lifetime or cover the policyholder for their entire life.

The duration for which the policies allow protection to the policyholder is called the policy term in a life insurance plan, including policies offered by LIC of India.

Policy Term in LIC Policies

As already discussed, a policy term of LIC policies denotes the tenure or duration of the policy. Let us now look at some significant details about policy terms in LIC policies.

• LIC allows the policyholders the option to choose the policy terms of their LIC plans as per their requirement
• If there is an unfortunate incident like the death of the insured during the term of the policy, the family/nominee of the policyholder can raise the death benefit claim
• If the policyholder’s demise occurs when the policy term ends, the family of the life assured will not receive any benefit. Hence, it is better to look for a whole life policy term for LIC policies
• Also, note that the LIC policy benefits go beyond death benefits. If the policyholder undergoes any permanent disability or is diagnosed with a critical illness, the LIC policy covers the insured against it. Further, in case of accidental deaths also, the policy covers by supporting the family of the life assured. However, you need to add specific riders to your plan to receive the particular benefits
• Most LIC policies come with maturity benefits that you can avail at the end of the policy term. However, this is not valid in the case of term insurance plans
• There are some LIC money-back plans which offer survival benefits to the insured if the person outlives the policy term of the particular plan
• In case a policyholder withdraws their LIC policy before the end of the policy term and after paying premiums for 2 to 3 years, they are still entitled to receive a sum of money in the form of surrender value

How to Select Policy Terms for LIC Plans?

The duration for which a policyholder stays covered under a LIC policy is known as its policy term. The policy term is chosen by considering several factors, such as the current age of the insured, the purpose of buying the plan – for retirement, for savings, or child planning etc. LIC child insurance plans or LIC annuity plans serve best for long-term goals.

When it comes to selecting the ideal policy term, continuing a life insurance policy for your entire employment tenure is considered best. This way, you can stay prepared to compensate for any income loss if any untoward situation occurs in your life. However, if the life assured is the family’s sole earning member and within the age bracket of 30 to 40 years, they may go for whole life cover to avail protection throughout their lifetime.

Type of LIC Plans’ Policy Terms

There is a particular type of policy term that policyholders can choose from for each type of insurance plan provided by LIC of India. Take a look at some policy terms of LIC policies below:

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