LIC Micro Bachat Plan Details: For just Rs 29/day, get Rs 2 lakh cover, Income tax benefits and more

LIC Micro Bachat Plan: The Life Corporation of India (LIC) has launched first of its kind microinsurance plan - LIC Micro Bachat. The official LIC document of the scheme says, "LIC’s Micro Bachat is a regular premium, non-linked, participating micro-insurance plan which offers a combination of protection and savings." It further says, "This plan provides financial support for the family in case of unfortunate death of the policyholder during the policy term and a lump sum amount at the time of maturity for the surviving policyholder. This plan also takes care of liquidity needs through its Loan facility." With the maximum basic sum assured (BSA) of Rs 2 lakh and annualised premiums as low as Rs 51.5 per Rs 1000 BSA, this plan targets small income individuals.

Here's a look at all the important details and benefits of the new LIC plan: 

No medical examination needed; Any individual living a healthy life can apply for the scheme. No medical examination is needed. LIC document says, "This plan is only available for standard healthy lives without undergoing any medical examination."

Restrictions: 

- Minimum Basic Sum Assured: Rs. 50,000
- Maximum Basic Sum Assured: Rs. 200,000
- The Basic Sum Assured is available in multiples of Rs.5,000
- Minimum Age at entry: 18 years (completed)
- Maximum Age at entry: 55 years (nearer birthday)
- Policy Term: 10 to 15 years
- Premium Paying Term: Same as Policy Term
- Maximum Age at Maturity: 70 years (nearer birthday of the insured)

Premium payment can be done yearly, half-yearly, quarterly or monthly intervals. 

Grace Period for Premium payment: For this plan, LIC provides a "grace period of one month but not less than 30 days" for payment of premiums. 

Premium rates:

The LIC document provides sample premium rates:

*Source: LIC

It is clear from the above chart, if a subscriber aged 35 years opt for 15-year Micro Bachat plan, he will need to pay annualised premium of Rs 52.20 per Rs 1000 BSA. Hence, for Rs 2 lakh basic sum assured, the annualised premium would be Rs 52.20 x 100 x 2 = Rs 10,400. This Rs 10,400 can be paid by saving just Rs 28.8 per day (Rs 29 in round figure), or just Rs 864 per month. 

The LIC document says, "Depending on age of life to be assured, Policy Term and Sum Assured chosen, for annual mode of premium payment, the premiums may vary from Rs 2,524 p.a. to Rs 17,612 p.a."

The premiums referred here does not include any taxes, extra amount if charged under the policy due to underwriting decision and rider premium, says LIC document.

Maturity Benefits

- If the life assured survives till the end of the policy term and pays all due premiums, he/she shall get the sum assured on maturity along with the applicable "Loyalty Addition."

Death benefit - If the Life Assured dies during the policy term provided and has paid all due premium, s/he will get: 

a) For death during the first five years: Sum Assured on Death.
b) For death after completion of five policy years but before the date of maturity: Sum Assured on Death with Loyalty Addition. The Sum Assured on Death here would be: 
• 10 times of annualised premium; or
• Sum Assured on Maturity.
• Absolute amount assured to be paid on death, i.e. Basic Sum Assured.

- The death benefit will not be less than 105% of all the premiums paid as on date of death. 

Loyalty Addition:

The policies under this plan are eligible for Loyalty Addition as per the terms declared by the LIC. The LIC document says, "In case of Death or Maturity claim in respect of inforce policies, Loyalty Addition shall be payable, provided premiums have been paid for at least five full years and after completion of five policy years."

"In case of Death or Maturity claim in respect of paid-up policies or in case of Surrender (both inforce and paid-up policies) Loyalty Addition shall be payable provided five policy years are completed with at least five full years’ premium have been paid and Maturity Paid-up Sum Assured is Rs 50000 or more."

- Loan facility

The policy subscriber can get a loan during the policy term after paying at least 3 full years’ premiums. 

Income tax benefits
The investment in the scheme will get income tax benefit under Section 80 C of the Income Tax Act. 

(Note: The article is for information purpose only. Read the official LIC document before subscribing to this scheme)