LIC Bima Ratna (Plan 864) – Features, Eligibility and Hidden Factors

LIC Bima Ratna (Plan 864) – Features, Eligibility and Hidden FactorsLIC has launched a new life insurance savings plan, LIC Bima Ratna. This plan is aimed to provide periodic payments during the survival period beyond life insurance coverage. Generally LIC keeps launching new policies during year end to, attract investors who are looking for tax savings. They rarely launch a plan during the beginning of the financial year. LIC has openly indicated that this product is designed to sell through banking partners. What are the Key Features of LIC Bima Ratna Plan? What is the eligibility to take this Bima Ratna Plan? Should you opt LIC’s Bima Ratna Plan 864?

Also Read: Best Term Insurance Plans in 2022 in India

What is the date of commencement of risk?

Since the death benefit is paid based on commencement of risk, it is important for us to understand them first.

> 8 years of age – Date of commencement of risk would be immediate.

< 8 years of age – Date of commencement of risk would be 2 years after taking the policy or after attaining 8 years of age whichever is earlier

Key Features of LIC Bima Ratna Plan No 864

It is non-linked, non-participating, individual, savings and life insurance plan. Here are the key features of the plan:

#1 – Death Benefit

In case of unfortunate death of the life insured, family members or nominee would get the sum insured which would be higher of the following:

125% of basic sum assured

7 times of annualized premium

105% of the total premiums paid excluding any rider premium paid

In case of minor aged below 8 years, on death before commencement of the risk, the only premium amount would be refunded as death benefit.

#2 – Guaranteed Additions

LIC offers guaranteed additions in this plan which is payable as follows:

1st to 5th year of the policy – Rs 50 per every 1,000 thousand sum assured (5%)

6th to 10th year of the policy – Rs 55 per every 1,000 thousand sum assured (5.5%)

11th to 25th year of the policy – Rs 60 per every 1,000 thousand sum assured (6%)

In case of death of the life insured, guaranteed additions would be paid for a full year in that year.

#3 – Maturity Benefits

In case of survival of life insured, maturity benefit would be paid which is equal to “Sum Assured on Maturity” along with Guaranteed Additions. Sum Assured on Maturity would be equal to 50% of Basic Sum Assured.

#4 – Survival Benefits

LIC Bima Ratna Survival Benefits would be paid as follows:

15 Year Plan – 25% of the sum assured would be paid at the end of each 13th and 14th year

20 Year Plan – 25% of the sum assured would be paid at the end of each 18th and 19th year

25 Year Plan – 25% of the sum assured would be paid at the end of each 23rd and 24th year

#5 – Eligibility to take this Plan

Minimum age of entry is 5 years for a 15 year policy and 90 days for 20 and 25 year policy.

Maximum age of entry is 55 years for a 15 year policy and 50 years for 20 and 25 year tenure policy.

Maximum age of maturity is 70 years.

While the minimum basic sum assured is Rs 5 Lakhs, there is no maximum basic sum assured limit. However, it should be in multiples of Rs 25,000.

Policy term would be 15 years, 20 years and 25 years.

#6 – Settlement Option in LIC Bima Ratna

LIC offers another unique feature which is a settlement option in this policy.  Under this settlement option, the maturity benefit would be paid in installments over 5 years instead of a lump sum under in force and paid-up policy. The amount can be either absolute value or % of the total claim proceeds payable. Interest payable would be 2% lower than the 5 years G-Sec yield.

#7 – Premium payment options

Premium paying term would be 11 years for 15 year policy term, 16 years for 21 year policy term and 20 years for the 25 year policy term.  Means one need to pay 4 years lower than the policy term.

Premiums can be paid either monthly, quarterly, half yearly or yearly or through monthly salary deductions.

#8 – Rebates on premium

This plan offers below rebates on premium:

Mode Rebate
Mode Rebate
Yearly 2% of tabular premium
Half Yearly 1% of tabular premium
Quarterly/Monthly Nil
High Sum Assured Rebate
Basic Sum Assured (BSA) Rebate – Rs 1,000 BSA
5 Lakhs to 9.75 Lakhs Nil
10 Lakhs to 14.75 Lakhs 0.50
15 Lakhs to 19.75 Lakhs 1.00
20 Lakhs and above 1.25

LIC Bima Ratna Sample Premiums

Here are the sample premiums (yearly) for Rs 20 Lakhs Basic Sum Assured.

Policy Term in Years (Premium Paying Term)
Age 15 (11) 20 (16) 25 (21)
20 2,16,040 1,51,066 1,14,218
30 2,16,824 1,52,340 1,16,178
40 2,20,744 1,57,534 1,22,940
50 2,32,602 1,71,548

LIC Bima Ratna explained with an example

Let me explain this an example. Mr. Rajesh, 30 years of age have taken 25 year plan with annual premium of Rs 1.16 Lakhs.

He need to pay a yearly premium for 21 years for 25 years tenure.

Guaranteed additions would be 5% for 1 to 5 years, 5.5% for 6 to 10 years and 6% for 11 to 25 years.

Survival benefit would be 25% of basic sum assured would be paid on 23rd year and 24th year.

Maturity Benefit would be 50% of basic sum assured would be paid  on maturity of 25 years.

The approximate XIRR is 4.8% in this case. Here is the computation.

LIC Bima Ratna - Example

Positive Factors in LIC Bima Ratna

Here are the major positive factors in this plan.

This is simple life insurance savings plan which is easy to understand.

This is the best life insurance savings plan for individuals who are low risk investors and looking for safe investment options.

Survival benefit helps to get periodical payments for each year in last 2 years of the policy term.

Guaranteed Additions of 5% / 5.5% and 6% would be paid for 5 years, 10 years and 15 years respectively.

Settlement option would help to receive the maturity amount in installments for 5 years either by absolute value or percentage of total claims payable.

Optional riders available, i.e. LIC Accident Benefit Rider and Accidental Death and Disability Rider Benefit, Critical illness benefit rider and Premium Waiver Benefit Rider.

Negative of Hidden Factors in Bima Ratna plan of LIC

Here are major negative factors in this policy:

This policy is offered only offline through bank partners, LIC agents and brokers. You cannot purchase online.

In case of death of minor aged < 8 years only premiums would be refunded and no additional death benefit would be paid.

In case premiums are not paid, guaranteed additions would cease to accrue under this plan.

In case life insured commits suicide within 12 months, the nominee or family members would get 80% of premiums paid. There would not be any further death benefit beyond this.

Life insurance savings plans provide low returns between 4.5% to 5.5%.

Also Read: Top Health Insurance Plans in 2022

Should you opt LIC Bima Ratna Plan 864?

LIC has openly indicated on first page of the sales brochure that this product is exclusively launched through its banking partners and corporate agents.

LIC’s new Bima Ratna policy is like a regular LIC plan without any exciting features. Such plans offer very low returns of 4.5% to 5% returns (depending on the policy tenure and age of life insured).

One can opt for a simple term insurance plan and invest balance surplus in a simple FD or a mutual fund scheme that can fetch high returns.

Source data: Bima Ratna LIC Policy Brochure

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Suresh KP

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