LIC Bima Ratna Plan Review (2024)-Is it Good or Bad?

Table of Contents:

1.) Introduction

2.) What is LIC Bima Ratna?

3.) Features of LIC Bima Ratna

4.) Benefits of LIC Bima Ratna

• Death Benefit
• Survival Benefit
• Maturity Benefit

5.) Guaranteed Additions

6.) Additional Benefits

• Rider Benefit
• Settlement Option for maturity benefit

7.) Option to take death benefit in instalment

8.) Payment of Premium in LIC Bima Ratna

9.) What is the eligibility to purchase LIC Bima Ratna?

10.) LIC Bima Ratna: Example with Illustration

11.) IRR of LIC Bima Ratna vs. Other Investments

12.) IRR of LIC Bima Ratna

13.) LIC Bima Ratna vs. PPF + Term Insurance

14.) LIC Bima Ratna vs. ELSS + Term Insurance

15.) What is the Grace Period in LIC Bima Ratna?

16.) Rebates

17.) Revival in LIC Bima Ratna

18.) What is a Paid-up value in LIC Bima Ratna?

19.) LIC Bima Ratna Policy Loan

20.) Advantages of LIC Bima Ratna

21.) Disadvantages of LIC Bima Ratna

22.) How to Cancel the LIC Bima Ratna?

23.) Surrendering the LIC Bima Ratna Policy

24.) Final Verdict of LIC Bima Ratna

Introduction

LIC Bima Ratna is an individual savings cum insurance policy that offers both life protection and savings. But, how can it be better than other insurance plans?

Will this LIC Bima Ratna plan help you with your financial growth?

Let’s discover the answer here.

A Review on LIC Bima Ratna: This analysis can help you to decide, whether the insurance is worth buying or not.

What is LIC Bima Ratna?

LIC Bima Ratna is an individual saving plus insurance plan which can give you life protection as well as savings.

This LIC Bima Ratna plan provides financial support to the policy holder’s family if the policyholder passes away unfortunately during the policy term. The LIC Bima Ratna plan also provides a regular payout for the survival of the policyholder.

Features of LIC Bima Ratna:

• LIC’s Bima Ratna is a Non-Linked, Non-Participating, Individual, Savings, Life Insurance Plan
• The loan is available to provide liquidity
• Tax Benefit
• Optional riders benefit
• Provide both savings and life protection.

Benefits of LIC Bima Ratna:

Death Benefit:

If the policyholder passes away during the policy term, then the nominee will get the “Sum Assured on Death.”

Sum Assured on Death will be higher than 125% of the basic sum assured

7 times of annualized premium.

105% of the total premium paid.

However, in the event of a minor Life Assured whose age at admission is less than 8 years, the Death Benefit payable on death before the initiation of Risk (as described in Paragraph 2 below) shall be a refund of premium(s) paid.

Survival Benefit:

If the policyholder survives throughout the policy term, then he will get the percentage of the basic sum assured as survival benefit as below,

Policy Term (in years)	Payment of Survival Benefit
15	25% of the Basic Sum is Assured at the end of each of the 13th and 14th policy years.
20	25% of the Basic Sum is Assured at the end of each of the 18th and 19th policy years.
25	25% of the Basic Sum is Assured at the end of each of the 23rd and 24th policy years.

Maturity Benefit:

If the Life Assured survives the specified Date of Maturity while the policy is still in existence, the “Sum Assured on Maturity” plus accumulated Guaranteed Additions will be paid. Where “Sum Assured on Maturity” equals 50% of the Basic Sum Assured.

Guaranteed Additions:

Guaranteed Additions will be paid at the end of the following policy years as follows.

Policy Year	Guaranteed Additions (per Rs 1000 Basic Sum Assured)
From 1st to 5th	Rs 50
From 6th to 10th	Rs 55
From 11th to 25th	Rs 60

Additional Benefits:

Rider Benefit:

By paying an extra charge, the following five optional riders will be accessible under this package.

However, the policyholder may select either the LIC’s Accidental Death and Disability Benefit Rider or the LIC’s Accident Benefit Rider, as well as the remaining three riders, subject to eligibility.

LIC’s Accidental Death and Disability Benefit Rider (UIN: 512B209V02)

LIC’s Accident Benefit Rider (UIN:512B203V03

LIC’s New Term Assurance Rider (UIN: 512B210V01)

LIC’s New Critical Illness Benefit Rider (UIN: 512A212V02)

LIC’s Premium Waiver Benefit Rider (UIN: 512B204V03)

In the event of POSP-LI / CPSC-SPV policy, no rider shall be offered.

Settlement Option for maturity benefit:

The settlement option is receiving the maturity benefit as an instalment in five years instead of getting a lump sum.

The settlement option is payable in yearly, half-yearly, quarterly, and monthly modes.

Mode of Instalment payment	Minimum instalment amount
Monthly	Rs. 5,000/-
Quarterly	Rs. 15,000/-
Half-Yearly	Rs. 25,000/-
Yearly	Rs. 50,000/-

Option to take death benefit in instalment:

If the policyholder passes away during the policy term, then the death benefit shall be payable as an instalment of 5 years instead of lumpsum.

The death benefit shall be payable in yearly, half-yearly, quarterly, and monthly modes.

Mode of Instalment payment	Minimum instalment amount
Monthly	Rs. 5,000/-
Quarterly	Rs. 15,000/-
Half-Yearly	Rs. 25,000/-
Yearly	Rs. 50,000/-

Payment of Premium in LIC Bima Ratna:

Premiums can be paid regularly on yearly, half-yearly, quarterly, and monthly modes or through salary deductions.

What is the eligibility to purchase LIC Bima Ratna?

Minimum Basic Sum Assured: Rs. 5,00,000

Maximum Basic Sum Assured (Basic Sum Assured shall be in multiples of No limit of Rs 25,000/- )

Policy Term :

• 15 years, 20 years, and 25 years
• 15 & 20 years (in case of policies procured through POSP-LI/CPSC- SPV)

Premium Paying Term :

• Premium Term is 11 years for Policy Term 15 years
• Premium Term is 16 years for Policy Term 20 years
• Premium Term is 21 years for Policy Term 25 years

Premiums can be paid regularly at yearly, half-yearly, quarterly, or monthly intervals (monthly premiums through NACH only) or through salary deductions.

Minimum Age at entry :

• 5 years (Completed) for Policy Term 15 years
• 90 days (Completed) for Policy Term 20 & 25 years

Maximum Age at Entry :  

• 55 years (Age Nearer Birthday) for Policy Term 15 years
• 50 years (Age Nearer Birthday) for Policy Term 20 years
• 45 years (Age Nearer Birthday) for Policy Term 25 years
• 65 years (Age Nearer Birthday) minus Policy Term (in case of policies procured through POSP-LI/CPSC-SPV )

Minimum Age at Maturity :

• 20 years (Completed) for Policy Term 15 & 20 years
• 25 years (Completed) for Policy Term 25 years

Maximum Age at Maturity :  

• 70 years (Age Nearer Birthday)

In case you obtain the policies through POSP-LI/CPSC-SPV then the maximum age of entry is 65 years (Age Nearer Birthday).

LIC Bima Ratna: Example with Illustration:

IRR of LIC Bima Ratna vs. Other Investments:

IRR of LIC Bima Ratna:

Overall contribution: Rs. 1, 18, 726

Tenure: 24 years

Then,

As you can see in the above illustration, the LIC Bima Ratna gives us an IRR of 4.40% and at the end of the policy term, it will give us a maturity benefit of Rs. 38, 50, 000.

But, being a long-term investment, is it enough to fulfill your family’s financial needs?

Will this be enough to beat the inflation?

Of course, the answer is not.

Yet, let’s not conclude.

Let’s compare this LIC Bima Ratna with other investment plans and see which one is better?

LIC Bima Ratna vs. PPF + Term Insurance:

Overall contribution: Rs. 1, 18, 726

Tenure: 20 years

Term Insurance:

Annual Premium: Rs. 8, 500

Sum Assured: Rs. 50, 00, 000

PPF Investment: Rs. 1, 10, 226

Interest rate: 7.10% (Risk-free)

As per the calculation, PPF gives us an IRR of 6.65% and Rs. 68, 94, 499 as a maturity value.

LIC Bima Ratna vs. ELSS + Term Insurance:

Overall contribution: Rs. 1, 18, 726

Tenure: 20 years

Term Insurance:

Annual Premium: Rs. 8, 500

Sum Assured: Rs. 50, 00, 000

ELSS Investment: Rs. 1, 10, 226

Assumed Interest rate: 12% with risk

After 20 years, we will get an IRR of 11.31% in ELSS investment and Rs. 1, 50, 17, 146 as investment return.

After 25 years, we will get Rs. 1, 56, 76, 203 without any additional contribution.

Investment Options	IRR (Internal Rate of Return)	Maturity Benefit	Death Benefit
LIC Bima Ratna	4.40%	Rs. 38, 50, 000	Rs. 53, 50, 000
PPF	6.65%	Rs. 68, 94, 499	Rs. 50, 00, 000
ELSS	11.31%	Rs. 1, 56, 76, 203	Rs. 50, 00, 000

So, compare to other investments LIC Bima Ratna did not give us a better investment return.

Now, let’s see other features of LIC Bima Ratna.

What is the Grace Period in LIC Bima Ratna?

Grace period for yearly, half-yearly, and quarterly mode premium is 30 days and for monthly mode, it is 15 days. During this time, the policy will be considered in force and will provide risk coverage without interruption by the provisions of the policy. The Policy expires if the premium is not paid before the end of the grace period.

Rebates:

Mode Rebate
Mode	Rebate
Yearly mode	2% of Tabular Premium
Half-yearly mode	1% of Tabular premium
Quarterly, Monthly (NACH) & Salary deduction	NIL

High Sum Assured Rebate
Basic Sum Assured (BSA)	Rebate on tabular premium per Rs 1000 BSA (Rs.)
5,00,000 to 9,75,000	Nil
10,00,000 to 14,75,000	0.5
15,00,000 to 19,75,000	1
20,00,000 and above	1.25

Revival in LIC Bima Ratna:

The coverage will lapse if the premiums are not paid during the grace period. It can be resurrected, but only after 5 years from the date of the First Unpaid Premium but before the date of maturity.

What is a Paid-up value in LIC Bima Ratna?

If in less than two full years’ payments have been paid, all policy benefits will be terminated.

If no additional premiums are paid after at least two full years of payments have been paid, the insurance is deemed paid up.

“Paid-up Sum Assured = Basic Sum Assured * (Total period for which premium is paid/Total period for which premium is payable)”

LIC Bima Ratna Policy Loan:

A loan can be obtained if at least two full years of premiums have been paid.

The maximum loan amount that can be awarded is as follows:

a. For active policies: up to 90% of Surrender Value

b. Paid-up policies: up to 80% of Surrender Value

Advantages of LIC Bima Ratna:

• This LIC Bima Ratna plan is appropriate for cautious investors because the return is not connected to market results.
• There is a loan facility available.
• The survival benefit and guaranteed addition are additional benefits.
• The settlement option receives both the maturity and death benefits
• There are optional riders available.

Disadvantages of LIC Bima Ratna:

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• The surrender or payment term is two years.
• The LIC Bima Ratna policy is not available online.
• You can only purchase the LIC Bima Ratna Policy through LIC’s Corporate Agents (including Banks), Insurance Marketing Firms (IMF), Brokers, CPSC-SPV, and POSP-LIs engaged by these intermediaries.
• LIC Bima Ratna is an insurance/investment product but neither a good insurance product and not a good investment product.

How to Cancel/ Surrender the LIC Bima Ratna?

If the policyholder did not get satisfied with the terms and conditions of the LIC Bima Ratna, then he can return the policy by stating the reason within 15 days from the date of purchasing the policy.

Surrendering the LIC Bima Ratna Policy:

The policyholder may surrender the insurance at any moment throughout the policy term if two full years’ payments have been paid. For more details, you can read the LIC Bima Ratna brochure here.

Final Verdict of LIC Bima Ratna:

LIC Bima Ratna claims that it can protect the policy holder’s family financially as it provides both life protection and wealth creation.

But, compared to other investment options this will not give better benefits and will not help you beat the inflation.

As insurance, the policy seems a bit expensive.

So, it does not serve as both investment or insurance plan.

So, if you don’t want to take any risk-oriented investment plan then you can choose PPF and RBI bonds or other risk-free investments.

If you are comfortable with risk-oriented investment, then you can choose mutual funds. For life protection, you can choose individual term insurance at a low price.

If you have any comments or questions, write them in the comment box below.

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