The Life Insurance Corporation of India (LIC) has announced significant changes to its insurance policies, affecting several of its well-known plans and introducing new schemes targeting a broader demographic of policyholders.
One of the most notable changes is the reduction of the entry age for the New Endowment Plan from 55 to 50 years. This shift is likely to impact older individuals, as it addresses the heightened risk associated with mortality rates observed after this age. Industry experts indicate this decision aims at mitigating LIC’s risks related to claims.
According to Minister of State for Finance Pankaj Chaudhary, during the financial year 2023-24 (FY24), LIC reported unclaimed maturity amounts totaling Rs 880.93 crore. This figure highlights the persistent issue of unclaimed benefits, with 3.72 lakh policyholders failing to claim their due amounts during this period. The government has emphasized the need for insurers to facilitate claims to prevent funds from remaining unclaimed.
The year-wise unclaimed maturity claims data indicates troubling trends: from Rs 652 crore in FY21-22 to Rs 897 crore the following year, and now Rs 880.93 crore for FY24. The rising amounts being left unclaimed could suggest policyholders either unaware of their potential benefits or facing hurdles when attempting to make claims.
LIC has taken proactive measures to reduce these unclaimed amounts through various initiatives, including advertisements across multiple platforms encouraging policyholders to check their entitlements. For example, funds classified as unclaimed typically arise when policyholders fail to collect their benefits after policy maturity or due to lapses, like cessation of premium payments without initiating claims.
For those concerned about unclaimed amounts, the process to check one's potential benefits is straightforward. Policyholders can visit the official LIC website, navigate to the “Customer Service” section, and select “Unclaimed Amounts of Policyholders”. By providing specific details—including policy number, name, date of birth, and PAN—policyholders can view their unclaimed amounts.
Claiming these unclaimed amounts is simple. After discovering unclaimed benefits, the policyholder must fill out the claim form, gather necessary documentation like the policy document and premium receipts, and submit these to their nearest LIC office. If approved, LIC will process the claim and release the amount owed.
Alongside addressing unclaimed funds, LIC is revising its policies to offer customers well-rounded insurance options. Notably, the new surrender rules will significantly affect plans. The New Endowment Plan-914 is engineered to not only provide death cover but also to act as a savings plan, ensuring financial returns on investments made by policyholders.
LIC has revamped approximately 32 of its insurance products, effectively incorporating newly instituted surrender value rules. These changes are scheduled to take effect on October 1, 2024. Premium rates for these plans have been increased by about 10 percent, along with raised sum assured, now starting at Rs 2 lakh for some plans, compared to the prior Rs 1 lakh minimum. This indicates LIC’s aim to cover rising risks and provide substantial protection.
The updated range of plans includes six different endowment schemes such as the LIC Single Premium Endowment Plan, LIC New Jeevan Anand, and more. Each of these offerings is crafted to meet varying consumer needs, balancing premium costs with the level of security provided.
LIC's policy changes come amid competitive practices within the insurance sector. While LIC is adjusting its prices and products, private firms reportedly have raised their premium rates only by 6 to 7 percent for similar coverages. This difference raises questions about whether customers will shift their loyalties based on cost effectiveness.
All these updates and changes underline the importance for policyholders to stay informed. The introduction of term life insurance plans, including LIC’s Yuva Term and Digi Term, aims to cater to younger audiences. Available both online and offline, these term plans provide financial security to families should unforeseen events occur during the insured’s lifetime.
The minimum entry age for new term plans is set at 18 years, with maximum entry ages between 45 and 75 years, ensuring accessibility for many. The assurance of death benefits is guaranteed under these new policies, providing added peace of mind to policyholders.
Overall, the modifications instituted by LIC not only reflect the company's responsiveness to changing markets but also the apparent need for policyholders to engage with their insurance plans actively. Continuous checking and claiming processes will help prevent substantial unclaimed funds from accumulating, ensuring policyholders can secure their rightful benefits.
With new policies and tweaks rolling out soon, it's imperative for existing and potential policyholders to understand these changes thoroughly. Staying informed gives them the power to protect their investments and gain significant returns from their insurance policies.
