LICs Bima Nivesh plan to have risk cover

Our Banking Bureau
11 July 2002

Mumbai: Life Insurance Corporation of Indias (LIC) single-premium investment plan, Bima Nivesh, will now feature an add-on risk cover. The benefit is in the form of a triple-risk cover built into the policy.

The new Bima Nivesh will be available only for a 10-year period with a triple cover attached. There are also some changes in the age limits and terms. While the minimum age of entry continues to remain 18 years, the maximum age of entry has now been brought down to 50 years from the earlier 70.

Contributions towards Bima Nivesh enjoy tax rebate under section 88. Also, the maturity proceeds and guaranteed additions paid on maturity are tax-free under section 10D of the IT Act. This section states that all the payments received from insurance, except annuity, will be tax-free in the hands of an individual.

The minimum amount that can be invested for a 10-year policy is approximately Rs 24,025 for Rs 25,000 sum assured. There is also a high-premium rebate equal to 1 per cent of the basic premium on premium in excess of Rs 25,000; 1.5 per cent of the basic premium on premium in excess of Rs 50,000; and 2 per cent of the basic premium on premium in excess of Rs 2 lakh.

No loan is provided by LIC to the policyholder under this plan. However, there will be a provision for assignment in order that the policyholder may draw a loan from other financial institutions.

To cite an example, the premium on a Bima Nivesh policy of Rs 50,000 for 10 years will work out to Rs 47,820. The life cover will be Rs 1.5 lakh, while the amount payable on maturity will be Rs 98,497 (6.48 per cent yield), which will be tax-free.