LIC Bima Diamond – New Money Back Plan : Features, Review & Returns Calculation

Life Insurance Corporation of India (LIC) is celebrating this year (2016) as  it’s Diamond Jubilee year. Marking the 60th anniversary celebrations, LIC is coming up with a new money back plan called as LIC Bima Diamond (Plan no 841). This new plan is a non-linked, traditional Money Back policy. This plan is available for purchase from 19th September, 2016 to 31st August, 2017.

LIC has launched 3 new life insurance plans during the last 8 months of 2016. These are namely, LIC Jeevan Labh Plan, LIC Jeevan Shikhar Plan and LIC Jeevan Pragati Plan. Bima Diamond Plan is going to be its fourth plan for the year 2016.

As per LIC, Bima Diamond Plan has triple advantage i.e., i) enhanced protection, ii) Money-back & iii) Auto cover features.

Key Features of LIC Bima Diamond Plan

Below are the key features of LIC’s new money back policy, Bima Diamond Plan;

• Enhanced Protection : Extended cover period for half of the policy term after end of the policy term.
• Money-Back (Survival Benefits) : Money back at an interval of every 4th year.
• Auto cover feature : On a policy of at least 5 full years on which subsequent premium is not duly paid, auto cover period of 2 years is available.
• Premium Paying Term : Three options to choose from;
  • Option 1 : Policy Term of 16 years with Premium Paying Term of 10 years. Example :  If you buy  LIC Bima Diamond policy with Rs 2 lakh sum assured with option 1, you need to pay the premiums for up to 12 years. Your life cover shall be for 30 years (20 Years policy term + 10 years extended coverage). You will get money back for 5 times during the policy term.
  • Option 2 : Policy Term of 20 years with Premium Paying Term of 12 years
  • Option 3 : Policy Term of 24 years with Premium Paying Term of 15 years
• Minimum Basic Sum assured is Rs. 1,00,000
• Maximum Basic Sum Assured Rs. 5,00,000
• Minimum entry age 14 yrs (Completed)

Benefits under Bima Diamond Policy

• Death Benefits under LIC Bima Diamond Plan :
  • In case if Life Assured dies before the date of Maturity of Policy;
    • During the first 5 policy years “Sum Assured on Death” will be paid to the nominee.
    • After completion of 5 policy years but before the date of maturity: “Sum Assured on Death” and Loyalty addition (if any) will be paid to the nominee of the Life Assured.
    • The death benefit will not be less than the 105% of all the premium paid in the policy as at the date of death of the life assured.
  • In case of the death of Life Assured during the extended cover period;
    • An amount equal to 50% of Basic sum assured will be paid to the nominee.
• Survival Benefits (money-back) : Below are the money-back benefits under this plan;
• Maturity Benefits under LIC Bima Diamond Policy : If the Life Assured (Policyholder) survives till the end of the policy term, “Sum Assured on Maturity” along with Loyalty Addition, if any will be payable to the Life Assured. Where “Sum Assured on Maturity” under LIC Bima Diamond Plan is 55% of Basic Sum Assured in case if policy term is 16 years and 40% of Basic Sum Assured under Policy tenures of 20 and 24 years.

Illustration of LIC Bima Diamond Plan

I have tried to explain the features of Bima Diamond policy and how it works through the below info-graphic. (You may click on the image to open it in a new browser window.)

I have considered a 20 year policy term Bima diamond plan. So, the premium payment term would be for 12 years. The survival benefit i.e., money-back installments would be payable at the end of 4th, 8th, 12th and 16th years. The money-back amount is 15% of the basic sum assured. The maturity benefit amount is payable at the end of 20th year, which is 40% of basic sum assured + Loyalty additions (if any). After the 20th year, the life cover continues for 10 more years.

LIC Bhima Diamond Plan & Calculation of Returns on maturity 

Example: In the above returns calculation table, I have considered the 20 year plan of Bima Diamond. The premium payment term is 12 years. I have assumed loyalty additions at the rate of Rs 500 for Rs 1000 sum assured. You can notice that the returns from LIC Bima Diamond policy would be around 4%. (Click on the above image to open it in a new window)

My Opinion on LIC’s Bima Diamond Plan

This new LIC policy is a typical money-back plan with an extended life-cover, that’s it. There are no major benefits from this plan as being highlighted in the marketing materials of the company. Kindly ponder upon below points before you buy LIC’s Bima Diamond Policy;

• Ceiling on Sum Assured : The maximum sum assured that can be taken under this plan is Rs 5 Lakh only. So, this is surely not enough if you are looking for life cover alone. You may consider buying a Term insurance plan so that you can get decent life cover. The value of Rs 5 Lakh after say 20 or 24 years would be very negligible. (Read: ‘Traditional Money-back or Endowment plan – a terrible investment option‘)
• Investment Returns: So, if this is not suitable for your life cover requirements then most of you might want to get good maturity returns, am I right? But, these kind of traditional plans can at best give you 5% returns. As calculated in the above table, this plan can offer you returns of around 4% to 5% only. If your investment objective is better returns then there are plenty of other investment options available in the market. (Read : ‘List of best investment options‘)
• No Simple Reversionary Bonuses: There are no simple and annual bonuses under Bima Diamond Plan. Loyalty Additions (if any) alone are paid on policy maturity.
• Tax Savings : If your objective is tax saving cum better returns, you may consider investing in an ELSS mutual fund scheme. Even PPF (Public Provident Fund) can give your better returns than this policy and it is tax-efficient too. (Read: ‘Term insurance + PPF Vs Endowment Life insurance plan‘)

You may like reading below articles;

• LIC 2014 all plans list : Review & Snapshot of all plans
• LIC 2015 all plans list : Review & Snapshot of all plans
• LIC New Plans in 2016 :
  • LIC Jeevan Labh Plan – Features & Review 
  • LIC Jeevan Shikhar Plan – Benefits & Returns Calculation 
  • LIC Jeevan Pragati Plan – Illustration & Returns Calculation

Kindly note that this post is based on the limited available information. The above details can be changed.

(Image courtesy of fantasista at FreeDigitalPhotos.net. Reference : Plan brochures) (Post published on : 03-September-2016)