LIC Aadhar Shila Plan: A Comprehensive Guide

Life Insurance Corporation of India (LIC) is a state-owned insurance group and investment corporation. It is the largest insurance company in India and the country’s largest institutional investor. One of their many offerings is the Aadhar Shila plan (Plan No.944). This article provides a detailed overview of the Aadhar Shila plan, its key features, benefits, and options available.

Introduction to Aadhar Shila Plan

The Aadhaar Shila plan is a non-linked, participating, individual, savings life insurance plan. It exclusively caters to female lives, providing a combination of protection and savings. This plan is designed to provide financial support for the family in case of unfortunate death of the policyholder any time before maturity. And also offers a lump sum amount at the time of maturity for the surviving policyholder. This plan also takes care of liquidity needs through its Auto Cover as well as loan facility.

Key Features of the Aadhar Shila Plan

Benefits

The Aadhar Shila plan offers both death and maturity benefits:

• Death Benefit: On the death of the Life Assured during the policy term provided the policy is in-force (i.e., all due premiums have been paid), the “Sum Assured on Death” and Loyalty Addition, if any, shall be payable. The “Sum Assured on Death” is defined as the higher of 7 times of annualised premium or 110% of Basic Sum Assured. The death benefit shall not be less than 105% of total premiums paid up to the date of death.
• Maturity Benefit: On Life assured surviving to the end of the policy term, provided all due premiums have been paid (i.e., the policy is in–force), “Sum Assured on Maturity” along with Loyalty Addition, if any, shall be payable. The “Sum Assured on Maturity” is equal to Basic Sum Assured.

Eligibility Conditions and Other Restrictions

The plan comes with certain eligibility conditions and restrictions:

• Minimum Basic Sum Assured per life: ₹2,00,000
• Maximum Basic Sum Assured per life: ₹5,00,000
• Minimum Age at entry: 8 years (completed)
• Maximum Age at entry: 55 years (nearest birthday)
• Policy Term: 10 to 20 years
• Premium Paying Term: Same as Policy Term
• Minimum Age at Maturity: 18 years (completed)
• Maximum Age at Maturity: 70 years (nearest birthday)

Options Available in Aadhar Shila Plan

The Aadhaar Shila plan offers several options to the policyholder:

Rider Benefits

The policyholder has the option of availing LIC’s Accident Benefit Rider under this plan at any time under an in-force policy within the policy term of the Base plan provided the outstanding policy term of the base plan is at least 5 years. In case of accidental death, the Accident Benefit Sum Assured will be payable in lumpsum.

Settlement Option for Maturity Benefit

After the commencement of instalment payments under Settlement Option, if a Life Assured, who has exercised Settlement Option against Maturity Benefit, desires to withdraw this option and commute the outstanding instalments, the same shall be allowed on receipt of written request from the Life Assured. In such case, the lump sum amount which is higher of the following shall be paid and policy shall terminate,

Option to take Death Benefit in Instalments

This is an option to receive death benefit in instalments over the chosen period of 5 or 10 or 15 years instead of lump sum amount under an in-force as well as paid-up policy. This option can be exercised by the Policyholder during minority of the Life Assured or by Life Assured aged 18 years and above, during his/her lifetime; for full or part of Death benefits payable under the policy. The amount opted for by the Policyholder/Life Assured can be either in absolute value or as a percentage of the total claim proceeds payable.

Understanding Guaranteed and Non-Guaranteed Benefits

Guaranteed and non-guaranteed benefits refer to the types of returns or payouts you can expect from your policy.

• Guaranteed Benefits: These are the benefits that the insurance company promises to pay out, regardless of any external factors. For example, in a guaranteed life insurance policy, the policy guarantees continuity of the cover as long as the insured individual is regular with timely payment of premium. The premium amount will remain the same throughout – even if the insurer raises its fees and other charges during the policy term.
• Non-Guaranteed Benefits: These are potential benefits that are not guaranteed to be paid out and are subject to change. They are often linked to the performance of the insurance company’s investments or other market factors. For instance, in a non-guaranteed life insurance policy, the premium amount remains unpredictable. That means the premium amount you start to pay in the first few years of the policy may hike up based on calculations in line with market scenarios.

Premium Payment and Grace Period

The Aadhaar Shila plan offers flexibility in premium payments. You can pay premiums regularly in yearly, half-yearly, quarterly, or monthly installments. Monthly premiums can be paid through NACH only or through salary deductions over the term of the policy. This allows policyholders to choose a premium payment schedule that best fits their financial situation.

In addition, the plan provides a grace period of 30 days for payment of premium. This means that if a policyholder misses a premium payment, they have an additional 30 days to make the payment without the policy lapsing. This grace period provides a safety net for policyholders. This ensures that their coverage continues even if they miss a premium payment deadline.

Aadhar Shila Plan Benefit Illustration

A benefit illustration provides a policyholder with a detailed overview of the potential benefits and returns from a policy. It includes both guaranteed and non-guaranteed benefits and shows the potential outcomes under different scenarios.

For example, a benefit illustration for the Aadhar Shila plan for a 35-year-old policyholder with a policy term of 20 years, a yearly premium payment mode, and a basic sum assured of ₹2,00,000 might show the total premiums paid till the end of the year, the guaranteed sum assured on maturity, the sum assured on death, and the non-guaranteed benefits (loyalty addition) under different scenarios.

It’s important to note that the non-guaranteed benefits in the illustration are calculated so that they are consistent with the projected investment rate of return assumption of 4% p.a (Scenario 1) and 8% p.a (Scenario 2). The projected investment rate of return is not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy is dependent on a number of factors including actual future investment performance.

Difference Between Aadhar Shila and Aadhar Stambh Plan

LIC’s Aadhaar Shila and Aadhaar Stambh are both endowment assurance plans that offer a combination of protection and savings. However, they target different demographics.

• Aadhar Shila: This plan is exclusively designed for female policyholders having Aadhaar cards issued by UIDAI. It provides financial support to the family in case of death of the policyholder before maturity. Only women can avail this policy.
• Aadhar Stambh: This plan is available only for male applicants. It also offers financial protection to the family in case of death of the policyholder.

Both plans provide protection to the life insured and also help them to build a corpus fund over the policy period. They offer a lump-sum amount of return at the time of maturity to the surviving policyholder. And also offers financial support for the family in case of unfortunate death of policy holder during the policy coverage period. Both plans address liquidity requirements by offering a lending facility as the policyholder can avail loan against the insurance scheme.

The entry age under both the plans is 8 years and the maximum entry age is 55 years. The maximum age of maturity is 70 years. Both the plans come with two policy terms of 10 years and 20 years. The minimum sum assured is Rs 75,000 and the maximum sum assured under both the plans is Rs 3,00,000.

the primary difference between the two plans is the target demographic. Aadhaar Shila is for women and Aadhaar Stambh is for men. Both plans offer similar benefits and features

Conclusion

Choosing a life insurance policy is a significant decision that requires careful consideration. Understanding the features, benefits, and options available in the policy is crucial. LIC’s Aadhar Shila plan offers a range of benefits and options that cater to the policyholder’s needs. However, it’s important to read the policy documents carefully and consider seeking advice from a financial advisor if needed.