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LIC Yuva Credit Life & Digi Credit Life – Features Benefits & Options

Life Insurance

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August 8, 2024

LIC Yuva Credit Life & LIC Digi Credit Life are Non-Par, Non-Linked, Life, Individual, and Pure Risk Plans. These plans offer protection to the insured’s family by covering any outstanding loan repayments in the event of the insured’s death during the policy’s duration.

LIC Yuva Credit Life Plan can be purchased Offline through Licensed agents, Corporate Agents, Brokers, and Insurance Marketing Firms. LIC Digi Credit Life plan shall be available Online only and can be purchased directly through the LIC’s website www.licindia.in.

LIC Yuva Credit Life Digi Credit Life Policies

LIC Yuva Credit Life & Digi Credit Life

LIC’s Yuva Credit Life & Digi Credit Life are purely decreasing Term Assurance plans wherein the death benefit will be reduced over the term of the policy. In both policies, the policyholder must select the Basic Sum Assured, duration of the policy, and interest rate based on the loan’s terms and conditions. Based on the Policyholder’s choice of Basic Sum Assured, Policy Term, and Interest rate, a Risk Cover Schedule will be created. The Risk Cover Schedule offers interest rates of 6%, 7%, 8%, 9%, 10%, 11%, and 12%, regardless of the loan provider’s interest rate on the policyholder’s loan. The Risk Cover Schedule will display the Death Benefit (Sum Assured on Death) for each Policy Year, calculated using the selected annual interest rate and paid yearly, regardless of loan repayments.

At the inception, the Sum Assured on Death shall be equal to the Basic Sum Assured, and subsequently, at each Policy Year, the Sum Assured on Death shall be as mentioned in the Risk Cover Schedule. Therefore, the death benefit as specified in the Risk Cover Schedule may be higher or lower than the actual outstanding Loan.

Key Features

• Flexibility to Select from Single Premium and Limited Premium Payment

• Policy Holder can select the Policy Term/Premium Paying Term

• Special rates for women

• Benefit of attractive High Sum Assured Rebate

• Two categories of premium rates namely (1) Non-Smoker rates and (2) Smoker rates. The application of Non-Smoker rates shall be based on the findings of the Urinary Cotinine test. In all other cases, the Smoker rates will be applicable

• Choice of loan interest rate as appropriate to the policyholder at the inception of the policy

Eligibility

Minimum Age at entry: 18 years (Last Birthday)
Maximum Age at entry: 45 years (Last Birthday)
Minimum Age at Maturity: 23 years (Last Birthday)
Maximum age at Maturity: 75 years (Last Birthday)
Minimum Basic Sum Assured – ₹ 50 Lakh
Maximum Basic Sum Assured – ₹ 5 Cr (Based on Approval)

The basic sum assured shall be in multiples of the amount specified below –

Basic Sum Assured range	Sum Assured Multiple
From ₹ 50,00,000/- to ₹ 75,00,000/-	₹ 1,00,000/-
Above ₹ 75,00,000/- to ₹ 1,50,00,000/-	₹ 25,00,000/-
Above ₹ 1,50,00,000/- to ₹ 4,00,00,000/-	₹ 50,00,000/-
Above ₹ 4,00,00,000/-	₹ 1,00,00,000/-

Policy Term & Premium Paying Term

Policy Term	Premium Paying Term
5 Years to 30 Years	Single
10 Years to 30 Years	5 Years
15 Years to 30 Years	10 Years
25 Years to 30 Years	15 Years

LIC Yuva Credit Life & Digi Credit Life Benefits

Death Benefit

Death benefit, payable on the death of the Life Assured during the policy term after the date of commencement of risk but before the stipulated Date of Maturity, provided the policy is in force and the claim is admissible shall be “Sum Assured on Death”.

For the Limited premium payment policy, “Sum Assured on Death” is defined as the higher of –

• 105% of “Total Premiums Paid” up to the date of death; or

• Absolute amount assured to be paid on death

Where “Total Premiums Paid” means the total of all premiums paid under the base product, excluding any extra premium and taxes, if collected explicitly.

For a Single premium policy, “Sum Assured on Death” is defined as

• Absolute amount assured to be paid on death

Where a Single Premium shall be the premium amount payable excluding taxes and underwriting extra premiums.

The Absolute amount assured to be paid on death shall be as specified in the Risk Cover Schedule. The Risk Cover Schedule shall show the Sum Assured on Death for each Policy Year and shall be based on the chosen interest rate p.a. effective on an equated yearly repayment basis, irrespective of the actual loan repayment. At the inception, the Sum Assured on Death shall be equal to the Basic Sum Assured, and subsequently at each Policy Year, the Sum Assured on Death shall be as mentioned in the Risk Cover Schedule. Death Benefit as specified in the Risk Cover Schedule may be higher or lower than the actual outstanding loan.

Maturity Benefit

On survival of the life assured to the end of the policy term, no maturity benefit is payable.

Options In case of Early Prepayment of Loan

If Life Assured repays the outstanding loan before the end of the policy term, he/she shall have the following two options

• To surrender his/her insurance cover.

On such cancellation, an amount equal to the Unexpired Risk Premium Value, if any, shall be payable.

• To continue the policy till the end of the Policy Term.

In case of death of the Life Assured during the policy term, the death benefit shall be payable to the nominee as per the Risk Cover Schedule.

LIC Yuva Credit Life & Digi Credit Life Premium illustration

The sample illustrative premiums for Males, Non-Smoker, Policy Term 25 years, Basic Sum Assured of ₹ 50 Lakh for a loan interest rate of 8% are as follows –

Age (Last Birthday in years)	Single Premium (in ₹)	Annual Premium for Limited Premium Paying Term of 5 years (in ₹)	Annual Premium for Limited Premium Paying Term of 10 years (in ₹)	Annual Premium for Limited Premium Paying Term of 15 years (in ₹)
20	40,900	10,100	6,100	4,850
30	53,550	13,150	7,900	6,200
40	1,03,450	25,100	14,900	11,650

The above premiums are exclusive of taxes.

The sample Risk Cover Schedule for a Policy Term of 25 years and loan interest rate of 8% is as follows –

Policy Year	Sum Assured on Death for the respective policy year	Policy Year	Sum Assured on Death for the respective policy year	Policy Year	Sum Assured on Death for the respective policy year
1	1000	11	801.84	21	374.03
2	986.32	12	772.31	22	310.28
3	971.55	13	740.42	23	241.42
4	955.59	14	705.97	24	167.05
5	938.36	15	668.77	25	86.74
6	919.75	16	628.59
7	899.65	17	585.2
8	877.95	18	538.34
9	854.5	19	487.73
10	829.19	20	433.07

Conclusion

LIC Yuva Credit Life & Digi Credit Life are good risk cover plans for loans. You can safeguard your assets against loan liabilities by purchasing these plans. You must evaluate these plans thoroughly before buying.

GICs are a great way to start investing

Information

Moneyexcel Editor

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August 7, 2024

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When you start hitting the big milestones of adulthood – like starting your first job, paying off your student loan debt, purchasing your first car and home, starting a family and establishing your savings – it might be the perfect time to start investing to have funds saved up for security and retirement. And while the world of investing may seem daunting, it doesn’t have to be. There are some easy options to start investing that are low-risk and still give you a good return.

GIC Investment

The basics of investing

Investing starts when you can put money away each month that you don’t need for expenses. You then commit that money to a fund, stock or bond to be able to get a return. However, it can be scary to put your money in stocks or mutual funds that are at the mercy of market fluctuations – especially when you’re just starting to dip your toes in the investment waters

Here are some signs that you could be ready to start investing:

You don’t have a heavy high-interest debt load, like credit card debt. For the most part, the return on your investment isn’t going to outpace the interest you must pay on your debt, so it’s normally a good idea to pay down debt before you think about investments.
You have access to emergency savings. The general rule of thumb is to have six months to one year of expenses saved in the event of an emergency.
You have a savings goal in mind. If you are still saving up to make a down payment on a property or for a large purchase, you may wish to consider a less risky investment when you’re starting out.

GICs are a good option for beginner investors

GICs, or Guaranteed Investment Certificates, are issued by banks and other institutions for a variety of terms usually ranging from 30 days to several years. The principal you invest is guaranteed to be returned to you at the end of the investment term, making this one of the easiest and most secure ways to earn investment income. That said, while GICs don’t offer the highest possible investment returns by their very nature they are an excellent option for first-time investors who are starting on the journey of their investment strategy.

While you may assume that online trading accounts are for savvy investors only, a lot of investors use them specifically to purchase GICs. Many online GIC options in fact offer higher interest rates than those available from your bank link.

You have the option of choosing your GIC term, as well as the type of account you would like to have your GIC held in. For instance, you can choose to have your GIC held in a registered, tax-deferred account like a TFSA or RRSP, or you can opt for a non-registered account.

As you move forward with your investment strategy throughout your life and make more income, you will want to diversify your portfolio. Regardless, you will likely always want to hold a portion of your investments in a secure option like a GIC.

LIC’s Yuva Term – Term Plan Features Benefits & Options

Life Insurance

Shitanshu Kapadia

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August 7, 2024

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LIC’s Yuva Term is a pure-term plan that is non-participating, non-linked, and designed for individual pure-risk coverage. This plan offers monetary security to the insured’s loved ones if he or she passes away unexpectedly within the policy period. This plan provides flexibility to choose from two benefit options level sum assured and the increasing sum assured. This plan can be purchased online as well as offline. Key features and benefit details of this plan are given below.

LIC Yuva Term Plan

LIC’s Yuva Term Plan

Key Features

Flexibility to choose from two Death Benefit options: Level Sum Assured and Increasing Sum Assured
Option to choose from Single Premium, Regular Premium, and Limited Premium options
Option to select policy term/premium paying term
Option for payment of benefits in installments
Special rates for women
The benefit of an attractive High Sum Assured Rebate
Two categories of premium rates namely – (1) Non-Smoker rates and (2) Smoker rates

Eligibility Conditions

Minimum Age at Entry – 18 years (Last Birthday)
Maximum Age at Entry – 45 years (Last Birthday)
Minimum Age at Maturity – 33 years (Last Birthday)
Maximum age at Maturity – 75 years (Last Birthday)
Minimum Basic Sum Assured – ₹ 50 Lakh
Maximum Basic Sum Assured – ₹ 5 Cr (Based on Approval)

The basic sum assured shall be in multiples of the amount specified below –

Basic Sum Assured range	Sum Assured Multiple
From ₹ 50,00,000/- to ₹ 75,00,000/-	₹ 1,00,000/-
Above ₹ 75,00,000/- to ₹ 1,50,00,000/-	₹ 25,00,000/-
Above ₹ 1,50,00,000/- to ₹ 4,00,00,000/-	₹ 50,00,000/-
Above ₹ 4,00,00,000/-	₹ 1,00,00,000/-

Premium Payment Term – Regular, Limited Premium of 10 years, Limited Premium of 15 years, Single Premium

Policy Term – 15 to 40 years under Regular/Single/Limited Premium of 10 years, 20 to 40 years under Limited Premium of 15 years

LIC Yuva Term Benefits

Death Benefit

The amount of money to be paid out in the event of the Life Assured’s death during the policy term between the date when the risk began and the date of maturity, will be the “Sum Assured on Death” as long as the policy is active and the claim is valid.

In Regular premium and Limited premium payment modes, the “Sum Assured on Death” is the amount equal to the highest of –

• 7 times of Annualised Premium (excluding the taxes, rider premiums) or

• 105% of “Total Premiums Paid” till death (excluding any extra premium, and taxes) or

• Absolute amount assured to be paid on death

In the case of a Single premium payment, the “Sum Assured on Death” is the amount equal to the highest of –

• 125% of Single Premium (excluding the taxes, rider premiums) or

• Absolute amount assured to be paid on death.

The absolute amount assured to be paid on death shall depend on the Death Benefit Option chosen at the time of taking this policy and is as under:

Option I: Level Sum Assured

The absolute amount assured to be paid on death shall be an amount equal to Basic Sum Assured, which shall remain the same throughout the policy term.

Option II: Increasing Sum Assured

The absolute amount assured to be paid on death shall remain equal to the Basic Sum Assured till the completion of the fifth policy year. Thereafter, it increases by 10% of the Basic Sum Assured each year from the sixth policy year till the fifteenth policy year till it becomes twice the Basic Sum Assured. This increase will continue under an enforced policy till the end of the policy term; or till the Date of Death; or till the fifteenth policy year, whichever is earlier. From the sixteenth policy year and onwards, the absolute amount assured to be paid on death remains constant.

Maturity Benefit

If the life assured survives until the policy term ends, no maturity benefit will be paid.

Options for Death Benefits

LIC’s Yuva Term offers the option to take Death Benefits in installments. This is a choice to get Death Benefits in payments over a duration of 5, 10 or 15 years rather than a one-time payment under a policy that is still in effect. The Life Assured has the choice to use this option at any point during their life, whether it be for the entirety or only a portion of the Death benefits provided by the policy. The Life Assured can choose to receive the Net Claim Amount in either a specific amount or a percentage of the total claim proceeds.

Payment must be made in advance either yearly, half-yearly, quarterly, or monthly, as preferred, with a minimum amount required for each payment option. Details are given below.

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

If the Net Claim Amount is below the necessary amount to cover the minimum installment required based on the chosen option by the Life assured, the claim will be paid all at once.

LIC Yuva Term Premium illustration

The example premium rates for Option I (Level Sum Assured) and Option II (Increasing Sum Assured) for a Basic Sum Assured of ₹ 50 Lakh for Non-Smoker, Male, and Standard individuals with various Premium Payment options are provided below:

Option I Level Sum Assured –

Age (Last Birthday)	Policy Term	Regular Annual Premium (in ₹)	Annual Premium for Limited Premium Paying Term of 15 Years (in ₹)	Annual Premium for Limited Premium Paying Term of 10 Years (in ₹)	Single Premium (in ₹)
20	20	4,550	5,250	6,600	44,350
30	20	5,950	6,850	8,750	59,550
40	20	11,700	13,600	17,500	1,21,900

The above premiums are exclusive of taxes.

Option II Increasing Sum Assured –

Age (Last Birthday)	Policy Term	Regular Annual Premium (in ₹)	Annual Premium for Limited Premium Paying Term of 15 Years (in ₹)	Annual Premium for Limited Premium Paying Term of 10 Years (in ₹)	Single Premium (in ₹)
20	20	5,850	6,750	8,550	58,400
30	20	8,250	9,600	12,250	84,950
40	20	17,850	20,850	26,850	188,950

Conclusion

LIC Yuva Term Plan is a very good policy that offers higher coverage at an affordable premium rate. This plan also offers flexibility to choose between level sum assured and increasing sum assured. If you are not covered with a term plan you should evaluate the LIC Yuva Term Policy as an option.

Understanding Retirement Plans in India: What You Need to Know

Retirement

Moneyexcel Editor

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August 7, 2024

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Planning for retirement is a crucial aspect of financial stability, yet it often remains overlooked until it’s nearly upon us. In India, with shifting family dynamics and increasing life expectancy, securing a robust retirement plan has never been more essential.

This blog explores the various retirement plans available in India, offering insights into their benefits and how they can fit into your long-term financial goals. Whether you are just starting your career or are midway through, understanding these plans will empower you to make informed decisions, ensuring a comfortable and secure retirement.

Let’s dive into what you need to know to navigate the complexities of retirement planning effectively.

retirement plans

Why a Retirement Plan is Essential?

A retirement plan is not just a financial strategy; it’s a preparation for life after your regular paycheck ends. With life expectancy on the rise thanks to better healthcare, the period of retirement is now longer and more active than ever before. Having a retirement plan ensures that you maintain your lifestyle, meet medical expenses, and deal with inflation effectively.

Types of Retirement Plans in India

In India, retirement plans can be broadly classified into two categories: employer-sponsored plans and personal retirement plans.

Employer-Sponsored Retirement Plans

Employees’ Provident Fund (EPF): This is a mandatory savings platform for employees working in organisations registered under the EPF Act. Both employee and employer contribute a fixed percentage of the salary, which can be withdrawn at retirement or under specific conditions.
National Pension System (NPS): Introduced by the government, NPS is a voluntary defined contribution pension system. NPS invests in equities and debt and offers the flexibility to choose your investment option based on your risk appetite. It is known for its tax efficiency and has been gaining popularity among those looking for a retirement plan with potentially higher returns.

Personal Retirement Plans

Public Provident Fund (PPF): A favourite among Indians, this scheme offers a secure investment avenue with attractive interest rates and tax benefits. It has a tenure of 15 years, which can be extended, making it ideal for long-term savings.
Mutual Fund Retirement Plans: These are tailor-made mutual fund schemes designed to accumulate wealth for retirement. They invest in a mix of securities, providing the benefits of diversification and professional management.

Choosing the Right Retirement Plan

Selecting the right retirement plan involves assessing your financial goals, risk tolerance, and investment horizon. Here’s a step-by-step approach to help you make an informed decision:

Assess Your Needs: Estimate your post-retirement expenses, including routine living costs, medical expenses, and any unforeseen costs.
Analyse Various Plans: Look at different plans, their features, benefits, and limitations. For instance, while EPF and PPF offer security, NPS and mutual fund plans provide opportunities for higher returns through market-linked growth.
Consider Tax Implications: Understanding the tax treatment of different retirement plans can significantly impact your net returns. Plans like PPF and EPF offer EEE (Exempt-Exempt-Exempt) tax status, making them very attractive.
Start Early: The earlier you start with your retirement plan, the more time your money has to grow. Compounding can turn even small savings into significant sums over a couple of decades.

Investment Strategies for Your Retirement Fund

Once you’ve chosen a retirement plan, it’s crucial to adopt the right investment strategy. Here are some tips to manage your retirement portfolio:

Diversify Your Investments: Don’t put all your eggs in one basket. A mix of equity, debt, and other investment forms can help balance the risk and returns.
Monitor and Rebalance: As you move closer to retirement, rebalance your portfolio from high-risk investments to more stable ones to preserve capital.
Review Regularly: Economic conditions, market trends, and personal circumstances change. Regular reviews will help ensure that your retirement plan remains aligned with your goals.

Common Mistakes to Avoid

While planning for retirement, many people make mistakes that can undermine the effectiveness of their efforts:

Procrastinating: Delaying your retirement planning can be costly. Starting late means you need to save more in a shorter period.
Underestimating Expenses: Always plan for unforeseen expenses, especially medical ones, which are likely to be higher as you age.
Ignoring Inflation: Inflation can erode the value of saved money. Ensure your retirement plan accounts for inflation, particularly if your retirement is several decades away.

Secure Your Future: Explore Comprehensive Retirement Plans Now

Steering through the complexities of retirement planning in India requires a blend of strategic thinking and timely action. By understanding the diverse retirement plans available and how they can align with your financial goals, you can lay a strong foundation for a secure and comfortable retirement.

Additionally, considering tailored solutions such as those offered by Tata AIA can enhance your planning. Tata AIA’s retirement solutions are designed to cater to various needs, offering a range of products that help in wealth accumulation and guarantee a steady income post-retirement.

Embrace these opportunities to ensure that your retirement years are not just secure, but also rich with possibilities. Start planning today to make your retirement tomorrow everything you hope for.