LIC’s AADHAR SHILA IN THE CONTEXT OF WOMEN

Life insurance is one of the most important financial decisions. Many people die at prematurely every year from illness or accident and when it is the sole breadwinner in the family passes away it could have devastating consequences for the loved ones. The difficulty arises to pay the household expenses and debts. People find it difficult to maintain their standard of living. Therefore in order to secure the family financial future life insurance policy is a must.

Women today are more empowered socially and are working hand in hand with their husbands to provide for their needs and build a better future for their children. More than two thirds of women in India are breadwinners or co-breadwinners in the family. Women need to focus themselves to run the family. Women health issues are very important and need special attention. Women give very low importance to their health.       Women are in good positions but for security many women are dependent on their father or husband. In the case of financial planning most of the women let the men to take financial decisions. In the present day context women should realize the financial planning and secure their lives against uncertainties that affect their financial status. Women life insurance plans act as vehicle which can be used for savings as well as investments. Social security is essentially very important for women folks.

Life Insurance for Economically Backward Women

Life insurance provides an infusion of cash dealing with adverse financial consequences of the insured’s death. Insurance enjoys tax benefits unlike other financial instruments. The policies are generally income tax free and estate tax free. The following are the benefits of life insurance. The government has launched a few social security schemes, which are of enormous significance for the masses. At a cost of a nominal premium, these schemes ensure comfortable future for many. Economically backward women are one of the mainstream of the society. Due to inadequate exposure women are not aware of many insurance policies and the risk coverage. LIC Aadhar Shila policy will provide necessary benefits for the benefit for the downtrodden women.

 LIC Aadhar Shila T-844

LIC’s Aadhaar Shila Plan is a non-linked insurance plan, with profits and regular premium paying. It is an endowment plan. This plan is a combination plan which offers both savings as well as protection. LIC’s Aadhaar Shila Plan is exclusively meant for female policy holders having Aadhaar cards issued by UIDAI. This is a Loyalty Addition based plan. This plan does not require any medical test and is available for standard healthy lives. LIC’s Aadhaar Shila Plan also provides financial support to the family in case of unfortunate death of the policyholder before maturity and a lump sum amount at the time of maturity for the surviving policyholder.  LIC has launched two new life insurance plans namely LIC Aadhaar Shila & Aadhaar Stambh. These plans are available for purchase from 24th April, 2017 onwards. LIC claims that Aadhaar Shila life insurance policy has been exclusively designed for female lives who are having Aadhaar card. The plan becomes attractive with low premium, Accident and Disability Benefit and loyalty addition.

Features of Aadhaar Shila Plan

LIC Aadhaar Shila Plan (Table 844) is new Aadhaar based life insurance plan. This plan is exclusively designed by LIC, for the female candidate having Aadhaar Card. The main reason of keeping policy name Aadhaar Shila is to take benefit of growing popularity of Aadhaar Card. Both the plan Aadhaar Shila and Aadhaar Stambh Plan is same except premium amount and gender eligibility. Aadhaar Shila policy can be taken without undergoing any medical checkup. The following are the features of Aadhaar Shila plan.

  • Holding Aadhaar Card is mandatory for this policy.
  • It is low premium policy and maximum cover available under this policy is 3 Lakh.
  • All premium paid under this policy is exempted from Income tax under section 80C.
  • A maturity amount under this policy is tax-free under 10D.
  • This plan provides auto cover facility i.e. it takes care of liquidity needs through its Auto cover as well as loan facility.
  • This plan is only available for females.
  • It is an Endowment policy wherein the amount is given as a lump sum at maturity i.e. at the end of the term.
  • In this plan Loyalty Addition will be paid additionally if the death occurs after 5 years, whereas normal insurance coverage will be equal to Basic Sum Assured.
  • At the maturity of this plan the policyholder receives Basic Sum Assured + Loyalty
  • Critical illness benefits are not available under this plan.
  • Loan facility is available under this plan but only after completion of three years.
  • Benefits like LIC’s Accidental Rider and permanent disability rider are available.
  • Revival of lapsed policy is available under this policy within the two years of first unpaid
  • Paid premiums are exempted from income tax under 80c.
  • Maturity amount is tax free under 10 (10D).

Eligibility Criteria and Restrictions

In order to buy this policy an individual should fulfill the following eligibility criteria:

  1. This plan is only available for female individuals.
  2. Minimum entry age for this plan is 8 years (completed).
  3. Maximum entry age for this plan is 55 years (nearest birthday).
  4. Minimum term for the plan is 10 years.
  5. Maximum term is 20 years.
  6. At maturity the maximum age should be 70 years (nearest birthday).
  7. Minimum sum assured is 75,000 for the plan and maximum sum assured is 3,00,000.
  8. Premium paying modes available for the plan are- Yearly, Half Yearly, Quarterly & Monthly (SSS and NACH Only).
  9. Following rebate is available on given premium paying modes:
  •  Yearly-2%
  •  Halfyearly-1%
  •  Quarterly and monthly- Nil

Benefits of LIC Aadhaar Shila

The following are the benefits of Aadhar Shila policy. Aadhar Shila policy provides benefits life maturity benefits, death benefits, Loyalty addition and accident benefit rider.

Maturity Benefits

When the policy is completed and the assured is alive and when all the due premiums have been paid sum assured on maturity along with the loyalty addition is paid.

Death Benefits

On death of the assured during first five years, Sum Assured on Death is paid. On death after completion of five policy years but before the date of maturity: “Sum Assured on Death” and Loyalty Addition, if any, is paid. The death benefit shall not be less than 105% of all the premiums paid as on date of death. Premiums referred above shall not include any taxes, extra amount chargeable under the policy due to underwriting decision and rider premiums, if any.

Loyalty addition

When the policy has completed five years and full premium has been paid for at least five years, then the plan is eligible for Loyalty Addition at the time of exit in the form of death during the policy term or maturity. Under a paid-up policy, Loyalty Addition shall be payable for the completed policy years for which the policy was in force. Loyalty addition is also considered during Special Surrender Value Calculation on surrender of policy during the term, only if the policy has completed five years and at least for five years full premium has been paid.

Optional Accidental benefit rider

Policy holders above 18 years of age have option of availing LIC’s Accidental Benefit Rider with this plan, will be provided additional amount equal to basic sum assured in case of death caused due to accident.

Date of commencement of risk

Under this plan the risk will commence immediately from the date of inception of policy. It also includes minor lives.

Payment of premium

Premium under this policy can be paid in intervals in the form of yearly, half yearly, quarterly and monthly, where monthly premium can only be through NACH or salary deduction during the term of policy. A grace period of one month but not less than 30 days is allowed for payment of yearly or half-yearly or quarterly premiums and 15 days for monthly premiums.

Revival

A revival period of two years is given to the assured from the date of first unpaid premium but before the date of maturity. This happens when the policy gets lapsed, if the premium is not paid by the end of the grace period. The policy can be revived by paying all due premium along with interest at such rate as fixed by the Corporation at the time of the payment, subject to submission of satisfactory evidence of continued insurability.

Paid up value

All the benefits under the policy will cease after the expiry of grace period and nothing will be paid, if the premiums have been paid for less than 3 years. In case of premium fully paid for three years and any subsequent premium is not duly paid, then the policy won’t be ceased but continued as a paid-up policy.

Other Important features and condition in LIC’s Aadhaar Shila

  1. Loan facility is available in this plan, after the payment of premium for at least full 3
  2. Policy can be revived within the 2 years of the FUP.
  3. Grace period in the policy is available; one calendar month, not less than 30 days in yearly, half yearly and quarterly mode and 15 days in monthly mode.
  4. The policy will acquire paid up value if the premium has been paid for 3 full years.
  5. Policy can be surrendered after the 3 years if at least 3 full year premium is already paid.
  6. Free look period of 15 days from the date of receipt of the policy bond.
  7. Backdating is allowed within the same financial year.
  8. Nomination and Assignment are allowed in the policy as per Sec 39 and Sec 38 of Insurance Act 1938 respectively.

TABLE : 1

Eligibility of LIC’s New Plan Aadhar Shila

Minimum Sum Assured

Rs. 75,000

Maximum Sum Assured

Rs. 3,00,000
Minimum Policy Term

10 Yrs

Maximum Policy Term

20 Yrs

Mode of Payment

Yly, Hly, Qly, Mnthly

Minimum Age at Entry

8 Yrs

Maximum Age at Entry

55 Yrs

Maximum Maturity Age

70 Yrs

Source: www.basunivesh.com

Conclusion

The plan is very beneficial for marginalized women and low income earning women. The scheme  provides auto cover facility and it is available for female members with low premium plan. This is an endowment policy where the amount given is a lump sum at the end of the term. The plan is suitable for women with critical illness. Women will be benefited from this policy. The important benefit of Aadhar shila is it provides benefits like Accidental Rider and permanent disability rider. This policy allures new customers residing in rural areas.


Author

Dr. P.Sundara Pandian, Principal, VHNSN College (Autonomous), Virudhunagar.

Dr. S. Muthu Lakshmi, Assistant Professor, Department of Commerce, VHNSN College (Autonomous), Virudhunagar.