Life insurance policies offered by the Life Insurance Corporation of India (LIC) and private insurance companies both have their own advantages and disadvantages.
One of the advantages of an LIC term insurance policy is that it is generally considered to be more stable and reliable than policies offered by private insurance companies, because LIC is a government-owned entity and has been in business for a long time. Additionally, LIC policies have a guaranteed maturity benefit which means, at the end of the term, even if the policyholder dies, the nominee will receive the sum assured.
On the other hand, private insurance companies often offer more flexibility in terms of policy terms and riders (add-ons) that can be added to a policy. They also typically offer a wider range of policies to choose from, including term insurance, endowment, and money-back policies, as well as unit-linked insurance plans (ULIPs). Additionally, because the private companies are motivated by profit, they can offer policies that are less expensive than LIC policies with the same coverage.
Ultimately, the choice between an LIC term insurance policy and a private term insurance policy will depend on your individual needs and preferences. Before you make a decision, it is a good idea to compare the features and benefits of different policies, and to consider factors such as the insurance company’s claim settlement ratio and customer service. Additionally, you can consult an insurance advisor to get proper guidance.
Another consideration when choosing between an LIC term insurance policy and a private term insurance policy is the coverage amount. In general, LIC policies tend to have lower coverage limits than private insurance policies. This means that if you need a large amount of coverage, you may be better off with a private insurance policy.
Another difference is the time required to process and settle a claim. In general, private insurance companies have a faster claim settlement process than LIC. However, it is worth noting that private companies have stricter rules in term of what is covered and what is not, and some claims may not be honored in the case of non-disclosure of certain information, mis-representation of facts or non-compliance of terms and conditions of the policy.
In terms of riders, private insurance companies offer a wider range of riders than LIC. These riders include accidental death and dismemberment, critical illness, and accidental disability. Additionally, private companies offer the option to add riders like accidental death and permanent total disability rider, which pays an additional amount of money on top of the sum assured in the event that the policyholder dies or becomes permanently disabled as a result of an accident.
LIC policies, on the other hand, do not offer as many riders, but they do have guaranteed maturity benefit, which is a feature that private companies do not usually offer.
It is important to evaluate all the pros and cons of each type of insurance policy and choose the one that best meets your specific needs and budget. Additionally, it is advisable to review the policies periodically and adjust coverage accordingly, as the life stages, financial goals and requirements keep changing.
Another important factor to consider when choosing between an LIC term insurance policy and a private term insurance policy is the reputation of the insurance company. LIC is a government-owned company and is considered to be a stable and reliable insurer. It has been in business for a long time and has a well-established track record of paying claims. On the other hand, private insurance companies are relatively new and some of them have less experience and a shorter track record of paying claims. However, there are also many established private insurance companies in India, which have a strong reputation for paying claims and providing good customer service.
It’s also worth noting that, in terms of the benefits, LIC policies tend to have a more defined and clear benefit structure, where the death benefit, maturity benefit are defined. Private insurance policies, on the other hand, may have more complex benefit structures, with a wide range of options and riders.
In terms of the Premium, LIC policies generally tend to be more expensive than private insurance policies, particularly for higher coverage amounts. However, Premium for LIC policies is fixed for the entire term, meaning, the Premium does not change over the life of the policy, whereas private insurance companies may increase the premium for their policies over time.
In conclusion, both LIC and private insurance companies offer a range of term insurance policies to choose from, each with its own set of advantages and disadvantages. Before making a decision, it is important to compare the features and benefits of different policies, and to consider factors such as the insurance company’s reputation, claim settlement ratio, customer service and the overall flexibility of the policy. It’s advisable to seek professional guidance in order to make an informed decision and to choose the right policy that suits your needs.