The Mortgage Redemption Assurance Scheme from Life Insurance Corporation of India is a group insurance scheme that can be availed by individuals who take out vehicle / housing loans from banks and financial institutions wherein the recovery of funds by the lender is done on EMI basis. Premium payments under this scheme must be done in one single instalment, and the premium applicable to a customer will be depend upon the age of the customer at the time of entering into the policy, the outstanding loan amount on the date of entry, schedule of repayment, term of loan and the interest rate applicable to the loan availed.
Any individual can apply for this policy and the minimum period for which the plan can be availed is three years. Existing customers may join the plan with particular conditions within six months after the tenure of the policy has commenced. If a customer dies during the tenure of the policy, life cover will be paid out to the nominee.
Eligibility Criteria for LIC Mortgage Redemption
|Minimum Entry Age||18 years|
|Maximum Entry Age||50 years|
|Maximum Age at Maturity||65 years|
Key Features of LIC Mortgage Redemption
|Plan Type||Pure Protection Term Insurance Policy|
Maximum: No Limit
|Premium Payment Modes||Monthly, Quarterly, Semi-annual, Annual, Salary Saving Scheme|
Benefits and Added Features of LIC Mortgage Redemption
- Sum Assured is handed out to the policyholder / nominee as death benefit in a lump sum amount.
- The declining loan liability of the customer over the years will lead to a corresponding decline in the sum assured.
- Customers must make premium payments for periods of time equivalent to two-thirds of the loan’s repayment period.
- The customer will have to bear all costs related to medical examinations.
- Death benefit: If the Life Assured expires during the tenure of the policy, the Corporation will offer death benefit to the nominee in the form of a lump sum sum assured.
- Tax benefits: Customers can claim tax deductions under Section 80C of the Income Tax Act with regards to the premiums paid towards the policy. Maturity proceeds will also be treated as tax free income under Section 10(10)D of the Income Tax Act.
- Maturity benefit: No maturity benefits are offered under the LIC Mortgage Redemption as it is a pure protection policy.
- In case a customer stops making premium payments following the premium payment made in the first year, the policy will lapse and no benefits will be offered to the customer.
- There is no loan facility for customers who take out the LIC Mortgage Redemption policy.
- This policy has no surrender value either.
How does this plan work?
The Mortgage Redemption policy from Life Insurance Policy of India is specially tailored to cater to the needs of the policyholder while ensuring that the outstanding debts and loans in the name of the policyholder will be paid up automatically in case of his demise. The policy is ideal for elderly professionals who have dependants that may require assistance when it comes to clearing their debts if there is an unfortunate demise of the policyholder. This policy requires only a single premium payment to be made, and the amount of premium for each customer will depend on a few factors.
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GST of 18% is applicable on life insurance effective from the 1st of July, 2017