Should You Buy LIC Bima Kavach Term Policy for Long-Term Protection?
Before making any investment decision, sound financial planning begins with protection. Medical insurance, an emergency fund, and a pure term insurance policy together form the foundation of financial security. Among these, term insurance plays a critical role in safeguarding family income in the event of an untimely death.
Life Insurance Corporation of India has introduced a new term insurance product, Bima Kavach, positioned as a high-coverage, flexible policy designed to address the underinsurance problem prevalent among Indian households. With a minimum cover starting at ₹2 crore, the product aims to nudge individuals toward more realistic protection levels.
A common mistake in India is opting for inadequate term cover. Many policyholders underestimate future liabilities such as housing loans, education costs, lifestyle inflation, and healthcare expenses. The result is a false sense of security that fails precisely when protection is needed most.
Key Features of LIC Bima Kavach
🔹 Minimum sum assured of ₹2 crore.
🔹 No upper limit on maximum coverage.
🔹 Entry age starts at 18 years.
🔹 Maximum entry age up to 65 years.
🔹 Coverage available up to age 100.
Bima Kavach offers both level sum assured and increasing cover options. Under the level option, the payout remains constant throughout the policy term. This suits individuals whose liabilities are stable or declining over time.
For those with rising financial responsibilities such as home loans, children’s education, or business liabilities, the increasing cover option allows the sum assured to rise annually. From the sixth year to the fifteenth year of the policy term, the cover can increase by 10 percent each year on a simple rate basis, potentially doubling the original cover by year fifteen.
Another distinctive feature is life-stage-based enhancement. Policyholders can increase coverage after key milestones such as marriage or the birth of children, provided the request is made within six months of the event.
This flexibility mirrors a principle seen in disciplined market strategies as well. Just as traders adjust exposure based on changing conditions using structured tools like Nifty Tip frameworks, insurance coverage too should evolve with life circumstances.
Premium Payment Options
LIC Bima Kavach offers both regular and limited premium payment choices. Regular premium requires payments throughout the policy term, while limited premium options allow payments over a shorter duration such as 5, 10, or 15 years, depending on the total policy term.
Limited premium plans are useful for individuals who expect income stability only during their active working years and prefer to complete premium payments early.
Premiums under Bima Kavach are higher compared to several private insurers for similar specifications under the regular premium option. For instance, for a 40-year-old non-smoker opting for a ₹2 crore cover up to age 60, the annual premium is approximately ₹43,600.
Comparable quotes from private insurers for similar coverage are significantly lower. However, this gap narrows when evaluating the single premium option. In a single premium structure, LIC’s pricing becomes relatively competitive due to discounts and its long-standing actuarial assumptions.
LIC charges roughly ₹4.75 lakh as a single premium for the same specifications, while private insurers quote a broad range depending on underwriting assumptions.
Strengths🔹 High minimum cover ensures adequate protection. 🔹 Flexible coverage enhancement options. 🔹 Strong claim settlement reputation. 🔹 Long-term stability of a PSU insurer. |
Weaknesses🔹 Higher premiums under regular payment mode. 🔹 Less aggressive pricing than private insurers. 🔹 Online experience still evolving. 🔹 Limited flexibility compared to some digital-first players. |
The decision to buy Bima Kavach should not be driven by premium comparison alone. Term insurance is a promise payable decades into the future. Claim settlement discipline, institutional stability, and transparency matter as much as price.
LIC’s long track record in settling claims provides comfort, especially for individuals with dependents who value certainty over marginal premium savings.
Who Should Consider This Policy🔹 Individuals seeking very high coverage. 🔹 Those prioritising claim settlement certainty. 🔹 Earners in higher income brackets. 🔹 Buyers preferring PSU-backed insurers. |
Who May Avoid It🔹 Premium-sensitive buyers. 🔹 Those comfortable with newer private insurers. 🔹 Individuals seeking ultra-low-cost plans. 🔹 Short-term coverage seekers. |
Another practical consideration is policy tenure. If retirement is expected around 50–55 years, running the policy only until that age can significantly reduce premium outgo while still covering peak earning years.
Single premium options suit individuals with surplus capital who wish to eliminate long-term payment obligations. However, medical disclosure must be complete and accurate, as claim settlement hinges on transparency.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, notes that protection decisions, much like investment strategies, should be based on structure, longevity, and certainty rather than short-term cost comparisons. LIC Bima Kavach addresses India’s chronic underinsurance problem by enforcing higher coverage discipline. For families prioritising long-term financial security and institutional reliability, the policy deserves serious consideration. Explore more structured financial insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Term Insurance and LIC Policies
Is LIC Bima Kavach better than private term plans?
Who should buy high-value term insurance?
Single premium vs regular premium term insurance
How much term cover is enough in India?
LIC claim settlement record and reliability
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
