Review: Nothing new about LIC Cancer policy

Sore points — after early-stage cancer, premium waived only for three years; covers only one early-stage cancer

A cancer policy from a life insurer is more comprehensive than a critical illness policy, where cancer is one of the many illnesses that are covered. LIC, the largest and only public life insurance company, recently launched its cancer policy.

LIC Cancer Cover is a non-linked health plan that provides benefit in case an individual is diagnosed with cancer. The policy is available for people in the age bracket of 20-65 years. The maximum policy term is 30 years but, the cover ceases automatically once the individual turns 75 years. The policy can be purchased offline as well as online (with 7 per cent discount on premium).

It is available for a sum assured of ₹10 lakh to ₹50 lakh. The premium rates under the policy are guaranteed for a period of five years. Based on the experience of the portfolio, the Corporation may revise the rates any time after the completion of five years. However, such revised rates shall be guaranteed for a further period of at least five years. The initial waiting period under the policy is 180 days. No benefit shall be payable if the life assured dies within a period of seven days from the date of diagnosis of cancer.

Relative to similar policies in the market now, this one from LIC isn’t good enough. Though, on the premium front, it is on par with others, it scores less on a few other critical parameters.

How it works

The plan has two benefit options. The premium rates vary depending on the option.

In the first option, the sum assured (SA) remains unchanged throughout the policy term. In the second option, the SA increases by 10 per cent each year for the first five years or until the diagnosis of the first event of cancer, whichever is earlier (this feature is like no-claim bonus).

The SA under the policy is paid on the first diagnosis of cancer. If it is an early-stage cancer, the policy pays 25 per cent of the SA. Premiums for the next three policy years or balance policy term, whichever is lower, is waived. If the policyholder is diagnosed to have a major-stage cancer, the full sum insured minus any previously paid claims (in respect of early-stage cancer) is paid. The policy terminates once the benefit amount is paid on a major-stage cancer. But the plan’s ‘income benefit’ feature gets activated wherein the policyholder will be paid 1 per cent of SA every month for a period of 10 years. This is irrespective of the survival of the individual or the period of 10 years going beyond the policy term. In case of death of the life assured while receiving the income benefit, the remaining pay-outs will be paid to the nominee.

Our take

There is no new attraction in this policy. It is similar to cancer policies of other life insurers. On a few parameters, this product, in fact, loses out to peers. In LIC’s Cancer Cover, after an early-stage cancer, the premium is waived only for three years. But in Max Life and ICICI Pru Life’s cancer policies, premium on the policy is waived for the rest of the term. On policy period, LIC offers a 30-year term with cover ceasing at 75 years, but in Future Generali’s Cancer Protect Plan, maturity is at 80 years and anyone of age 35 years can get a cover for a term of 45 years under the plan.

One may have to read the fine print on exclusions with LIC’s cancer Cover. In case of early-stage cancer, it excludes all tumours described as benign, borderline malignant, or low malignant potential, carcinoma in-situ of skin and a few other conditions, and, in case of major-stage cancer, it excludes some kind of thyroid cancers and leukaemia.

One has to also note that LIC’s Cancer Cover accepts only one early-stage cancer, while a few players in the market include multiple instances of early-stage cancer up to 100 per cent of sum assured.

For a male of 40 years, for sum assured of ₹30 lakh, the annual premium is about ₹15,000 with LIC. Other policies in the market too come for almost the same price. ICICI Pru’s Cancer Protect is a little expensive — annual premium of ₹18,963 for a ₹30-lakh cover, but is a very comprehensive plan.

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