LIC Yuva Credit Life

LIC's Yuva Credit Life (Plan 877) is a Non-Par, Non-Linked, Life, Individual, Pure Risk plan. It gives your family a safety net against loan repayment if you pass away during the policy term. Being a non-par product, policies do not get any share in LIC's surplus or profits. The plan is sold offline through licensed agents, corporate agents, brokers and insurance marketing firms.

It is a pure decreasing term assurance plan: the death benefit reduces over the term of the policy, broadly in step with a loan being repaid. You choose the Basic Sum Assured, the policy term and an interest rate to match the terms of your loan, and LIC prepares a Risk Cover Schedule from those three choices. The schedule shows the Sum Assured on Death for every policy year: it starts equal to the Basic Sum Assured, then steps down year by year.

The interest rates available for the Risk Cover Schedule are 6%, 7%, 8%, 9%, 10%, 11% and 12%, applied on an equated yearly repayment basis regardless of the rate your lender actually charges. Because the schedule is fixed upfront and your real repayments may not follow it exactly, the death benefit in any given year can be higher or lower than the actual outstanding loan.