LIC’s “term insurance” plan runs into trouble

New Delhi, June 11: The Life Insurance Corporation’s ambitious scheme for “term insurance” for army personnel has run into trouble with the Defence and Finance Ministeries, it is learnt. The scheme, which was initiated when Mr. T.A. Pai was Chairman of the Corporation, is of the nature of a group insurance protection-cum-savings scheme and is to cover nearly eight lakhs of army personnel. The scheme is in two parts, one for officers and the other for JCOs and other ranks. The insurance cover is for Rs. 30,000 for officers and Rs. 5,000 for other ranks. The officers will have to pay a compulsory monthly contribution of Rs. 30 and the JCOs and other ranks Rs. five which is to be deducted from their salary. Though war risk is excluded, mortality due to other causes than war, including sniping and accidents, are covered by the scheme. Out of the contributions, a small portion is credited as premium and the rest is credited to the whole group in a bank account. When death occurs, the insurance amount, the saving portion of the contribution and the interest accrued will be given to the family. According to the Corporation sources, this could be a substantial amount. The Corporation has also made another offer to the Defence Ministry to make the scheme attractive. It has offered to effect considerable reduction in the premium, if it finds that claims experience is favourable. The excess amount will be paid to the group as a whole, in its savings account.