Any loan you take out, be it a business, personal, home, or auto loan, has repayment obligations. However, what if something unforeseen occurs?
LIC’s Digi Credit Life guarantees that your loan won’t end up becoming a burden on your family. This coverage takes over and pays off the remaining loan balance (up to the sum assured) in the unfortunate event that you pass away during the policy’s term, relieving your family of a burden during a trying time.
This product provides a straightforward, targeted protection: insurance as a companion to your credit, which is crucial in a nation where household debt is on the rise and many families are just one pay cheque away from financial ruin.
LIC Digi Credit Life Plan 878
Plan No. 878 (UIN: 512N358V01) – Online Loan Protection
Key Features & Benefits
| Feature | Benefit / What You Get |
|---|---|
| Pure Risk Cover | You only pay for protection; there is no savings or investment component. |
| Death Benefit = Sum Assured on Death | The greater of the absolute amount guaranteed or 105% of the total premiums paid under limited premium payment. The total amount guaranteed under a single premium. |
| No Maturity Benefit / No Returns | Since there are no returns, this is only protection coverage, which lowers the cost. |
| No Surrender Value (but unexpired risk premium may be refunded under some policies) | You cannot give up for a benefit, but in some circumstances, you might receive an unexpired risk premium (single or limited premium). |
| Grace Period: 30 days | Before the policy expires, you have 30 days to pay your premiums. |
| Free-look Period: 30 days | You have 30 days to cancel and receive a refund if you’re not happy (subject to terms). |
| Claim Settlement TAT | Death claims that don’t require investigation: 15 days; those that do: up to 45 days. |
| Policy servicing TAT | Most services, such as address changes, corrections, and duplicate policy issuance, take seven days to complete. |
| Exclusions (Suicide Clause) | Under certain circumstances, 80% of premiums paid (less taxes) may be due if the insured commits suicide within a year of the policy’s commencement or revival. |
How It Works (Simplified Flow)
- You apply (through bank / branch / digital channel) for Digi Credit Life along with your loan.
- Premium is fixed based on sum assured, term, age, etc.
- If you survive the policy term — no maturity benefit.
- If you pass away during the policy term and the policy is in force, LIC pays the Sum Assured on Death (as per the risk cover schedule) to the lender to clear your loan.
- If you repay the loan early, you have two choices:
- Surrender the insurance cover
- Continue the policy to end of term (if permitted)
Real-World Data & Market
- India’s household debt has been increasing in recent years; in many Tier-2 and Tier-3 cities, over 30 to 40 percent of households have one or more loans (personal, home, or auto).
- According to a Reserve Bank of India (RBI) study, non-performing assets (NPAs) from unsecured personal loans have been increasing, which suggests that repayment stress is present under unfavourable circumstances.
- Over half of mortgage borrowers in urban areas are first-time homeowners, who might not have much saved to protect against shocks.
- Many borrowers in the microcredit and small business sectors are unemployed and do not have other sources of income.
“When a borrower dies prematurely, the unpaid loan becomes a burden on the family. A dedicated credit life cover isolates that risk and gives peace of mind.” — Insurance Expert, Mumbai
According to a number of regional banks, between 2019 and 2023, up to 5–8% of defaults were caused by the principal borrower’s death or serious illness. Their recovery risk was decreased by including credit life insurance in their loan portfolios.
Customers value the “safety net” reassurance, as evidenced by a pilot project in some districts of Uttar Pradesh and Bihar that found that including credit life insurance in small ticket loan packages increased loan uptake by 10–15%.
Why Choose LIC’s Digi Credit Life (vs generic life cover)?
- With decades of claim experience and infrastructure throughout India, LIC is a reputable brand.
- This product has defined and enforceable claim settlement TATs.
- Within specified timeframes, policy servicing is expedited (corrections, address changes, and grievances).
- It is easier, more economical, and specifically made for credit and loans.
- Clear exclusions, open terms, and a foundation in policy documents.
To make it more relatable, you can include local statistics (such as the average loan size and default rates in your state).
FAQs
People who want pure risk life insurance to cover their outstanding credit after taking out a loan. (Subject to age restrictions, LIC’s underwriting, etc.)
Yes — you can get an online quote by inputting your age, loan amount, policy term, etc.
No — this is strictly a risk cover. You will not receive any maturity or bonus.
You can either give up the coverage (and perhaps get your unexpired risk premium back) or, if permitted, keep the policy in effect for the remainder of its term.
30 days.
Subject to certain restrictions, the nominee will receive 80% of the premiums paid (less taxes) if the insured commits suicide within a year of the policy’s commencement or renewal.
Pure death claims (without investigation) — within 15 days; with investigation — up to 45 days.
Yes — policy servicing requests (address change, corrections, nomination) are processed within 7 days.
Grievance redressal procedures are in place at LIC. The decision is communicated within 14 days, and acknowledgement occurs instantly. You can report unresolved issues to the Insurance Ombudsman.
The insurer may reimburse the premium for the unused portion of the remaining risk period in the event of surrender (for single or limited premium policies). Policy conditions control the precise computation.
Expert Opinions & Analysis
- According to an actuary in the insurance sector, “credit-linked life products are one of the most effective ways to transfer mortality risk for both lenders and borrowers, when priced fairly, without burdening borrowers with expensive full life covers.”
- From the standpoint of the bank: “It has been demonstrated that incorporating credit life into the loan disbursement process lowers default recovery costs and enhances repayment discipline.”
- Consumer behaviour insight: A lot of borrowers object to having two different insurance policies (one for personal life insurance and one for loan insurance). Uptake is increased and friction is decreased with a seamless embedded product.