LIC Digi Credit Life (878) Calculator

LIC Digi Credit Life (878) Calculator

What this calculator does

LIC's Digi Credit Life (Table No. 878) is a non-linked, non-participating, single-premium pure protection plan designed specifically to cover an outstanding loan - a home loan, personal loan, or any other borrowing - so that a borrower's family is not left with the loan liability if the borrower dies during the loan tenure. There is no bonus and no maturity payout: the entire single premium goes towards death cover for the loan term you choose.

The plan offers two Cover Type options:

• Level Sum Assured - the death benefit stays exactly the Loan Amount you entered, for the whole tenure, regardless of how much of the loan has actually been repaid. This is useful when you want the payout to also cover other liabilities alongside the loan, not just the shrinking outstanding balance.
• Reducing Sum Assured (aligned to Loan Balance) - the death benefit reduces every year in step with the loan's own reducing-balance amortisation schedule, so the cover always matches (roughly) what's still owed. Because the average sum at risk is lower than under Level cover, this option costs noticeably less.

This calculator gives you an indicative estimate of:

• the one-time Single Premium payable, based on your age, gender, smoking/tobacco habit, loan amount, tenure, and chosen Cover Type
  • the Sum Assured at the start and end of the term
• a year-by-year schedule comparing the loan's own outstanding balance against the Sum Assured / Death Benefit actually payable in each shown policy year

Formula Used

Eligibility. Entry age must be between 18 and 65 years, the Loan Tenure (Policy Term) between 5 and 30 years, and the tenure is capped so cover ends by age 75:

$$EntryAge + LoanTenure \le 75$$

Loan amortisation. The loan is assumed to be repaid by level monthly instalments (EMI) on a reducing-balance basis at the entered annual interest rate. The outstanding balance after k months of an n-month loan of principal P at monthly rate r is:

$$r = \frac{AnnualRate}{12 \times 100}$$ $$B(k) = P \times \frac{(1+r)^n - (1+r)^k}{(1+r)^n - 1}$$

Sum Assured at risk. Under Level cover, the full Loan Amount is at risk every year. Under Reducing cover, the Sum Assured each year equals that year's outstanding loan balance, so the average Sum Assured over the tenure is the average of the yearly balances - always lower than the original Loan Amount:

$$SumAssured(year) = \begin{cases} LoanAmount & \text{Level} \\ B(year \times 12) & \text{Reducing} \end{cases}$$

Base mortality rate. The illustrative tabular annual rate (₹ per ₹1,000 Sum Assured) rises with age at entry and, more gently, with loan tenure:

$$BaseRate(age, tenure) = 0.45 + age \times 0.055 + tenure \times 0.01$$

Loadings and rebates. A smoker/tobacco-user loading and a female rebate are applied multiplicatively, and a High Sum Assured Rebate (per ₹1,000, based on the Loan Amount) is subtracted for larger loans:

$$Rate = BaseRate \times SmokerFactor \times GenderFactor - Rebate(LoanAmount)$$ $$SmokerFactor = \begin{cases} 1.6 & \text{Smoker / Tobacco User} \\ 1.0 & \text{Non-Smoker} \end{cases} \qquad GenderFactor = \begin{cases} 0.9 & \text{Female} \\ 1.0 & \text{Male} \end{cases}$$ $$Rebate(LoanAmount) = \begin{cases} 0.4 & LoanAmount \ge 2,00,00,000 \\ 0.3 & LoanAmount \ge 1,00,00,000 \\ 0.15 & LoanAmount \ge 50,00,000 \\ 0 & \text{otherwise} \end{cases}$$

Single Premium. The one-time premium is priced off the average Sum Assured over the tenure (the full Loan Amount for Level cover, or the average yearly outstanding balance for Reducing cover), converted into an equivalent annual premium and then discounted into a single lump sum:

$$AnnualEquivalentPremium = \frac{AvgSumAssured}{1000} \times Rate$$ $$SinglePremium = AnnualEquivalentPremium \times LoanTenure \times 0.52$$

Note: these rates and eligibility limits are illustrative approximations for planning purposes, not LIC's official IRDAI-approved rate table, which can change over time and depends on full medical underwriting and the lender's actual loan schedule. Always confirm exact figures with LIC, your lender, or an authorized agent before purchasing a policy.

How to Use

1. Enter your Age at Entry in years (18 to 65).
2. Select your Gender and Smoking/Tobacco Habit - both affect the premium.
3. Enter the Loan Amount / Sum Assured you want covered (minimum ₹5,00,000).
4. Enter the Loan Tenure / Policy Term in years (5 to 30, subject to cover ending by age 75).
5. Enter the Loan Interest Rate (% per annum) - used to work out the reducing loan balance schedule.
6. Choose a Cover Type - Level Sum Assured, or Reducing Sum Assured aligned to the loan balance.
7. Click Calculate Premium to see your Single Premium, Sum Assured at inception and at the end of term, and the year-by-year schedule.

Worked Example

Suppose a 40-year-old non-smoker male takes a ₹30,00,000 home loan over a 20-year tenure at 9% p.a., and chooses Reducing Sum Assured.

$$BaseRate(40, 20) = 0.45 + 40 \times 0.055 + 20 \times 0.01 = 0.45 + 2.2 + 0.2 = 2.85$$

Since the Loan Amount is below ₹50,00,000, no High Sum Assured Rebate applies, and there is no smoker loading or female rebate:

$$Rate = 2.85 \times 1.0 \times 1.0 - 0 = 2.85$$

The reducing-balance schedule brings the average outstanding balance over 20 years to roughly ₹20,00,000 (well below the original ₹30,00,000, since the balance keeps shrinking every year):

$$AnnualEquivalentPremium = \frac{20,00,000}{1000} \times 2.85 \approx ₹5{,}700$$ $$SinglePremium = 5{,}700 \times 20 \times 0.52 \approx ₹59{,}280$$

If the borrower had instead chosen Level Sum Assured, the average Sum Assured would be the full ₹30,00,000 throughout, giving a noticeably higher Single Premium - the trade-off for cover that doesn't shrink alongside the loan.