LIC’s Endowment plans
LIC is one of the largest life insurance companies in India whose history goes back to as early as the year 1956 when the company was formed. Today, the company has the trust of more than 250 million customers. When it comes to products, LIC of India offers a range of insurance plans to suit the financial requirements of every individual. In the endowment category too the company has a range of different plans and each plan has a different set of features and benefits. Let’s understand what endowment plans are and the list of endowment plans offered by LIC.
What is an endowment plan?
An endowment insurance plan is a savings oriented life insurance plan which provides the dual benefits of insurance coverage and guaranteed wealth creation. The plans come with a long term investment perspective. If the insured dies during the policy tenure, the death benefit is paid. However, if the insured survives until the end of the policy term, a maturity benefit is paid. Thus, endowment plans help policyholders create savings for their financial goals.
Salient features of endowment plans
Endowment plans have the following salient features –
- Many of these plans have a bonus component. Bonus is the profit earned by the insurance company which is passed down to policyholders. Every year when the company makes a profit, bonus is declared in many endowment plans which increases the benefits payable
- Coverage tenure is allowed for longer durations
- Optional riders are available under many endowment plans which help in increasing the scope of coverage
Endowment plans offered by LIC
LIC has a variety of endowment plans which are described in brief below –
- LIC’s Jeevan Pragati Plan
This plan is a with-profits endowment plan which means that the plan allows bonus additions. Other features of the plan include the following –
- The sum assured increases by 25% after every five policy years. In case of death, the increased sum assured is paid
- On maturity, however, the basic sum assured and accrued bonuses are paid.
- The plan’s coverage can be enhanced with an optional rider
- There are tax benefits in the plan as well. Both the premiums paid and the benefits received earn tax reliefs.
- LIC’s Jeevan Labh Plan
This endowment plan also earns bonuses and provides loan facility during the policy tenure if the policyholder wants funds for financial emergencies. Other features of the plan include the following –
- Simple reversionary bonuses are payable throughout the term of the plan. Moreover, along with the maturity or death benefit a final bonus might also be paid
- A choice of two additional riders is allowed to be chosen with the basic plan
- The premiums that are paid are eligible for tax deductions. They are allowed as a deduction from the taxable income under Section 80C up to a maximum limit of INR 1.5 lakhs.
- Even the plan benefits received are tax-free in the hands of the policyholder.
- LIC’s Single Premium Endowment Plan
As the name suggests, this is an endowment plan where only a single premium is required to buy the plan. Thus, the plan is suitable for those looking for one-time investments. Other features of the plan are as follows –
- This is a participating plan where bonuses are paid if the company earns a profit
- Premium rebates are allowed if you choose a sum assured of INR 1 lakh and above
- Loan is available after the completion of the first policy year.
- The policyholder can also enjoy tax benefits on the premiums paid and the benefits received
- LIC’s New Endowment Plan
This endowment plan is offered as a participating plan which earns bonus. In case of death during the policy tenure the death benefit is paid and if the insured survives till the policy tenure, maturity benefit is paid. Other notable features of the plan are as follows –
- LIC’s Accidental Death and Disability Benefit Rider can be chosen to include coverage against accidental death and disability
- Coverage is allowed for up to 35 years after buying the policy
- Two types of premium discounts are available under the plan. One if for the mode of premium payment and the other is for the level of sum assured selected.
- Premiums paid, up to INR 1.5 lakhs are eligible deductions from the taxable income under Section 80C. Even the benefits received are fully tax-free under Section 10 (10D)
- LIC’s New Jeevan Anand Plan
A popular endowment plan, New Jeevan Anand is offered as a participating plan having the following features –
- There is an optional rider which can be taken with the base policy
- Up to 2% of the premium is allowed as discount for paying the premium in annual or half-yearly mode
- A high sum assured also attracts premium discount
- Policy loans are available during the term of the policy
- Premiums paid help in lowering the taxable income as they are eligible deductions under Section 80C. The benefits received are also treated as tax-free income which do not attract anya tax.
- LIC’s Jeevan Rakshak Plan
Another participating endowment plan, Jeevan Rakshak offers bonus additional as well as loyalty additions thereby increasing the benefits payable under the plan. The features of the plan include the following –
- LIC’s Accident Benefit Rider is allowed as an optional cover
- Sum assured of up to INR 2 lakhs is available
- If sum assured of INR 1.5 lakhs or above is chosen there is a premium discount
- The plan allows dual tax benefits as the premiums paid and the benefits received both earn tax exemptions.
- LIC’s Limited Premium Endowment Plan
As is evident from the name, this plan requires only limited premiums while coverage continues for a longer duration. The features of the plan are as follows –
- Bonuses are added to the plan’s benefits
- Two optional riders are available with the policy
- Premium discounts help in lowering the premium payable
- The limited premiums paid under the plan are allowed as tax-free deductions under Section 80C.
- The benefit which is paid under the plan is tax-free in nature and does not attract any tax.
- LIC’s Jeevan Lakshya Plan
Under this plan, the death benefit is paid in a combination of annual incomes and lump sum amount while the maturity benefit is paid in lump sum. The features of the plan include the following –
- On death of the insured, annual incomes are paid. The income is 10% of the sum assured.
- Incomes are paid till one year before the policy matures. In the last year, after the policy matures, 110% of the sum assured is paid along with bonuses
- The premium paying tenure is three years less than the total policy tenure
- The premiums paid qualify for deduction under Section 80C and are therefore tax-exempt.
- The maturity or death benefit received are also a tax-free income under the provisions of Section 10 (10D).
- LIC’s Aadhar Shila Plan
This endowment plan offered by LIC is only for females who have a valid Aadhar card. The features and benefits of the policy include the following –
- Loyalty additions are paid at death or maturity if the premiums of the first five years have been paid
- The maximum sum assured which can be opted under this plan is limited to INR 3 lakhs
- Premium discounts are allowed for choosing higher sum assured levels and also for paying the premiums annually or semi-annually
- The policyholder can enjoy tax benefits on the premiums paid and the benefits received under the plan. Premiums paid are tax-free under Section 80C and the benefits received are tax-free under Section 10(10D)
- LIC’s Aadhar Stambh Plan
Just like Aadhar Shila Plan, Aadhar Stambh plan is designed only for male lives having a valid Aadhar card. The features of the plan are as follows –
- Loyalty addition is paid if the policy was in force for the first five years
- Policy term of 10 to 20 years is available
- Sum assured from INR 75,000 to INR 3 lakhs is available
- The benefit which is received is completely tax-free. Even the premiums paid are allowed as deduction from taxable income upto INR 1.5 lakhs
Loans are offered when the plans attain a surrender value, i.e. premiums have been paid for the first two or three years depending on the plan. If the plan has acquired a surrender value, loans can be availed up to a specific portion of the surrender value.
Yes, a grace period of 30 days is allowed for payment of premiums. However, in the case of monthly premiums, the grace period allowed is 15 days.
If premiums are paid half-yearly a rebate of 1% of the premium is allowed. In the case of yearly premiums, the rebate increases to 2%
The policyholder can take as many available riders as he/she likes provided that the rider premium does not exceed 30% of the premium of the base policy.
A policy lapses if the premiums are not paid even within the grace period.