LIC’s New Children’s Money Back Plan is a conventional money back plan that helps the parents and guardians in making a stronger and safer future for their child, even if they are no longer around. This plan is a combination of life cover and investment, as it takes care of the child’s growing financial needs when he grows up.
LIC’s New Children’s Money Back Plan is an excellent plan for the child. It not only helps the parent to create a corpus for the child but also provides liquidity during the tenure of the plan so as to meet interim financial requirements.
The primary features of the pan are given as follow:
|Age of Entry of the child||0 Years, At Birth||12 years|
|Age of Maturity of the child||–||25 years|
|Tenure of Policy||25 years Minus Entry Age|
|Premium||INR 24,000||No Maximim Limit|
|Sum Assured||INR 1 Lakh||No Maximum Limit|
There are many advantages to investing in LIC’s New Children’s Money Back Plan. Few of the many benefits are given below:
There are 2 possibilities for payment of Death Benefit :
Death Benefit = Sum Assured on Death + accrued Simple Reversionary Bonus + Final Additional Bonus if any.
Sum Assured on Death is the higher of :
Subject to a minimum of 105% of the premiums that have been paid.
|Schedule for Survival Benefit||Survival Benefit paid|
|On the policy anniversary after the 18th birthday of the life insured||20% of the Sum Assured|
|On the policy anniversary after the 20th birthday of the life insured||20% of the Sum Assured|
|On the policy anniversary after the 22nd birthday of the life insured||20% of the Sum Assured|
|Maturity Benefit at the end of the policy tenure||The remaining 40% of the Sum Assured is paid along with Simple Reversionary Bonus and Final Additional Bonus|
Maturity Benefit is paid to the policyholder when he outlives the entire policy tenure.
Maturity Benefit = The remaining 40% of the Sum Assured is paid + accrued Simple Reversionary Bonus and Final Additional Bonus.
LIC’s New Children’s Money Back Plan also offers LIC’s Premier Waiver Benefit Rider. The Rider is available for the proposer who is between the age group of 18-55 years.
Like other add-on Riders, LIC’s New Children’s Money Back Plan can either be purchased at the time of inception of the plan or it may be added on a policy anniversary while the policy is active.
Under the Premium Waiver benefit Rider, if the proposer dies within the policy tenure, the premiums due after the date of death till the end of the policy tenure would be waived off but the policy would continue to pay the benefits as per schedule.
Here are the details of the premium amount for the following particulars
Sample premium rates
|Age at Entry||Premium Factor|
|0 years||44.15/ INR 1000 sum assured|
|5 years||57.00/ INR 1000 sum assured|
|10 years||80.60/ INR 1000 sum assured|
|12 years||93.90/ INR 1000 sum assured|
Rebates and Discounts: This policy offers a rebate in premium for Annual and Semi-Annual modes and a discount in premium for high sum assured.
|Annual Mode||2% of Tabular premium|
|Half-yearly Mode||1% of Tabular premium|
|Quarterly and Monthly||NIL|
High Sum Assured Discount
|INR 1,00,000 to INR 1,95,000||NIL|
|INR 2,00,000 to INR 4,95,000||2/1000of Basic Sum Assured|
|INR 5,00,000 and above||3/1000 of Basic Sum Assured|
So, the premium for a 5-year-old child can be calculated as
|Age at Entry||5 years|
|Policy Term||20 years|
|Mode of Premium payment||Yearly|
|Premium Paying Term||20 years|
|Basic Sum Assured||INR 1 lakh|
|Premium calculation||57/1000*100000 = 5700|
|Amount of Annualised Premium||INR 5586.00 (after all the discounts and rebates) + taxes|
Participation in Profits
If the policy is active, it may participate in the profits of LIC conferring to the provisions made in Section 28 of the LIC Act 1956. The policy would eligible for Simple Reversionary bonus at a rate that is specified by LIC depending on its experience.
If at least 3 years’ are paid and the policy lapses, then the regular benefits under this policy also cease and the policy gets converted to a paid-u policy. However, the death benefit continues with reduced paid-up policy coverage. This amount would depend on the number of premiums that have been paid. The accrued bonuses are also not forfeited.
If, however, the first 3 years’ premiums are not duly paid, then the policy does not accrue any paid-up value and thus lapses after the end of the grace period!
The policy has a Guaranteed Surrender Value when at least 3 years’ annual premium has been duly paid and the policy gets a paid-up value.
Guaranteed Surrender Value = % of Total Premium Paid till the date of Surrender
Deferring the Survival Benefits
The policyholder has the freedom to decide whether he wishes to receive the survival benefit at the time it is due or after the due date, but while the policy is in force. He may also defer the survival benefits that are due. In that case, LIC will then pay him a Survival Benefit that includes Survival benefits, sum assured and factors that are applicable.
Revival Of Lapsed Policy
Non-payment of premium can lead to a lapsed insurance policy. If the due payment is not paid even during the grace period then the policy will lapse. However, LIC provides the policyholder with an option to receive the policy during its lifetime but within 2 subsequent years from the first unpaid premium date. The right to accept the original terms of the policy remain with LIC.
After paying the due premiums for three full years, the policyholder is eligible to ask for a loan against the surrender value of his policy.
During the 15 day free-look period, if the policyholder is not completely satisfied with the policy that he has purchased, he can return it to LIC. The cancellation, when requested with 15 days of purchase, is carried out by LIC and the premium that has been paid is returned.
Let us assume, Mr and Mrs Kumar buy LIC’s New Children’s Money Back Plan for their 10-year old daughter, Sheena.
|Sum Assured||INR 5 lakhs|
|Premium factor for 10 years||80.60|
|Premium||= 80.60/1000*500000 = INR 38000 approx (after discounts and rebates)|
Survival Benefit schedule
|On Sheena’s 18th birthday||INR 1 lakh as Survival Benefit|
|On Sheena’s 20th birthday||INR 1 lakh as Survival Benefit|
|On Sheena’s 22nd birthday||INR 1 lakh as Survival Benefit|
|On Sheena’s 25th birthday||Remaining INR 2 lakhs + accrued bonuses as Maturity Benefit and the policy terminates|
As parents, everyone wishes to keep their children protected and looked after. Fulfilling the child’s dream is the desire of every parent. LIC’s New Children’s Money Back Plan helps the parents to cater to the growing financial needs of their child, that includes education, career and wedding.
The policyholder at the time of buying the policy, himself selects a frequency that is convenient to him. It can be on a monthly, quarterly, half yearly or yearly basis.
The time period given by the insurer, that is from the actual due date of premium payment, without charging the policyholder a fine or late fee is called the grace period. If the insured individual dies within this period, the policy would still be considered active. Under LIC’s New Children’s Money Back Plan, a grace period of 15 days is given if the frequency of payment is monthly, and a grace period of 30 days for payments that are on a monthly, quarterly, half yearly or yearly basis.
Under LIC’s New Children’s Money Back Plan, when the insured individual survives the policy anniversary that coincides or immediately follows the ages 18, 20 and 22 years, a share of 20% of the total value of the sum assured is payable, provided the plan is still in force. The pending 40% of the sum assured is paid at the time of the policy’s maturity.
Before you purchase the policy you must be certain about your financial standing. Buying the policy and not paying the premiums is not a wise option. However, if less than 3 years premiums, all the ensured benefits under the plan will be stopped as soon as the grace period finishes. The policyholder will not be eligible for any payouts. But in case of payments for the first 3 years have been made, the policy will not be withdrawn wholly. Then, it would be a paid-up plan that comes with a much reduced Death-Paid up sum assured.
LIC’s New Children’s Money Back Plan would be invalid if the insured, whether sane or insane, commits suicide. If the insured commits suicide within 1 year of buying the policy, LIC will not serve any claim other than 80% of the amount that has been paid through premiums. If the individual does so within 1 year of policy revival, LIC will not serve any claim other than 80% of the premiums that have been paid till the date of death.
If the insured individual is less than 8 years old, then the risk under LIC’s New Children’s Money Back Plan will begin a day before the plan completes 2 years or a day before the plan anniversary that follows the 8th birthday of the insured, whichever date is earlier.
Other LIC’s Money Back Plans