LIC’s New Endowment Plus Plan
Life Insurance Corporation of India, founded in the year 1956 is the only public sector life insurance company present in India. Headquartered in Mumbai, LIC is the largest life insurance market player that has its presence in every corner of the country with over 2000 and more branches. LIC has wide range of life insurance plans in its offerings starting from pure protection plans to savings and investment plans for every type of customer need. With the highest brand equity, LIC has been serving the large customer base with various new offerings from time to time. LIC’s new Endowment Plus is one such innovative offering.
What are endowment plans?
Endowment plans are savings cum protection plans. These plans help you save regularly for a certain period of time. For the regular investments that you make, endowment plans not only provide life protection (i.e. fixed sum assured in the event of death) but also helps you avail lump sum benefit on maturity. The benefit so received can be used to meet your long-term goals such as children’s education, marriage or for retirement etc. Endowment plans can be with profit or without profit plans. These plans also come in both non-ULIP and ULIP (Unit Linked Insurance Plans) variants. Dual benefit of savings and protection is the key element of any endowment plan.
LIC’s New Endowment Plus Plan
LIC’s New Endowment Plus is a non-participating unit linked insurance plan. This ULIP policy is launched by LIC in August 2015 post new product regulations issued by the Insurance regulator, IRDAI (Insurance Regulatory and Development Authority of India). The scheme allows you to invest in equity and debt in four different combination of fund types to choose from. Premiums paid are invested in these funds as per your choice and risk appetite. The fund value of your investment is paid back on maturity as a survival/maturity benefit. In case of an unfortunate event during the policy term, death benefits would be paid out to nominee/beneficiary. Let’s know the plan in detail.
Features of LIC’s New Endowment Plus Plan
- Unit linked endowment assurance plan
LIC’s new endowment plus allows you to invest in both equity and debt market through any of the four funds available for you to choose. Premium paid by you is invested in to funds after the deduction of premium allocation charges. However, the investment involves market risk as the fund value of your investment is dependent on market driven unit price or net asset value (NAV). - Four fund choices for investment
LIC’s new endowment plus plan offers four different investment funds for you to choose as per your investment objective and risk appetite. After the deduction of charges, premium paid will be utilised for buying fund units. Here are the four investment funds with different combination are available for choice.
| Fund Type | Investment into listed equity shares | Short-term/money market investments | Investment in government securities or corporate debt |
|---|---|---|---|
| Growth fund | 40% to 80% | Not more than 40% | Not less than 20% |
| Balanced fund | 30% to 70% | Not more than 40% | Not less than 30% |
| Secured Fund | 15% to 55% | Not more than 40% | Not less than 45% |
| Bond Fund | Nil | Not more than 40% | Not less than 60% |
Pattern of investment for discontinued policy fund
- Money market instruments : 0% to 40%
- Government securities : 60% to 100%
- Flexibility to choose premium amount and payment frequency
LIC’s new endowment plan allows you to choose the premium amount. In case of regular payment of premium, frequency can be chosen by you as per your convenience – yearly, half-yearly, quarterly or monthly (through ECS mode only). The plan also allows you to invest through single premium.
Benefits of LIC’s New Endowment Plus Plan
- Transparency
As it’s a ULIP plan, the plan offers transparency to the investor as fund performance can be tracked by knowing daily net asset value of the investment fund. - Customise with optional rider
LIC’s new endowment plan gives you an option to customise the policy with an additional accidental death benefit rider. The rider enhances your policy coverage and benefits. Rider comes at an additional cost of premium. - Free fund switches
LIC’s new endowment plus plan offers a switching option which enables you to switch your investment from one fund type to another depending on the market situations and your individual risk appetite. Four fund switches allowed without any charge in each policy year. Switching more than four times in a policy year will be charged at INR. 100 per switch. - Liquidity
LIC’s new endowment plus plan offers liquidity by allowing you to make partial withdrawals from the policy after completion of 5 policy years. However, withdrawals are allowed with subjected to maintenance of minimum balance of :- 6th to 10th of the policy : 50% of the fund value or 3 times the annualised premium, whichever is higher.
- 11th to 20th year of the policy : 25% of the fund value or 3 times the annualised premium, whichever is higher.
- Tax benefits
LIC’s new endowment plus plan also helps you save tax. The premiums that you pay are allowed for tax deduction under Section 80C of the Income Tax Act, 1961. Benefits received at the end can also be tax free under Section 10 (10D) of the Income Tax Act.
Who should buy LIC’s New Endowment Plus Plan?
LIC’s new endowment plus can be bought by any type of investor seeking a dual benefit of long-term savings and protection. With various fund option, investor of every risk profile can customise their choices and invest accordingly.
Let’s take a look at suitability of investment funds.
- Growth fund : If you are an aggressive investor with a long-term goal, growth fund is an ideal choice for capital appreciation.
- Balanced fund : If you are moderately aggressive investor who aims to strike balance between income generation and capital appreciation, balanced fund is an ideal choice
- Secured fund : If your risk appetite is moderate, secured fund can help you avail a steady income.
- Bond fund : This fund can be a best choice for conservative investors with low risk appetite.
There is also an option to switch from one fund to another depending on your choice.
Eligibility criteria for LIC’s New Endowment Plus Plan
Let’s take a look at the eligibility requirement for LIC’s new endowment plus
| Eligibility conditions | Minimum | Maximum |
|---|---|---|
| Entry age | 90 days (completed) | 50 years (nearest birthday) |
| Maturity age | 18 years (completed) | 60 years (nearest birthday |
| Policy term | 10 years | 20 years |
| Premium payment term | Same as policy term | |
- Eligibility requirement for premium amount vary as per the mode of payment chosen. And the sum assured depends on the premium amount. Here is the eligibility conditions for the premium payment.
| Eligibility condition for mode of premium | Minimum (in INR.) | Maximum (in INR.) |
|---|---|---|
| Yearly | 20000 | No Limit |
| Half-yearly | 13000 | |
| Quarterly | 8000 | |
| Monthly (through ECS) | 3000 |
- Sum assured
10 times the annualised premium or 105% of the total premium paid – whichever is higher. - Date of commencement of risk
- In case the life assured is less than 8 years of age at the time of availing the policy, the risk cover will commence from one day before the completion of 2 years from the date of policy commencement or one day before the policy anniversary after life assured becomes 8 year old, whichever is earlier.
- In case age of the life assured is 8 years and more, the risk cover will commence immediately.
Charges in LIC’s New Endowment Plus
Below are some of the major charges applicable for LIC’s new endowment plus.
- Premium allocation charges
When you make a premium payment each time, premium allocation charges are first deducted before the money is invested. Here is percentage of charges depending on the policy year.
| Policy Year | Premium allocation charges |
|---|---|
| 1st year | 7.5% of premium |
| 2nd year to 5th year | 5% of premium |
| 6th year onwards | 3% of premium |
- Mortality charges
Mortality charges are basically the cost to provide life cover. This is age specific and depends on the sum assured. These charges are deducted at the beginning of every month by cancelling appropriate number of units out of your investment fund.
Here is a mortality charge for a healthy life at different age.
| Age | 25 | 35 | 45 | 50 |
|---|---|---|---|---|
| Charges per annum per INR. 1000 | INR. 1.23 | INR. 1.60 | INR.3.59 | INR. 6.18 |
- Fund management charges
These charges are charged on daily basis while computing net asset value (NAV). Charges are as under :
| Fund Type | Fund management charges |
|---|---|
| All four types of funds (Bond fund, Secured fund, Balanced fund and Growth fund | 0.7% p.a |
| Discontinued fund | 0.5% p.a |
- Policy administration charges
These charges are deducted at the beginning of every month by cancelling appropriate number of units out of your investment fund. Monthly charges are as follows
| Policy year | Policy administration charges |
|---|---|
| 1st year | (0.35%*instalment premium) or INR. 100, whichever is lower |
| 2nd year | (0.25%*instalment premium) or INR. 70, whichever is lower |
| 3rd year | 2nd year charge*1.03 |
| 4th year | 3rd year charge* 1.03 |
| 5th year | 4th year charge* 1.03 |
| 6th year onwards | INR. 52.17 In 6th year and yearly increase at 3% thereon. |
These charges are for annual mode of payment, charges need to be multiplied by below factors for other payment modes.
| Premium payment mode | Half-yearly | Quarterly | Monthly |
|---|---|---|---|
| Applicable factors | 1.6 | 2.6 | 7 |
- Partial withdrawal charges
Flat charges of INR. 100 is charged by cancelling appropriate number of units out of investment fund on the date of partial withdrawal. - Discontinuance charges
These are the charges levied at the time of discontinuation or surrender of policy. Charges are deducted by cancelling the appropriate number of units from investment fund. Here are the charges :
| Year of policy discontinuation/surrender | Charges for policies with annual premium of INR. 25,000 and below | Charges for policies with annual premium of more than INR. 25,000 |
|---|---|---|
| 1 | Lower of 15% * (annualised premium or fund value) subjected to maximum of INR. 2,500 | Lower of 6% * (annualised premium or fund value) subjected to maximum of INR. 6,000 |
| 2 | Lower of 7.5% * (annualised premium or fund value) subjected to maximum of INR. 1,750 | Lower of 4% * (annualised premium or fund value) subjected to maximum of INR. 5,000 |
| 3 | Lower of 5% * (annualised premium or fund value) subjected to maximum of INR. 1,250 | Lower of 3% * (annualised premium or fund value) subjected to maximum of INR. 4,000 |
| 4 | Lower of 3% * (annualised premium or fund value) subjected to maximum of INR. 750 | Lower of 2% * (annualised premium or fund value) subjected to maximum of INR. 2,000 |
| 5th year onwards | Nil | Nil |
- Accidental death benefit charges (in case rider is availed)
In case you avail an additional rider, then the cost of cover will be taken at the beginning of every month by cancelling appropriate number of units from the fund value which is at the rate of INR. 0.40 per thousand of rider’s sum assured for every policy year.
Documents required to buy LIC’s New Endowment Plus Plan
Here are the documents required for LIC’s new endowment plus :
- Age proof (Birth certificate/Voter ID/ Driving license/10th class marksheet/ Passport etc)
- Income proof
- Identity proof (PAN card/Aadhaar car/Driving license/Voter’s ID/Passport)
- Address proof (Passport/Ration card/Voter’s ID/Driving license/Latest utility bills)
- Passport size photographs
Scope of Coverage under LIC’s New Endowment Plus Plan
As LIC’s new endowment plus is dual benefit plan, both life cover and survival benefit is offered. Let’s take a look at all the scenarios to understand the scope of coverage.
Scenario 1
In case of demise of the life assured during the policy term, the policy pays out the death benefits to nominee/beneficiary.
- Death benefits
- If life assured dies before the date of commencement of risk, fund value of his/her investment shall be payable.
- If life assured dies after the date of commencement of risk, then basic sum assured or the fund value whichever is higher would be paid out to nominee/beneficiary.
Scenario 2
In case life assured survives through the policy term, maturity benefit or the survival benefit would be paid out to him/her at the end of the policy term.
- Survival benefits
Fund value of investment at the end of policy term is paid out as survival benefit.
Scenario 3
If life assured has availed an additional optional rider i.e. LIC’s linked accidental benefit rider, additional sum assured availed by the life assured would be paid out only during an accidental death.
Exclusions for LIC’s New Endowment Plus Plan
- Suicide clause is not applicable to life assured whose age was less than 8 years at the time of buying or reviving the policy.
- Suicide clause : In case of death due to suicide, within 12 months from the date of commencement of policy or revival of the policy, beneficiary or nominee of the life assured will be entitled to fund value available on the death of life assured’s death.
Frequently Asked Questions
No. loan is not allowed under this plan.
Yes, LIC’s new endowment plus plan allows you to surrender your anytime during the policy term with certain conditions.
- If you surrender your policy within five years of lock-in period : surrender value will be equal to fund value minus the discontinuance charges applicable. The surrender value amount will be transferred to discontinued policy fund and the proceeds of which will be paid out after the lock-in period of 5 years is completed. However, in case of death after surrender, the proceeds will be immediately paid out to nominee or beneficiary.
- If you surrender your policy after five years : Surrender value will be equal to fund value which will be paid out directly after surrender.
Yes. You can! If you are not satisfied with the terms of the policy after buying it, you can cancel the policy within 15 days of free look period. Amount that includes value of fund units, unallocated premium with charges deducted will be refunded after deducting stamp duty and medical examination charges incurred, if any.
- If you discontinue your premium payments within lock-in period of 5 years, policy fund value minus discontinuance charges, if any will be transferred to discontinued policy fund and the proceeds of which will be paid out after completion of 5 years lock-in period. However, there is 2 years of revival period given within which policy can be revived.
- If you discontinue the premium payment after the lock-in period of 5 years, then fund value of the policy can be withdrawn without any risk cover applicable for discontinued policy period.
Yes, there is a grace period of 30 days given for yearly, half-yearly or quarterly mode of premium payment. The plan provides 15 days grace period for monthly (via Electronic Clearing System) premium payments.