new endowmwnt

LIC’s New Endowment Plus Plan (Table No.835) : Review

August 21, 2015

LIC India has launched the new ULIP Plan – New Endowment Plus (Table No.835). This is a first ULIP plan by LIC, since IRDAI issued new ULIP guidelines.

Sailent Features of LIC’s New Endowment Plus Plan

• Minimum Entry Age: 90 Days (completed)
• Maximum Entry Age: 50 years (nearest birthday)
• Policy Term : 10 to 20 years
• Premium Paying Term: Same as Policy Term
• Minimum Maturity Age: 18 years (completed)
• Maximum Maturity Age: 60 years (nearest birthday)
• Basic Sum Assured: (10* Annualized Premium) or (105% of the total premiums paid), whichever is higher.
• Minimum Premium: Mode Amount Yearly Rs.20,000; Half-Yearly Rs.13,000; Quarterly Rs.8,000; Monthly (ECS) Rs.3,000
• Maximum Premium: No limit Annualized Premiums shall be payable in multiple of Rs. 1,000 for all modes other than ECS monthly. For monthly (ECS), the premium shall be in multiples of Rs. 250/-

Positive Points

A. The policy holder has the option to choose any of the 4 funds namely:
1- Bond Fund (Low Risk)
2- Secured Fund (Lower to Medium risk)
3- Balanced Fund (Medium risk)
4- Growth Fund (High risk)

B. The option of switching within the funds is available any number of times during the duration of policy. The first four switches every year are free of charge and a charge of Rs. 100 is levied thereafter per switch.

C. Premium allocation charges under the policy are 7.5 per cent in the first year, 5 per cent from 2nd to 5th year and 3 per cent thereafter. Single premium allocation charges are 3.3 per cent, Fund management charges may vary from 0.5 per cent for Bond Fund to 0.8 per cent for Growth Fund.

D. The rate of Mortality Charge per annum per Rs. 1000/- Sum at Risk for some of the ages in respect of a healthy life are as under:

E. Partial Withdrawal Charge – A flat amount of Rs. 100/- shall be deducted by canceling appropriate number of units out of the Policyholder’s Fund on the date on which partial withdrawal takes place.

F. Benefits:
Death Benefit: On death of the Life Assured before the stipulated Date of Maturity provided policy is inforce, then:
1. On death before the Date of Commencement of Risk: An amount equal to the Policyholder’s Fund Value shall be payable.
2. On death after the Date of Commencement of Risk: An amount equal to the higher of Basic Sum Assured or Policyholder’s Fund Value shall be payable. Where, Basic Sum Assured is (10 * Annualized Premium) or (105% of the total premiums paid), whichever is higher.

Maturity Benefit: On Life Assured surviving the date of maturity provided the policy is inforce, an amount equal to Policyholder’s Fund Value shall be payable.

Negative Points

A. You can buy the plan at minimum age = 90 days, but LIC’s Linked Accident Benefit Rider can only be added for 18 years (completed)
B. No loan facility shall be available under this plan.
C. No increase/decrease of benefits will be allowed under the plan. the policyholder can, however, cancel the LIC’s Linked Accidental Benefit Rider at anytime during the policy term.
D. In case the age at entry of the Life Assured is less then 8 years, the risk under this plan will commence either one day before the completion of 2 years from the date of commencement of policy or one day before the policy anniversary coinciding with or immediately following the completion of 8 years of age, whichever is earlier.

The Bottom Line : Avoid

As you were aware that returns are low in Endowment Plans, but this is a Unit Linked plan, so expecting that return would be moderate. But no liquidity and no loan option, makes it avoidable. We would recommend LIC’s New Endowment Plus Plan, only for low risk investors.