LIC Profit Plus Plan Review
Plan No – 188
Introduction on LIC Profit Plus Plan
Introduced on – 23/08/2007 Withdrawn on – 01/09/2010
LIC Profit plus is an ulip plan
LIC Profit plus plan is an unit linked Endowment plan where the premium payment term (PPT) is limited to single lump sum, or uniformly over 3, 4 or 5 years. You can choose the level of cover within the limits, which will depend on whether the policy is a Single premium or Limited premium contract, term chosen and on the level of premium you agree to pay
After withdrawal of LIC’s Money plus plan-180, w.e.f. 15/8/2007, it has been decided to introduce a unit linked Endowment plan where premium-paying term is either single or limited to 3,4 or 5 years. The premium payable in 3,4, or 5 years will be same for all years. This condition is different from earlier ULIP plan no 187i.e, Fortune plus plan
Four types of investment Funds are offered in Profit plus plan. Premiums paid after allocation charge will purchase units of the Fund type chosen. The Unit Fund is subjected to various charges and value of units may increase or decrease, depending on the Net Asset Value (NAV).
LIC Profit Plus Plan Parameters
Age at Entry
: Minimum 0 years (Last Birth Day)
: Maximum 65 years (Next Birth Day)
: Minimum 18 years (Last Birth Day)
: Maximum 75 years (Next Birth Day)
|Premium Paying term||Policy term|
|3 and 4 years||10-20 years|
|5 years||10,15 and 20 years|
|Single premium||5 to 20 years|
Premium paying term: 3, 4,or 5 years only and single premium also.
Mode of premium payment : Yearly, Half-yearly, quarterly, ECS-monthly and single.
Minimum first year premium:
|Premium Paying term||Minimum Premium|
|3,4 and 5 years||Rs 15,000/- P.A|
|3,4 and 5 years (monthly)||Rs 1500/- P.M|
|Single premium||Rs 40,000/-|
Maximum Premium: No Limit
MInimum and Maximum Sum Assured for Regular Premium:
= w.e.f 1/1/2010 5 times of annualized premiums.
Sum Assured for Single Premium:
Minimum – 1.25 times of the single premium.
If Critical benefit is not opted for
– 5 times of the single premium if age at maturity is 65 years or less.
– 3 times of the single premium if age at maturity is 66 to 70 years .
– 2.5 times of the single premium if age at maturity is 71 years and above
If Critical Illness Benefit Rider is opted for:
– 5 times the single premium if age at maturity is 55 yrs or less
– 3 times the single premium if age at maturity is 56 yrs or more.
Note : The sum assured shall be available in multiples of Rs.5000/-. Where the sum assured not in multiples of Rs.5000, it will be rounded off to the next multiple of Rs.5000
LIC Profit Plus Plan Benefits
On the policyholder surviving the date of maturity an amount equal to the value of the units held in the policyholder’s fund is payable as maturity claim.
In case the policy is in Full Force
In case of death of policyholder when the policy is in force, the death claim payable will be ,
1) sum assured under the basic plan
2) or the fund value of units held in the policyholder’s fund value as at the date of booking the liability.(Whichever is higher)
Policy is in Lapsed condition
In above case, fund value of the units in the policyholder’s fund as on date of intimation of death claim would become payable. Sum assured or DAB sum assured is not payable.
LIC Profit Plus Plan Riders
Riders available under this Profit plus plan are:
1. Accident Benefit Rider Option:
Accident benefit can be availed as an optional rider benefit by paying an additional premium of Rs 0.50 paise for every 1000 Accident benefit sum assured per policy by cancellation of appropriate no of units out of policyholders unit account every month. If policyholder is employed in any police organization and he wish to have DAB with police duty, then rate of premium for DAB will be Rs 1.00 per 1000 sum assured.
Kindly, note that Disability benefit i.e PDB/EPDB is not included in above accident benefit.
2. Critical Illness Benefit Rider Option:
An amount equal to the critical illness rider sum assured will be payable in case of diagnosis of defined categories of critical illness subjected to certain terms and conditions, provided the critical illness cover is opted for and in force. The maximum cover for this rider will be Rs.5 lakh under all policies of the life assured with the corporation taken together. The CIR sum assured shall also not exceed the sum assured under the basic plan.
If the age at entry of life assured is less than 18 yearrs, then CIR can be opted for from the policy anniversary coinciding with or immediately following the completion of 18 yrs of age. The benefit will be available only till the policy anniversary on which the age NBD of the policyholder is 60 yrs. No charges for this benefit shall be deducted from the policy anniversary at which the benefit ceases. This benefit will be available only once during the term of the policy. Once a claim charges towards CIR shall be deducted.
LIC Profit Plus Plan Features
1) INVESTMENT FUND TYPE AND SWITCHING OVER OF FUND:
There are four different types of funds
1) Bond fund 2) Secured fund 3) Balanced fund 4) Growth fund.
|Fund Type||Investment in Government / Government Guaranteed
Securities / Corporate Debt
|Short-term investments such as money
market instruments (including Govt.
Securities & Corporate Debt)
|Investment inListed Equity Shares||Details and objective of the fund for risk / return|
|Bond Fund||Not less than 60%||100%||Nil||Low risk|
|Secured Fund||Not less than 45%||Not more than 85%||Not less than 15% & Not more than 55%||Steady Income – Lower to Medium risk|
|Balanced Fund||Not less than 30%||Not more than 70%||Not less than 30% & Not more than 70%||Balanced Income and growth –Medium risk|
|Growth Fund||Not less than 20%||Not more than 60%||Not less than 40% & Not more than 80%||Long term Capital growth – High risk|
2) ALLOCATION OF PREMIUM:
Total premium received is divided into unit fund and non-unit fund. This allocation is done as per percentage given as follows.
Single premium policies:
|Premium Band||Allocation Charge|
|Up to 4,00,000||5.00%|
|4,00,001 and above||4.50%|
Limited Premium Paying Term policies:
Premium Paying Term – 3 or 4 years:
|Premium Band(per annum)||Allocation charge|
|15,000 to 1,50,000||10.50%||2.50%|
|1,50,001 to 3,00,000||10.00%||2.50%|
|3,00,001 to 4,50,000||9.50%||2.50%|
|4,50,001 and above||9.00%||2.50%|
Premium Paying Term – 5 years:
|Premium Band(per annum)||Allocation charge|
|15,000 to 1,50,000||24.00%||4.00%|
|1,50,001 to 3,00,000||23.50%||4.00%|
|3,00,001 to 4,50,000||23.00%||4.00%|
|4,50,001 and above||22.50%||4.00%|
There is no provision to pay top up premium under this policy.3) Top up premium
4) Recovery of charges and frequency of charges
sum of all charges should not be deducted from allocated amount, but no. of units will be deducted. The total no. of units to be deducted will be calculated as:
= Total amount of following charges
Applicable NAV rate as per time applicable.
The various types of charges in LIC Profit plus plan , they are :-
1.MORTALITY(LIFE COVER) CHARGE:
This is with life cover policy. Mortality charge will be taken every month by canceling appropriate no of units out of the policyholder’s fund value as per NAV rate applicable. Mortality charge during the policy year will be based on age nearer birthday of policyholder as at the policy anniversary coinciding with or immediately preceding the due date of cancellation of units and hence will increase every year on each policy anniversary.
This is the cost of life insurance cover which is age specific and will be taken every month. The life insurance cover is the difference between Sum Assured under Basic plan and the Fund Value after deduction of all other charges.
The charges per Rs. 1000/- life insurance cover for some of the ages in respect of a healthy life are as under:
2) ACCIDENT BENEFIT CHARGE
If accident benefit cover is opted for, then charge of 0.50 paise per 1000 sum assured of accident benefit per policy year by monthly cancellation of appropriate no of units will bededucted. This is level charge and will not change at each policy anniversary.
3) CRITICAL ILLNESS BENEFIT CHARGE
This is the cost of Critical Illness Benefit rider (if opted for). These are age specific and will be taken every month. The charges per Rs. 1000/- Critical Illness Rider Sum Assured per annum for some of the ages in respect of a healthy life are as under:
4) POLICY ADMINISTRATION CHARGES
Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter, throughout the term of the policy.
5) SERVICE TAX CHARGE
A service tax charge shall be levied on the charges for mortality, accident benefit ,if any and shall be taken by cancelling appropriate no. of units out of policyholder’s fund value on monthly basis as and when above charges are deducted. At present F.Y 2007-08, rate will be 12.36% ( 12% service tax + 3% educational cess on service tax). W.E.F. 1/1/2010, service tax will be levied on policy administration, mortality, accident benefit, critical illness benefit , if any, premium allocation, fund management, switching and alteration charges. For information about Tax on Life Insurance Policies www.taxqueries.in
DAYS OF GRACE: A grace period of 1 calendar month but not less than 30 days will be allowed for payment of YLY/HLY/QLY premiums. If premium is not paid within days of grace, policy will lapse. If death of life assured occurs within the grace period but before the payment of premium due, the policy will be treated in force and death benefits shall be paid after deduction of all charges. For ECS monthly mode, days of grace will be 15 days.
Discontinuance of Premiums:
Under Regular premium policies where at least 3 years’ premiums have been paid and the subsequent premiums are not paid, the opted risk cover will continue for
(a) two years from the due date of the first unpaid premium or
(b) till the date of maturity or
(c) till such period that the Policyholder’s Unit account reduces to Rs.5000
whichever is earlier
REVIVAL OF POLICY:
If the due premium is not paid within days of grace, the policy will lapse. A lapsed policy can be revived during the period of 2 years from due date of FUP or before date of Maturity, whichever is earlier. The period during which the policy can be revived will be called” period of revival”.
COMMENCEMENT OF RISK UNDER Minor’s LIFE:
Date of commencement of risk’ is the date from which life assurance cover shall be available under the policy. If the age of life to be assured is 12 years or more, risk under the policy will commence immediately.If the age of life assured is less than 12 years, then risk will commence as under: –
Age at entry is up to 10 yrs, risk will commence either after 2 years from the date of commencement of policy or from the policy anniversary coinciding with or immediately following the completion of 7 years of age, whichever is later. Where age at entry is 11 yrs, the risk shall commence from the policy anniversary after completion of 1 year from DOC i.e. from the policy anniversary coinciding with or next following 12th birthday of life assured.
No Loan will be available under this plan .
Assignment/ change of nomination will be allowed as per rule.
The concept of compulsory surrender is also applicable under this plan.
1. Where premiums have been paid for less than 3 years (not 3 years) , then policy shall be terminated compulsorily
Condition: In case premiums are paid for less than 3 years, if the balance in the policyholder’s fund value, at any time is not sufficient to recover the relevant charges, the policy shall be compulsorily be terminated and the balance amount in the policyholder’s fund value, if any, will be refunded to the policyholder immediately as the amount will be negligible.
Where premiums have been paid for at least 3 years & more and further premiums have discontinued, then policy shall be compulsorily surrendered in following cases:
1) The balance in the policyholder’s fund, at all times, shall be subject to a minimum balance of Rs.5000/-. In case the policyholder’s fund value falls below this limit, the policy shall compulsorily be terminated with a notice to the policyholder and the balance amount in the policyholder’s fund will be refunded to the policyholder.
2) In case the policy is not revived during the period of revival, then the policy shall be terminated on the expiry of revival period or on maturity, whichever is earlier and the balance amount in the policyholder’s fund will be refunded to the policyholder.
Benefit Illustration for LIC Profit Plus Plan :
Name of the Product: LIC’s Profit Plus
Unique Identification No. 512L245V02
Service Tax Rate: 10.30%
Sum Assured: 50000
Policy Term : 10
Premium Paying Term: 1
Mode of Premium Payment : Single
Amount of Installment Premium: 40000
Funds opted for: Growth Fund
Combination: BASIC PLAN WITH LIFE COVER
Gross Yield: 10%
Net Yield: 7.96%