LIC Endowment Plus Review
LIC Endowment plus is an ulip plan
Introduced on – 20/09/2010 Withdrawn on –
LIC Endowment Plus is a unit linked insurance plan (ULIP), where the risk of investment is borne by the policyholder. If the Life Insured dies within the policy tenure, the nominee would receive the Sum Assured or the Fund Value, whichever is higher.
LIC Endowment Plus is a unit linked Endowment plan which offers investment cum insurance cover during the term of the policy. You can choose insurance cover level within the limits, which will depend on the mode and level of premium policyholder agree to pay.
Policy holder have a choice of investing your premiums in one of the four types of investment funds available. The Unit Fund is subject to various charges and value of units may increase or decrease, depending on the Net Asset Value (NAV).
LIC Endowment Plus Plan Parameters
Age at Entry:
: Minimum 7 years (Last Birth Day)
: Maximum 60 years (Next Birth Day)
: Minimum 18 years (Last Birth Day)
: Maximum 70 years (Next Birth Day)
: Minimum – 10 years
: Maximum – 20 years
Premium Paying term : Regular and single
For regular premium term : Minimum – Rs. 20,000 p.a (other than monthly(ECS) mode)
– Rs. 1,750 p.m. (for monthly (ECS) mode)
: Maximum – Rs 1,00,000 p.a
For Single premium term : Minimum – Rs 30,000
: Maximum – No Limit
Mode of premium payment : Regularly : yearly, half-yearly, quarterly or monthly (through ECS mode only) intervals
Single premium can be paid. .
Sum Assured for Regular Premium:
Minimum – Regular Premium policies: (Policy Term +1) times the annualized premium
Maximum – 30 times of the annualized premium if age at entry is upto 45 years
25 times of the annualized premium if age at entry is 46 to 60 years
Sum Assured for Single Premium:
Minimum – 1.25 times of the single premium for age at entry of below 45 years
1.10 times of the single premium For age at entry of 45 years and above
If Critical Illness Benefit Rider is opted for:
– 5 times the Single premium if age at maturity is upto 55 years.
– 3 times the Single premium if age at maturity is 56 to 60 years.
If Critical Illness Benefit Rider is not opted for:
– 5 times the Single premium if age at maturity is upto 65 years.
– 3 times the Single premium if age at maturity is 66 to 70 years.
Note : Sum assured shall be available in multiples of Rs. 5000. Where the minimum sum assured is not in the multiples of Rs. 5000, it will be rounded off to the next multiple of Rs. 5000.
LIC Endowment Plus Plan Benefits
On the policyholder surviving the date of maturity , an amount equal to the fund value of the units held in the policyholder’s
Fund value is payable as maturity claim in LIC Endowment Plus.
a) 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)
b) Policy is in Lapsed condition
In above case, outstanding surrender value credited in this account as on date of intimation of death would become payable in LIC Endowment Plus.
LIC Endowment Plus Plan Riders
Riders available under this LIC Endowment plus plan are:
1. Accident Benefit Rider Option :
Accident Benefit (AB) can be availed of as an optional Rider benefit by paying an additional premium of Rs. 0.50 for every Rs. 1,000/- of the Accident Benefit Sum Assured per policy year by cancellation of appropriate number of units out of the Policyholder’s Fund for every 6 months.
On Accidental death of the Policyholder during the term of the policy, a sum equal to the Accident Benefit Sum Assured will become payable.
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. Critical Illness subject to certain terms and conditions,provided the Critical Illness Benefit cover is opted for and is in force. The maximum cover for this rider will be Rs.10 lakh under all policies of the Life Assured with the Corporation taken together including the new proposal under consideration. The Critical Illness Rider Sum Assured shall also not exceed the Sum Assured under the Basic Plan.
LIC Endowment plus Plan Features
1) INVESTMENT FUND TYPE AND SWITCHING OVER OF FUND:
The premium allocated to purchase units will be invested according to the investment pattern prescribed for different fund types:
1) Bond fund 2) Secured fund 3) Balanced fund 4) Growth fund.
|Fund type||Investment in Govt / govt. guaranteed securities/corporate debts||Short term investments such as money market||Investment in listed equity shares||Risk factor|
|Bond Fund||Not less than 60%||Not more than 40%||Nil||Low risk|
|Secured Fund||Not less than 45%||Not more than 40%||Not less than 15% &Not more than 55%||SteadyIncome Lowerto Medium risk|
|Balanced Fund||Not less than 30%||Not more than 40%||Not less than 30% &Not more than 70%||Balanced Income andgrowth Medium risk|
|Growth Fund||Not less than 20%||Not more than 40%||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 under single premium and regular premium policies. The unit fund premium is utilized for arriving at the no of units by dividing it by the applicable NAV rate.The difference between NAV and face value of the unit i.e Rs.10/- will be credited /debited to unit capital premium A/c. Non-unit fund will be allocation charge as shown below i.e difference between total of first premium less total amount allocated to unit capital / unit capital premium A/c.
The allocation charge are as below:-
a) Single premium
|Premium band||Allocation rate|
|Any premium amount||3.3%|
|CEIS||Nil, no charge|
b) Regular premium i.e yearly, half-yearly, quarterly, ECS-monthly
|Premium band ( per annum)*||Allocation charge|
|1 st Year||2 nd to 5 th year||6 th year and onwards|
|For any amount of premium||7.50%||5.00%||3.00%|
|For any amount of premium||Nil||Nil|
3) Top up premium
There is no provision to pay top up premium under LIC Endowment plus plan.
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 Endowment plus plan are :-
1.MORTALITY(LIFE COVER) CHARGE:
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 be deducted.
3. CRITICAL ILLNESS BENEFIT CHARGE
If Critical Illness Rider is opted for , then charges as given below will be taken every month per 1000 sum assured of CIR, by canceling appropriate no. of units out of policyholders fund value as per NAV rate prevalent . CIR charges during a policy year will be based on the age NBD of policyholder as at the policy anniversary coinciding with or immediately preceding the due date of cancellation of units. Hence premium will increase every year.
4. POLICY ADMINISTRATION CHARGES
Policy administration charges of Rs.30/- per month during the first policy year and Rs 30/-per month escalating at 3% p.a. thereafter throughout the term of the policy, will be deducted by canceling appropriate no. of units out of policyholders’ fund value. No flat fee or policy charge will be charged separately.
5. SERVICE TAX CHARGE
A service tax charge shall be levied on the all applicable charges for mortality, Accident benefit and critical illness benefit rider , if any and shall be taken canceling appropriate no. of units out of policyholders fund value on monthly basis, as and when above charges are deducted as per prevalent service tax laws from time to time. For information about Tax on Life Insurance Policies www.taxqueries.in
6. FUND MANAGEMENT CHARGE:
Fund management charges will be deducted from fund before declaring NAV, hence separate deduction will not be required. Miscellaneous charge for alteration @ rs.50/- will be deducted by canceling appropriate no of units.
DAYS OF GRACE: A grace period of 30 days will be allowed for payment of YLY/HLY/QLY premiums and 15 days for Monthly-ECS. 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. However , no need to deduct instalment premium, only monthly charges as stated above should be deducted.
Discontinuance of Premiums:
If you fail to pay premiums under the policy within the days of grace, a notice shall be sent to you within a period of fifteen days from the date of expiry of grace period to exercise one of the following options within a period of thirty days of receipt of such notice:
1. Revival of the policy,
2. or Complete withdrawal from the policy
During the notice period of 30 days, the policy shall be treated as in force and the charges for Mortality, Accident Benefit and / or Critical Illness Benefit cover, if any, shall be taken in addition to other charges, by cancelling an appropriate number of units out of the Policyholder’s Fund Value. The cover shall continue till the date of discontinuance of the policy (i.e. till the date on which the intimation is received from the policyholder for complete withdrawal of the policy or till the expiry of the notice period).
REVIVAL OF POLICY:
If the due premium is not paid within days of grace, a notice shall be sent to the policyholder within a period of 15 days from the date of expiry of grace period to exercise the option for revival within a period of 30 days of receipt of such notice. If the policyholder exercises the option to revive the policy, the arrears of premium without interest shall be required to be paid. No evidence of health will be required, since policy is without life cover.
COMMENCEMENT OF RISK UNDER Minor’s LIFE:
Risk under this policy will commence immediately from date of FPR and not after 2 years from date of commencement of policy.
Loan will be available under LIC Endowment plus plan under certain conditions.
Assignment/ change of nomination will be allowed as per rule.
1) If the balance in the policyholder’s fund value at any time is Not sufficient to recover the relevant charges, in case of partial withdrawal of units after the 5th policy anniversary OR
2) If the balance in the policyholder’s fund value at any time is less than or equal to the loan outstanding along with interest thereon, if any loan has been taken under the policy.
In above case, the policy shall be compulsorily terminated and the balance amount in the policyholder’s fund value , if any, shall be refunded to the policyholder.
Once a policy is surrendered, it can not be reinstated.
Example:Mr. Naveen has taken LIC Endowment PLUS plan
Name of the Product: LIC’s Endowment Plus Unique Identification No. 512L261V01
BOND FUND – SFIN NO.ULIF001200910LICEND+BND 512
SECURED FUND- SFIN NO.ULIF002200910LICEND+SEC512
BALANCED FUND – SFIN NO.ULIF003200910LICEND+BAL512
GROWTH FUND – SFIN NO.ULIF004200910LICEND+GRW512
Service Tax Rate:10.30%
Sum Assured:420000 Policy Term :20
Premium Paying Term:20Mode of Premium Payment :Yearly
Amount of Instalment Premium:20000 Funds opted for:Growth Fund
Combination:BASIC PLAN WITH LIFE COVER
FMC Rate :0.80% p.a.
Statement of Various charges along with growth of the fund expected over the duration of the policy with assumed rate of interest as mentioned (All charges are in Rupees)