LIC Wealth plus plan Review
LIC Wealth plus is an ulip plan
Introduced on 09/02/2010 and With Drawn on –
For the first time, LIC is introducing ULIP(Unit linked Plan) which is a type of Insurance plan where the cash value of a policy varies according to the current NAV(Net Asset Value) of underlying Investment assets.
LIC Wealth plus plan is a ULIP that safeguards your investment from market fluctuations,so that your investments are protected in financially volatile times.This plan offers payment of Fund Value at the end of policy term, based on highest (NAV) over the first 7 years of the policy,or the NAV as applicable at the end of the policy term,whichever is higher.Also for the first time,free death cover equal to basic sum assured is offered after date of maturity under ULIP plan.Under this policy level mortality charge based on the age at entry under the policy shall be taken during the policy term and not as per age of life assured as on each policy anniversary.
LIC Wealth Plus Plan Parameters
Age at Entry : Minimum 10 years LBD (Last Birth Day)
Maximum 65 years NBD (Next Birth Day)
Maturity age: Minimum 18 years LBD
Maximum 73 years NBD
Policy term: Minimum/ maximum 8 years
- Extended life cover 2 years after completion of policy term
premium paying term : 3 years or single premium
Mode of premium payment : Yearly, Half-yearly, Quarterly,ECS- monthly, Single .
Minimum premium :
|Regular,Other thanECS(Electronic Clearance Service)-monthly||Rs. 20,000 p.a. for 3 years, inmultiple of rs. 1000/-|
|ECS monthly||Rs. 2000/- per month, inmultiple of Rs. 500/-|
|Single premium||Rs. 40,000/- , in multiple ofRs. 1000|
Sum Assured: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.
|Sum Assured Minimum||3 years PPT(Premium Paying Term)||5 times of annual premium|
|Single premium||1.25 times the single premium|
|Sum Assured Maximum||3 years PPT||->10 times annualized premiumif age at entry is up to 50years. ->5 times of annualized premiumif age at entry is 51 yrs andabove.|
|Single premium||->5 times of single premium if age at entry is up to 40 years.->2.5 times of single premium if age at entry is between 41 to 50 years->1.25 times of single premium if age at entry is 51 yrs and above.|
LIC Wealth 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.However, the bid value as on date of maturity will be based on the highest NAV over the first 7 years of the policy or the NAV as applicable at the end of the policy term,whichever is higher.
- In case of death during the policy term,the nominee shall receive Sum Assured under the basic plan together with the Policyholder’s Fund Value as death benefit.
- In Case of death of the Life assured after the policy term,but before the expiry of extended period,the nominee shall receive the Sum Assured under the Basic Plan.
- Policy is in lapsed condition where premium have been paid for less than 3 years Sum Assured or DAB Sum Assured is not payable.
LIC Wealth Plus Plan Riders
Riders available under this Whole plus plan are:
Accident Benefit:Accident benefit can be availed as an optional rider benefit by paying an additional premium of Rs0.50 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 you are between 18 and 62 years of age,you may opt for Accident Benefit equal to the amount of life cover subject to minimum of Rs.50,000 and maximum of Rs.50 lakh.In case of death by Accident,an additional sum equal to Accident Benefit sum assured shall be payable.
Accident Benefit sum assured shall exceed basic sum assured under the plan.
Features of LIC Wealth Plus Plan:
1) INVESTMENT FUND TYPE AND SWITCHING OVER OF FUND:
The premium allocated to purchase units will be invested according to the investment
pattern prescribed. Under this plan, there is only one fund type namely- wealth plus fund.
|Fund type||Investment in Govt / govt. securities / corporate debts||Short term investments such as moneymarket||Investment inlisted equityshares||Risk factor|
|Wealth plusfund||0% to 100%||0% to 100%||0% to 100%||Medium 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. The unit fund premium is utilized for arriving at the no. of units by dividing it by the applicable NAV rate. No. of units are to be rounded off up to 3 decimals. Further unit capital will be always 10 times of the no of units.
Premium paying term-3 years:
|Premium band(per annum)||Allocation charge||premium allotted||allocation charges||premium allocated|
|First year ( CEIS)||First year||Thereafter (CEIS)||Second Year Onwards|
|20,000 to 2,00,000||12.00% 2.00%||86%||2.50% (NIL)||97.50%|
|2,00,001 to 4,00,000||11.75% 1.75%||86.5%||2.50% (NIL)||97.50%|
|4,00,001 to 7,00,000||11.50% 1.50%||87%||2.50% (NIL)||97.50%|
|7,00,001 and above||11.25% 1.25%||87.5%||2.50% (NIL)||97.50%|
Example for Allocation premium:
Suppose Mr.Raj taken a wealth plus policy for 7years and premium paying term is 3 years yearly for 1,00,000 premium allocated 86% means 86,000 will be allocated to allocated units(NAV) and remaining 14% will be taken as different charges.
So, no.of units allocated will be 86,000/NAV as today rate
Suppose today’s rate is 11 Rs.then , 86,000/11=7818.18 will be the premium band for first year.
Suppose Mr.Raj taken a wealth plus policy for 7years and premium paying term is 3 years yearly for 1,00,000 premium allocated 97.50% means 97,500 will be allocated to allocated units(NAV) and remaining 14% will be taken as different charges.
So, no.of units allocated will be 97,500/NAV as today rate
Suppose today’s rate is 12 Rs.then ,97,500 /12=8125 will be the premium band for first year.
Total NAV will be =1st yr premium band + 2nd year premium band=7818.18+8125=15943.18.
In case of HLY and QLY premiums for deciding allocation rate, Hly & QLY premium should be multiplied by 2 & 4 respectively. Then refer premium band
Single Premium Policies:
|PREMIUM BAND||ALLOCATION CHARGE ( CEIS)|
|Upto 4,00,000||5.00% 2.00%|
|4,00,001 and above||4.50% 1.50%|
3) TOP-UP PREMIUM:
There is no provision to pay top-up premium under this policy.
4) RECOVERY OF CHARGES & FREQUENCY OF CHARGES:
After receipt of premium & further deduction of allocation charge, from balance amount,
total no. of units available in policyholder’s unit capital A/c will be calculated.
note that sum of all charges should not be deducted from allocated amount, but
- of units will be deducted. The total no of units to be deducted will be calculated as:-
= Total amount of charges to be recovered/ Applicable NAV rate as per time applicable.
Other Salient Features:
- Policy stamping will be at the rate of 0.20 paise per thousand sum assured under
the basic plan.
- Backdating of policy is not allowed.
- If policyholder is not satisfied with the ‘terms and conditions ‘ of the policy,
- policyholder may cancel the policy within 15 days from the date of receipt of policy
under cooling –off period. The amount refundable is as:-
Value of units in the policyholder’s fund
Plus, unallocated premium
Plus, policy administration charges deducted
Less, charges @ 0.20 paise per 1000 sum assured
Less, actual cost of medical examination and special reports, if any.
Charges under LIC Whole plus policy 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.
- policy level mortality charge based on the age at entry under the policy shall be
taken during the policy term and not as per age of life assured as on each policy
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
3. POLICY ADMINISTRATION CHARGE: Rs.60/- per month during the first policy year, Rs 25/- per month during the second year and thereafter,from the third year on wards till the end of the policy term Rs. 25/- per month month escalating at 3% p.a. will be deducted by canceling appropriate no of units out of policyholder’s fund value on monthly basis.
4.SERVICE TAX CHARGE:
A service tax charge shall be levied on the charges for mortality, accident benefit ,if any and shall be taken by canceling appropriate no. of units out of policyholder’s fund value on monthly basis as and when above charges are deducted. At present F.Y 2009-10, rate will be 10.30% ( 10% service tax + 3% educational cess on service tax). For information about Tax on Life Insurance Policies www.taxqueries.in
5.FUND MANAGEMENT CHARGE:
Under this plan flat fee and policy charge will not be deducted. Fund management charge at 1.00% of fund value will be deducted from fund before declaring NAV, hence separate deduction will not be required.
6) GUARANTEE CHARGES:
A charge of 0.35% p.a of the Fund Value shall be levied for the cost of investment guarantee.This is a charge levied at the time of computation of NAV,which will be done on daily basis.This charge will also be deducted from fund before declaring NAV, hence there is no need to deduct this charge separately.
7) OTHER CHARGES:
This is charge levied for revival and alteration . for revival , the flat charge will be Rs. 500/- and for alteration like change in mode from higher frequency to lower frequency within the premium paying term , grant of accident benefit after issue of policy will be rs. 250/-. These charges will be deducted by cancelling the policyholder’s fund value appropriately.
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 but not instalment premium which is overdue.
There is no need to define the term auto cover. Generally, auto cover is available under ULIP plans after paying at least 3 full years premiums. Under this policy, after paying 3 years premiums ,policy will become fully paid up.
REVIVAL OF POLICY:
A lapsed policy can be revived during the period of 2 years from due date of FUP. The period during which the policy can be revived will be called” period of revival”.
COMMENCEMENT OF RISK UNDER Minor’s LIFE:
Risk on minor life will commence immediately from date of FPR. There is no need to wait for 2 years from date of commencement of policy.
Assignment/ change of nomination will be allowed as per rule.
Where premiums have been paid for less than 3 years (not 3 years) i.e for full
premium paying term:The policy is not revived during the period of revival, then the policy shall be terminated after completion of 3 years from the date of commencement of policy or on expiry of revival period, whichever is later.
Where premiums have been paid for at least 3 years i.e premiums have been paid fully
for premium paying term:
The balance in the policyholder’s fund, at all times, shall be subject to a minimum
balance of 50% of one annualized premium.
In case of single premium policy, if the balance in the policyholder’s fund value at any
time is not sufficient to recover the relevant charges, the policy shall compulsorily be
terminated and the balance amount in the policyholder’s fund will be refunded to the
Once a policy is surrendered, it can not be reinstated.
SURRENDER VALUE PAYMENT – NORMAL: There is no surrender charge under this policy.
EXTENDED LIFE COVER:
Under Whole plus plan, if policyholder survives as on date of maturity and after settlement of
maturity claim( means policy is not compulsorily surrendered within policy term) , then
extended life cover for sum assured equal to basic sum assured will be granted.
During this extended term, accident benefit cover will not be available.
Example:Mr.Ram taken the product LIC’S WEALTH PLUS plan
Amount of Instalment Premium:40000
Policy Term:8 years
Premium Paying Term:Single
Extended term cover:2 years
Funds opted for: Wealth Fund
Mode of Premium Payment: Single
Service Tax Rate:10.30%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.
Gross Yield 10.00%
Net Yield 7.38%
Gross Yield 6%
IN THIS POLICY, THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDER AND THE ABOVE INTEREST RATES ARE ONLY FOR ILLUSTRATION PURPOSE.