LIC New Endowment Plus: An Overview
With over 2000 branch offices nationwide, Life Insurance Corporation of India (LIC) is the only state-run life insurance company. Since its inception, the company has offered various types of life insurance plans in different categories, including term plans, saving plans, child plans, health plans, endowment plans, and some with dual benefits of life cover and investment. The insurance plans offered by LIC of India focus on the discrete financial necessities of Indians. The company ensures that the plans are affordable and helps customers accomplish their dreams.
LIC of India is the preferred choice of Indians among various life insurance companies when it comes to buying insurance. LIC policies offer various policies to complement the financial goals of individuals and groups. Customers can easily compare and buy life plans as per their life and health cover requirements. LIC New Endowment Plus plan is an updated version of the old Endowment Plus Plan by LIC of India, offering a good combination of security and long-term savings. Keep reading to learn more about the plan, its benefits, and features to help you decide why you should invest in the plan.
What is LIC New Endowment Plus Plan?
New Endowment Plus from Life Insurance Corporation of India (LIC) is a non-participating, unit-linked, regular premium paying, individual life insurance plan that offers the benefit of investment cum insurance cover. The plan allows you to invest in equity and debt from the four fund options available. The premium paid towards the LIC policy is used to purchase the units under the fund type selected after deducting the Premium Allocation Charge. All the investments under LIC New Endowment Plus are made as per the risk appetite of the customer. Hence, the plan combines the gains of life protection and long-term savings, providing the maturity benefit to the policyholder and the death benefit to the beneficiaries.
Highlights of LIC New Endowment Plus
Below are the key highlights of the LIC New Endowment Plus.
- Plan Type
- Policy Term
- Fund Options
- Lock-in Period
- Revival Period
Unit-Linked Plan
10-20 Years
Bond/ Secured/ Balanced/ Growth
5 Years
3 Years
Eligibility Criteria of LIC New Endowment Plus
To invest in LIC New Endowment Plus, the policyholder needs to satisfy the following eligibility criteria.
| Particulars | Specifications |
|---|---|
| Entry Age | 90 days - 50 years |
| Maturity Age | 18 years - 60 years |
| Premium Paying Term | Same as Policy Term |
| Basic Sum Assured | 10 times of Annualized Premium |
| Premium Amount | Yearly: 20,000 Half-Yearly: 13,000 Quarterly: 8,000 Monthly: 3,000 |
| Maximum Premium Amount | No Limit |
Benefits of LIC New Endowment Plus
LIC New Endowment Plus offers the following benefits to provide the policyholder with a dual gain of life cover and long-term savings.
Death Benefit
In case of the death of the policyholder during the policy term, the death benefit is provided to the beneficiaries in a lump sum or instalments (if opted by the policyholder), as
On Death Before the Date of Commencement of Risk: An amount equal to the Unit Fund Value is payable.
On Death After the Date of Commencement of Risk: The highest of the following amounts is payable.
- Basic Sum Assured after the deduction of Partial Withdrawals (if any, made before two years of the date of death).
- Unit Fund Value
- 105% of the total premium received upto the date of death after the deduction of Partial Withdrawals (if any, made before two years of the date of death).
Maturity Benefit
If the policyholder survives the maturity period, they are entitled to receive an amount equal to the Unit Fund Value as the maturity benefit.
Optional Benefits Under LIC New Endowment Plus
LIC of India offers some optional benefits that are available under the plan, and a policyholder can opt to enhance the base plan coverage.
Rider Benefit
The policyholder can avail of the Accidental Death Benefit Rider at any policy anniversary, only if the outstanding policy term is at least 5 years but on or before the policy anniversary when the policyholder turns 55. Suppose the rider is opted for, on the accidental death of the life assured. In that case, the beneficiaries receive the Accident Benefit Sum Assured in a lump sum along with the death benefit of the base plan.
Partial Withdrawals
The LIC policyholder can withdraw the units partially after the fifth policy anniversary if all the premiums are duly paid till the date of partial withdrawal. Partial withdrawals are possible under the following conditions
For 6th to 10th Policy Years: Higher of 3 Annualized Premium, or 50% of Unit Fund Value
For 11th to 20th Policy Years: Higher of 3 Annualized Premium, or 25% of Unit Fund Value.
- If the life assured is minor, partial withdrawals are allowed only after the completion of 18 years.
- Partial withdrawal charges are deducted from the Unit Fund Value.
- Partial withdrawals will be allowed as:
Switching Between the Fund Types
The policyholder can switch between the four fund types during the policy term. The entire Fund Value transfers to the new Fund selected on a switch. The nominee is not eligible to make a switch.
Settlement Option
The policy allows the life assured to choose an option to receive the death benefit in instalments and for a period of years (not more than 5 years). If the policyholder selects the option, the nominee can not make any changes.
Investment of Funds Under LIC New Endowment Plus
The LIC of India offers the following fund options under the New Endowment Plus Plan.
Unit Fund
The four fund types are available under the LIC New Endowment Plus policy. As per the fund option selected by the policyholder, the allocated premium is used to buy the units. The various types of fund and investment patterns are as follows.
| Fund Type | Investment in Government/ Government Guaranteed Securities/ Corporate Debts | Short-term investments such as money market instruments | Investment in Listed Equity Shares | Objective | Risk Profil |
|---|---|---|---|---|---|
| Bond Fund | 60% to 100% | 0% to 40% | NIL | To provide a relatively safe and less volatile investment option (investment in fixed-income securities) | Low Risk |
| Secured Fund | 45% to 100% | 0% to 40% | 15% to 55% | To provide steady income (investment in both equities and fixed-income securities) | Lower to Medium Risk |
| Balanced Fund | 30% to 100% | 0% to 40% | 30% to 70% | To provide balanced income and growth (similar proportion investment in equities and fixed-income securities) | Medium Risk |
| Growth Fund | 20% to 100% | 0% to 40% | 40% to 80% | To provide long-term capital growth (investment primarily in equities) | High Risk |
* All the data has been provided from the official LIC sources.
Discontinued Policy Fund
The investment pattern of the Discontinued Policy Fund is categorised as
For Market Instruments: 0% to 40%
For Government Securities: 60% to 100%
How Does LIC New Endowment Plus Plan Work?
To have a clear picture, let’s understand the working process of the plan with a standard example.
Say, Rahul, at 30, wants to invest in a suitable plan to help him achieve his future financial requirements. He invests for 20 years of the policy term and a yearly premium paying mode.
Premium Amount: Rs. 30,000
Basic Sum Assured: Rs. 3,00,000
Type of Fund: Growth
The LIC’s New Endowment Plus benefits are calculated as
| End of Policy Duration (Year) | Cumulative Premium | Fund Value | Death Benefit | Fund Value | Death Benefit |
|---|---|---|---|---|---|
| Benefit @4% p.a. | Benefit @4% p.a. | ||||
| 5 | Rs. 1,50,000 | Rs. 1,46,020 | Rs. 3,00,000 | Rs. 1,64,220 | Rs. 3,00,000 |
| 10 | Rs. 3,00,000 | Rs. 3,24,522 | Rs. 3,24,522 | Rs. 4,05,084 | Rs. 4,05,084 |
| 15 | Rs. 4,50,000 | Rs. 5,32,911 | Rs. 5,32,911 | Rs. 7,44,429 | Rs. 7,44,429 |
| 20 | Rs. 6,00,000 | Rs. 7,75,448 | Rs. 7,75,448 | Rs. 12,22,058 | Rs. 12,22,058 |
* All the data has been provided from the official LIC sources.
This way, Rahul gets the following maturity benefit on the maturity date
Rs. 7,75,448 at Rate of Investment @4% p.a. Rs. 12,22,058 at Rate of Investment @8% p.a.
Comprehensively, Rahul gets a net 6.67% benefit at the investment rate of @8% p.a.
Charges Under LIC New Endowment Plus
New Endowment Plus of LIC of India levies some charges for managing the funds and opting for any additional benefits on the policy. The charges are as follows
Premium Allocation Charge
A percentage of the premium received is allocated to collect the charge. This part is known as the allocation rate and is used to purchase the units for the policy. These charges are applicable as
For 1st Year: 7.50% of the premium
From 2nd to 5th Year: 5.00% of the premium
6th Year and Thereafter: 3.00% of the premium
Mortality Charge
A mortality charge is the cost of securing life insurance coverage. These charges vary according to age and sum at risk and are levied at the beginning of each policy month by deducting an appropriate number of units from the Unit Fund Value.
Accident Benefit Rider Charges
If the policyholder opts for LIC’s Accidental Death Benefit Rider, an Accidental Benefit Rider Charge is levied. The charge is recovered at the beginning of each month by cancelling an appropriate number of units from the Unit Fund Value during the policy term. The accidental benefit rider charge rate is Rs. 0.40 per thousand Accident Benefit Sum Assured per policy year.
Right to Revise Charges
Life Insurance Corporation of India (LIC) has the right to revise all the charges occasionally except the Mortality Charge and Accident Benefit Charge. The modifications in the charges are done on prior approval of IRDAI, and the policyholder is notified of the changes on the official Life Insurance Corporation of India website before 3 months.
Other Charges
LIC of India applies the following charges during the policy term.
| Charge | Applicability | Applicable As |
|---|---|---|
| Policy Administration Charge | At the beginning of each policy month | Charges vary as per the policy year. |
| Fund Management Charge | Management of funds at the time of computation of NAV |
|
| Switching Charge | Switching of funds from one fund to another at the time of the switch |
|
| Partial Withdrawal Charge | At the time of partial withdrawal | A flat charge of amount Rs. 100 by deducting an appropriate number of Units from the Unit Fund Value |
| Discontinuance Charge | On the date of discontinuation of the policy | Charges vary as per the policy year and annualized premium amount invested. |
* All the data has been provided from the official LIC sources.
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Additional Features of LIC New Endowment Plus
Except for the benefits mentioned above, some additional features make the New Endowment Plus 935 a suitable option for investment. Let’s have a look at the features
Payment of Premiums
The policyholder can pay the premium regularly on a yearly, half-yearly, quarterly or monthly (through NACH only) basis during the policy term. The LIC premium payment mode is chosen at the time of commencement of the policy and can be changed at any policy anniversary during the policy term.
Grace Period
Under the New Endowment Plus Plan, the Life Insurance Corporation of India (LIC) provides 30 days Grace Period for the missed payments of yearly, half-yearly, or quarterly premiums and 15 days Grace Period for monthly premiums.
Discontinuance of Premiums
If you miss paying the premium within the provided grace period, the policy acquires the state of discontinuance. However, the revival of the discontinued policy is possible under some conditions.
Surrender Value
If you have duly paid all the premiums, and want to surrender the policy during the policy term, then the policy acquires a surrender value. The surrender value is payable as
If the policyholder surrenders the policy within 5 years of the lock-in period
The Unit Fund Value after deducting the Discontinuance Charge is converted into a monetary amount. This monetary amount is then transferred to the Discontinued Fund Policy in the form of Units. The proceeds of the Discontinued Policy Fund are payable to the life assured after the completion of the 5-year lock-in period.
In case of death of the life assured after the surrender but before the completion of the lock-in period, the proceeds of the Discontinued Policy Fund are payable to the nominee.
If the policyholder surrenders the policy after the 5-year lock-in period
The Unit Fund Value at the surrender date is payable. No discontinuance Charge is applicable in such a condition.
Treatment of the Discontinued Policy
In case the policy is surrendered or discontinued on or before 5 years lock-in period, the treatment of the policy is possible following the procedure mentioned below
- Unit Fund Value is converted into Monetary Amount
- The monetary Amount is transferred into the Discontinued Policy Fund
- The proceeds of the Discontinued Policy Fund are calculated
Compulsory Termination
When the policy runs and duly paid for at least 5 years, but the balance of the unit fund is insufficient to recover the applicable charges, the policy shall compulsorily terminate. The balance amount in the Unit Fund is refunded to the policyholder.
Free Look Period
The policy offers a 15-day free-look period from the date of receipt of the policy. During that period, if you are not satisfied with the ‘Terms and Conditions’ of the policy, you can return the policy to the corporation stating the reasons for objections. The LIC of India cancels the policy and returns the amount applicable for a refund.
Exclusions Under LIC New Endowment Plus
Suppose the policyholder commits suicide within 12 months from the date of commencement of risk or the date of revival of the policy. In that case, the nominee receives the Unit Fund Value available on the date of intimation of death.
Any charges other than Fund Management Charges recovered after the date of death shall be added back to the Unit Fund Value. Any guaranteed additions made after the date of the death shall be recovered from the Unit Fund. Life Insurance Corporation (LIC) will entertain no further claims under this plan.
Final Words
LIC’s New Endowment Plus is the unit-linked investment cum insurance plan that offers the maturity benefit and death benefit during the policy term. The affordable plan offered by one of the best life insurance companies, LIC of India, helps you achieve your future financial goals. A 3-year revival period is available under the New Endowment Plus plan of LIC of India, during which you can treat your discontinued policy and retain the benefits. The plan offers four fund types to make a profitable investment and provide life cover.
You should buy a life insurance policy from the list of life insurance companies early to gain the benefits at the right time. Do you need expert assistance? Visit the nearest LIC branch or connect with RenewBuy POSP advisors on our official website. You can also look for an LIC agent using the RenewBuy Advisor Connect.
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