LIC’s New Endowment Plus Plan is a simple unit linked insurance plan (ULIP). Thus it is a Regular Pay Non-Traditional Insurance Plan without Bonus Facility.
How the Plan works:
In the new Unit Linked Insurance Plan of LIC called New Endowment Plus Plan, premium needs to be paid for the entire policy tenure as chosen at the policy inception between 10 and 20 years. Premium can however be paid in annual, semi annual, quarterly or monthly mode. Anyone from 90 days to 50 years can take the policy such that it can continue till he is at least 18 years on maturity or a maximum of 60 years.
This policy being a Unit Linked Insurance Plan gets units allocated to the policyholder’s name. Thus, the premium paid towards the policy less premium allocation charges gets units allocated towards the policy at the prevailing NAV.
NAV is defined as Net Asset Value, i.e. the price of each unit which gets allocated.
Now, the policyholder has a choice of 4 funds available to him to choose his investments from:
- Bond Fund: with 60% investments in the Debt Market with Government Bonds, Debt and other Securities and 40% in Money Market instruments and no exposure to equity market at all.
- Secured Fund: This Fund has a flexi exposure to equity of a minimum of 15% to a maximum of 55%, depending on the Fund Manager’s discretion and the market performance with a minimum of 45% in the Debt Market with Government Bonds, Debt and other Securities and the remaining amount, if any in liquid Money Market instruments.
- Balanced Fund: This fund has a 30% equity exposure at all points of time which can be increased to a maximum of 70% depending upon the Fund Manager’s discretion and the market performance with at least 30% in the Debt Market with Government Bonds, Debt and other Securities and the remaining amount, if any in liquid Money Market instruments of a maximum of 40%.
- Growth Fund: This fund can have an equity exposure upto 80% with a minimum of at least 40% in equity at all points of time with at least 20% of Debt exposure and the remaining amount, if any in liquid Money Market instruments of a maximum of 40%.
There are 2 types of Benefits available in this plan: Death and Maturity Benefit.
- Death Benefit: If the Life insured dies within the policy tenure, the Death Benefit is payable to the nominee and the policy terminates.Thus, if the Life Insured dies:
- Before the commencement of risk on his life, then only the Policy Fund Value is paid to the nominee and the policy terminates.
- After the commencement of risk on his life, then the higher of:
- Basic Sum Assured, as defined at the start of the policy or
- Policy Fund Value or
- 105% of total premiums paid till date
Is paid to the nominee as Death Benefit and the policy is terminated.
- Maturity Benefit: if the life insured lives till the end of the policy tenure, then the Fund Value would be payable to the policyholder on maturity as Maturity Benefit and the policy terminates.
This plan has an additional benefit of Accidental Benefit cover which can be opted at an additional cost.