New Endowment Plan

LIC's New Endowment Plan is a participating non-linked plan which offers an attractive combination of protection and saving features. This combination provides financial support for the family of the deceased policyholder any time before maturity and good lump sum amount at the time of maturity for the surviving policyholders. This plan also takes care of liquidity needs through its loan facility.

Death benefit:

In case of death during the policy term provided all due premiums have been paid Death benefit, defined as sum of "Sum Assured on Death" and vested Simple Reversionary Bonuses and Final Additional Bonuses (FAB), if any, shall be payable. Where, “Sum Assured on Death” is defined as higher of Basic Sum Assured or 7 times of annualised premium. This death benefit shall not be less than 105% of all the premiums paid as on date of death.

Where premiums exclude service tax, extra premium and rider premiums, if any.

Maturity Benefit (Survival Benefits):

Basic Sum Assured, along with vested simple reversionary bonuses and Final Additional Bonus, if any, shall be payable in lump sum on Survival to the end of the policy term provided all due premiums have been paid.

Participation in Profits:

The policy shall participate in profits of the Corporation and shall be entitled to receive Simple Reversionary Bonuses declared as per the experience of the Corporation, provided the policy is in full force.

Final (Additional) Bonus may also be declared under the policy in the year when the policy results into a claim either by death or maturity, provided the policy has run for certain minimum term.

LIC’s Accidental Death and Disability Benefit Rider: LICs Accidental Death and Disability Benefit Rider is available as an optional rider by payment of additional premium. In case of accidental death, the Accident Benefit Sum Assured will be payable as lumpsum along with the death benefit under the basic plan. In case of accidental permanent disability arising due to accident (within 180 days from the date of accident), an amount equal to the Accident Benefit Sum Assured will be paid in equal monthly installments spread over 10 years and future premiums for Accident Benefit Sum Assured as well as premiums for the portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured under the policy, shall be waived.

Premium Payment Mode :

Yearly, Half Yearly, Quarterly, Monthly (ECS) ;

Term :

12 to 35 Years ;

Minimum Entry Age :

8 Years completed ;

Maximum Entry Age :

55 Years ;

Maximum Maturity Age :

75 Years ;

Minimum Sum Assured :

Rs. 1,00,000.00;

Maximum Sum Assured :

NO LIMIT ( Depending on the proposer's income);

Surrendered Value :

The Policy can be surrendered at any time during the policy term provided at least 2 full years premiums have been paid.

Loan :

Loan facility is available under this plan, after payment of premiums for at least 2 full years.

Income Tax Benefit :

• Premium paid under this plan is eligible for TAX rebate under section 80c.
• Maturity under this plan is free under section 10(10D).

Benefit Illustration :

Mr. Chandru, a male executive is working in an MNC after graduation. His company is located in Bengaluru. His current age is 22 Years. He could set aside about Rs.35,000.00 to Rs. 37,000.00 rupees of money to keep aside after meeting all his expenses, for his future. He decides to buy The New Endowment Policy from LIC.

His goals are:

(1)Protecting the interests of his dependant parents (in case of his death while on duty) and

(2) To save some money for his 50th year.

Let us see how he achieves his goals.

Solution :

Mr. Chandru chose Mr. Niranjana as his insurance advisor. Both meet and create in illustration to achieve Mr. Chandru's Goals:

• Mr. Chandru (Proposer) wants to buy an Life Insurance for Rs. 10,00,000.00 Sum Assured. ( He is actually eligible to buy a SA of 15 times his gross annual salary).
• Because Mr. Chandru wants to save some money for his 50th year, the tenure of his insurance must be 28 years.
• Because Mr. Chandru is travelling to work on his personal vehicle in the city traffic, his life is prone to risks due to accidents. Hence, he is advised buy an DAB (Double Accident Benefit) Raider of Rs. 10,00,000.00.
• In order to increase the risk coverage the advisor told Mr. Chandru to avail a Term raider for Rs. 10,00,000.00, for which he agreed.
• Let's assume the prevailing income tax rate is 30% .

With these details, we arrive at the following numbers:

Summary of Insurance Coverage:

1. DAB : Rs. 10 Lakhs ( This will save him from any unforeseen expenses upto Rupees 10 Lakhs, which may be arising due to accidents and dismemberment)
2. Term Raider S.A. : Rs. 10 Lakhs ( This will double the Sum Assured)
3. Life S.A. : Rs. 10 Lakhs. ( This is the policy coverage for Mr. Chandru's life)

Detailed Illustration given below:

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