LIC is one of the most trusted insurance brands in India.it is controlled by the government of India.it offers several insurance plans. One such plan is the LIC New Endowment Plan. The plan number for this policy
is 914.sometimes you may find somewhere written as LIC New Endowment Plan 914.
It is a non linked plan which was introduced in February 2020 that offers protection for life along with savings. It has death and maturity benefits. You can take a loan against this policy.
All the details regarding this policy will be explained in this article. At last, we will discuss the premium and benefits with an example.so let’s start and explore more about this Plan.
Key Features of LIC New Endowment Plan
- Flexibility in payment terms.you can pay the premium monthly, quarterly, half-yearly, and yearly.
- Flexibility in choosing the terms of the policy.
- offers the benefit of protection and savings.
- Death and maturity benefits are available.
- you can add riders also to this policy.
- Grace period facility is available up to a certain time period.
- Tax deduction under section 80 C of the income tax Act 1961.
Eligibility Criteria For LIC New Endowment Plan
| Specifications | Details |
|---|---|
| Minimum Age of Entry | 8 years(Completed) |
| Maximum Age of Entry | 55 years |
| Maximum Maturity Age | 75 years |
| Minimum Policy Term | 12 years |
| Maximum Policy Term | 35 years |
| Minimum Sum Assured | INR 100000 |
| Maximum Sum Assured | No Limit |
Riders in LIC New Endowment Plan
Riders mean extra benefits other than policy benefits. In order to avail of the benefits of riders, you have to pay an extra premium.
Following are the riders in this policy:-
| Riders | Description |
|---|---|
| 1-Accidental death and Disability benefit rider | This means if an insured person died due to an accident or disablement happened due to ac accident, he/she will get an additional Sum Assured |
| 2-Accidental Benefit Rider | you will get benefit only in case of an accident. |
| 3-New term Assurance rider | It’s like a term plan and you will get the additional benefit only when the insured dies during the policy period.no maturity benefit. |
| 4-New critical illness benefit rider | If a policyholder gets any of the 15 illnesses mentioned by LIC then he/she will get additional Sum Assured. |
| 5-Premium waiver Benefit rider | This is where policyholders and proposers are different. for Example-this rider can be taken for the child as in case if something unfortunate happens to the proposer, the policyholder does not have to pay the remaining premium. |
you can choose only one between first and second rider from above list.
Benefits of LIC New Endowment Plan
There are lot of benefits available in this plan. Let’s discuss one by one.
Grace Period
It means extra time to pay the premium after the due date. Death claim is payable during the grace period.it depends on the modes of premium which you have chosen.
If the the premium mode is chosen as =
yearly/half yearly/quarterly——Grace period is of 30 days
Monthly Mode of premium——Grace period is of 15 days
Surrender Value
If you have paid a premium for up to 2 years you are eligible to surrender the policy. However, you will be at a loss whenever you surrender the policy.so make sure you chose the policy of that much sum assured which you can pay without any issue to avoid surrender the policy.
Loan Facility
The loan will be available only after paying the premium of a minimum of 2 years. The loan will depend on how long the policy is is existence and its surrender value.
For In-force Policy(Current active policy)–90% of the surrender value.
For Paid-Up Policy(no premium payments further)—80 % of the surrender value
Paid Up Benefits
If you discontinue after paying the premium regularly for 2 years due to any reasons, your policy will get the paid-up value. In simple terms, it means your death and maturity benefits will reduce if you discontinue the premium payments after 2 years of the policy term.
Revival of Policy
After the non-payment of premium if your policy closed we can start the policy. The policy can be revived within 5 years from the premium due date.you have to pay all the arrears of the premium together with interest.
Settlement Options for Maturity and Death Benefit
In this policy there are two ways you can take maturity and death benefit.
1-Lump-Sum Payment
The death and maturity benefit is settled at once and the full amount is paid either to the insured if he is alive or to the Nominee if the insured passed away.
2-In Installment
In this case, the payment is done in part wise like monthly, quarterly, half-yearly, and yearly. the insured person can also choose a part of the payment in full and the rest in installments.
If the insured is minor i.e. below 18 years they can withdraw the amount once they complete 18 years.
“The insured person can change the withdrawal of the payment process i.e. in installment or one-time payment till he is alive but it can not be changed by Nominee later“
Tax Benefits
Premium-Exempted under Section 80 C
Benefits of maturity and death-Tax Free under the Section 10(10D)
Revisionary and Final Bonus
Revisionary bonus depends on the length of the premium paid. The more the length of the premium the more will revisionary bonus. The percentage for this bonus is declared by LIC every year and it can vary as well.
Final bonus depends on the profit made by LIC.
Exclusion in LIC New Endowment Plan
If someone suicide, within 12 months of taking this Policy, they will not be eligible for any benefit, and whatever the premium they paid till then, 80% will be given to the Nominee.
Let us understand the concept of this policy through an Example
MR. Naresh took this New Endowment plan as per the below-
Current Age of Mr. Naresh-35 years
Sum Assured of -INR 5 lakhs
Policy Period of-35 years
In case if Mr. Naresh chose the monthly/yearly payment premium option he has to pay-
Monthly=INR 1190.47
Yearly=INR 14285
Total Premium for 35 years=INR 4,99,975
Calculation of maturity benefit after 35 years-
Sum Assured of the Policy=5.00 Lakhs
Revisionary Bonus====== 8.40 Lakhs
Final Bonus=======11.50 Lakhs
Total================24.90 Lakhs(around 25 Lakhs)
The above calculation is for the death after the policy tenure ends or the policy is matured while the insured person alive.
Calculation of the amount while insured dies during the policy period =
Sum Assured + Simple Revisionary bonus(depends on how long the policy is active)+Final Additional Bonus
“Only the First-year premium can be higher due to interest charges.
Revisionary and Additional Bonus calculated above on the current Bonus rate of the Policy By LIC. therefore your maturity amount can be different.”
Conclusion
The Lic New endowment plan provides options for both protection and savings.it is suitable for people who don’t want to take any risk and comfortable with low returns. However, it is always advisable to check with the financial expert for the perfect plan that suits an individual.
