Life Insurance Corporation of India’s ULIP (Unit Linked Insurance Plan)
Life Insurance Corporation of India of India had initiated a new ULIP (Unit Linked Insurance Plan) on 19-August-2015. Life Insurance Corporation of India’s New Endowment Plus (Plan / Table no 835) is a unit linked assurance plan, which provides investment plus insurance for the period of the tenure of the policy.
ULIP sales has taken a strike since 2010, when the regulator (IRDA) refurbished norms by hiking the lock – in period & decreasing the commissions on their sales. ULIP sales, which formerly constituted 90 per cent of private life insurers’ overall product portfolios, has now decreased sharply to less than 10 per cent of their portfolios.
Characteristics of Life Insurance Corporation of India’s New Endowment Plus ULIP Plan
Below are the main features of New Endowment Plus ULIP Policy by Life Insurance Corporation of India;
- Minimum Age at entry – 90 Days
- Maximum Age at entry – 50 years
- Minimum Maturity Age – 18 years
- Maximum Maturity Age – 60 years
- Policy Tenure – 10 to 20 years
- Premium Paying Tenure – Same as Policy Tenure
- Premium Amount is relied on the quantum of Sum Guaranteed. The minimum premium amount is Rs 20, 000 p.a. & there is no maximum limit.
- Demise Advantage– An amount equivalent to the higher of Basic Sum Guaranteed or Policyholder’s Fund Value shall be payable.
- Maturity Advantage– On Life Guaranteed surviving the date of maturity given that the policy is in – force, an amount equivalent to Policy holder’s Fund Value shall be payable.
- Fund Options– The allocated premiums will be used up to purchase units as per the fund type chosen by the Policy holder. Life Insurance Corporation of India is providing 4 fund kinds under New Endowment Plus. Many types of fund options & broadly their investment patterns are as under:
- Premium Allocation Charges: This is 7.5 percent in the first year, 5 percent from 2nd to 5th year & 3 percent after the 6th year.
- Fund Management Charge: It is 0.7 percent p.a. of Unit Fund for all the 4 fund types.
- Partial Withdrawal Charge shall not exceed Rs. 100 /- on each withdrawal.
- Fund Switching Charge shall be Rs. 100 /- per switch. Within a mentioned policy year 4 switches will be allowed free of charge.
- Mortality Charge: This is insurance cum investment scheme. Mortality charge is the cost of life insurance cover, which is age specific & will be taken at the commencement of each month by cancelling the number of units out of the Policy holder’s Fund. The rate of Mortality Charge per annum per Rs. 1, 000/ – Sum at Risk for some of the ages are given below:
- Minimum Lock – in Period: 5 years.
If you surrender New Endowment Plus policy on or previous to the expiry of the 5 years’ lock-in period, then the Policy holder’s Fund Value after decreasing the Discontinuance Charge (if any) must be relocate to the Discontinued Policy Fund. You will get 4 percent as guaranteed interest on this fund. You can cash in this fund after the expiry of 5 years only. If you be relevant for surrender of the policy after the expiry of 5 years’ lock-in-period, then the Policy holder’s Fund Value as on the date of surrender shall be payable.
- Optional Accident Advantage Rider is obtainable under this New Endowment Plus ULIP plan. The charges in the direction of this rider (if opted) will be taken at the establishment of each month by cancelling number of units out of Policy holder’s Fund while the policy is in-force. This must be at the rate of Rs. 0.40 per thousand of Accident Advantage Sum Guaranteed per policy year.
- No loan facility is obtainable for New Endowment Plus policy.