The New Endownment Plus (Ulip) Plan No 835
Life Insurance Corporation of India (LIC) recently launched a new unit-linked insurance plan (Ulip) nineteen months after its earlier product was withdrawn from the market. The New Endownment Plus (Ulip) Plan No 835’, will be an insurance-cum-investment plan. The premium allocation charges would range from 7.5% of premium paid in the first year to 3% from the sixth year onwards.
LIC had earlier launched a Ulip plan in January 2013 after a gap of two years. After the new norms for traditional products kicked in from January 1, 2014, life insurance companies had to stop selling existing products and introduce new ones.
LIC, too, had to withdraw its products from the market and introduce new variants compliant with guidelines, which included money-back plans. However, there was no Ulip launch in 2014. Ulips make up less than 10% of the total product mix of LIC. The rest are traditional life insurance products.
The new plan would have four funds namely Bond Fund, Secured Fund, Balanced Fund and Growth Fund. The premiums paid by the policyholder would be subject to premium allocation charge and would be used to purchase units in the desired fund.
Units will be allotted based on the Net Asset Value (NAV) of the respective fund as on the date of allotment. The NAV will be computed on a day-to-day basis and will be based on investment performance. Investment of Funds The premiums allocated to purchase units will be strictly invested according to the investment pattern committed in various fund types.
A quick look at the Eligibility Conditions:
Minimum Age at entry: 7 (age last birthday) and Maximum Age at entry: 60 years (age nearer birthday)
Minimum Maturity Age: 18 years (completed) and Maximum Maturity Age: 70 years (age nearer birthday)
Policy Term: 10 to 20 years
Minimum Premium Regular premium: Rs. [20, 000] p.a. Regular premium: Rs. [1, 750] p.m. Single premium: Rs. [30, 000]
Maximum Premium Regular premium: Rs. [1, 00, 000] p.a. Single premium:
Additional features of the Plan
One can switch between the four fund types for the entire Fund Value during the policy term subject to switching charges, if any. Increase / Decrease of risk covers No increase of covers will be allowed under the plan. One can, however, decrease the risk covers, without reducing the level of premium, once in a year during the Policy term, provided all due premiums under the Policy have been paid.
Risks borne by the Policyholder
LIC’s Endowment Plus is a Unit Linked Life Insurance products which is different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for their decisions.
Benefits to the policyholder
Death Benefit Higher of Sum Assured and the Policyholder’s Fund Value shall be available as death benefit.
Maturity Benefit on the Life Assured surviving to the end of the policy term chosen, an amount equal to the Policyholder’s Fund Value is payable.
Conclusion
Investors with low risk can look for this plan as it is unit linked plan. The returns expected can be moderate. Returns would depend on the type of scheme chosen. Expenses in the plan are high, which is costly when compared to mutual funds investments. Liquidity is an issue with ULIP plans, also there will be penalty and charges involved. Ideally, one who is looking for mainly insurance should avoid this scheme as it will hardly take care in case of a death of the policyholder.