LIC Endowment Plus Policy


Name of Policy

LIC Endowment Plus Policy

Type of Policy

ULIP

Various Investment Options

There are 4 Investment Funds available

1.       Bond Fund

2.       Secured Fund

3.       Balanced Fund

4.       Growth Fund

Features

Parameter

Value             

Entry age

Minimum: 7 ; Maximum: 60 years

Maturity Age

Min: 18 years ; Max:70 years

Policy Term(Fixed)

Min: 10 years

Max: 20 years                            

Premium Payment Term

Min: Single

Max: Equal to Policy Term

Premium Payment Term

Annual & Single

Premium

Regular: Rs. 50,000 – Rs. 1,00,000

Limited: Rs 75,000 – Rs 1,00,000

Single: Rs 1,00,000 – Rs 2,50,000

Basic Sum Assured

Regular and Limited Premium:

Min SA:(Policy Term +1) x Annual premium

Max SA:30 x Annualized premium

Single Premium:

Min SA: 1.25 x Single premium

Max SA: 5 x Single Premium

Top-Up Premium

Min: Rs 20,000

Max: For Regular & Limited Premium: 10 x AP

For Single Premium: 5 x SP

(aggregate for all Top-up Premiums during the policy term)

Top-Up Sum Assured

Age at the time of Top-Up less than 45 yrs: 1.25 X Top-Up Premium

Age at the time of Top-Up is 45 yrs and above: 1.10 X Top-Up Premium

 

Charges

Explanation

Premium Allocation Charge

For Single premium policies:       3.3%

For Regular premium policies:    


Premium

Allocation Charge

First Year

7.50%

2nd to 5th Year

5.00%

thereafter

3.00%

Policy Administration Charge

Rs. 30/- per month during the first policy year and Rs 30/- per month escalating at 3% p.a. thereafter, throughout the term of the policy shall be levied.

Fund Management Charge

It is a charge levied as a percentage of the value of units at following rates:

         0.50% p.a. of Unit Fund for “Bond” Fund

         0.60% p.a. of Unit Fund for “Secured” Fund

         0.70% p.a. of Unit Fund for “Balanced” Fund

         0.80% p.a. of Unit Fund for “Growth” Fund

     Fund Management Charge shall be appropriated while computing NAV.

Switching Charge

This is a charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch.

Partial Withdrawal Charge

For each Partial Withdrawal from the Main Account in any policy year Rs. 500 will be charged. Thischarge may be increased to a maximum of Rs. 2,000 subject to IRDA approval.

Discontinuance Charge

Where the policy is discontinued during the policy year

Discontinuance charges for the policies having annualized premium up to Rs. 25,000/-

Discontinuance charges for the policies having annualized premium above Rs. 25,000/-

1

Lower of 10% * (AP or FV) subject to a maximum of Rs. 2500/-

Lower of 6% * (AP or FV) subject to maximum of Rs. 6000/-

2

Lower of 7% * (AP or FV) subject to a maximum of Rs. 1750/-

Lower of 4% * (AP or FV) subject to maximum of Rs. 5000/-

3

Lower of 5% * (AP or FV) subject to a maximum of Rs. 1250/-

Lower of 3% * (AP or FV) subject to maximum of Rs. 4000/-

4

Lower of 3% * (AP or FV)  subject to a maximum of Rs. 750/-

Lower of 2% * (AP or FV) subject to maximum of Rs. 2000/-

5 and onwards

 

 

Mortality Charge

The charges per Rs. 1000/- life insurance cover for some of the ages in respect of a healthy life are as under:

Age

25

35

45

55

Rs.

1.43

1.73

3.89

10.76

 

Critical Illness Benefit Rider Charge:This is the cost of Critical Illness Benefit rider (if opted for). These are age specific and will be taken every month.

The charges per Rs. 1000/- Critical Illness Rider Sum Assured per annum for some of the ages in respect of a healthy life are as under:

Age

25

35

45

55

Rs.

0.91

1.80

5.31

14.44

Miscellaneous Charge

This is a charge levied for an alteration within the contract, such as reduction in sum assured, change in premium mode and grant of Accident Benefit after the issue of the policy. An alteration may be allowed subject to a charge of Rs. 50/-.

Illustration

Let us assume a simple case:

  •     Premium = Rs.20,000
  •     Age = 20 years
  •     Sum Assured = Rs.400000
  •     Policy Term = 20 years
  •     PPT = Regular Pay
  •     Total Investment = Rs 20,000 x 20 years = Rs 4,00,000


Let’s see what you get:The life insurance component is miniscule, not exceeding 20 times your annual premium. If you really want life insurance, a good term plan will give you life insurance of about 500 times your annual premium – so you would rather avoid the Invest Maxima fund.

  •       life cover plus Investment
  •      Of your first year premium of Rs.50,000/-  7.5%+ Rs 30 + Mortality charge is removed. Most of this goes to your agent’s pocket. Only the remaining gets invested in the fund.
  •       Of your second year premium of Rs.50,000/- .5%+Mortality charge gets removed again. Most of this again goes to your agent, and only the remaining gets invested.
  •       In addition to this, of your total fund, the fund management charge of ~1.35% is cut every year
  •       Instead, if this Rs.50,000 per year had gone into a Systematic Investment Plan in a Mutual Fund, giving a return of approximately 15% a year on a five year average, not a single Rupee would have been deducted as policy charges. It would not take a mathematician to deduce that the returns here will be much better.

 

In summary, investments can deliver returns only if the costs are not so high.


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