The New Endowment Plan from Life Insurance Corporation of India (LIC) is a non-linked, participating, life insurance policy. This policy guarantees a death/maturity benefit with additional bonuses. Further, the policyholder can also avail a loan against the policy if he/she is in need of emergency funds. Policyholders can also increase the level of coverage offered by the New Endowment Plan by opting for LIC’s Accidental Death and Disability Benefit Rider. One is also entitled to claim tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
Policyholders who wish to purchase an insurance policy will have to ensure that they meet the eligibility criteria that’s set by the insurer.
|Parameters||Criteria for eligibility|
|Minimum age at entry||8 years|
|Maximum age at entry||55 years|
|Maximum age at maturity||75 years|
The sum assured is a certain amount of money that one is entitled to receive from the insurer, before any the addition of any bonuses or accrued benefits.
|Minimum Sum Assured||Rs.1 lakh|
|Maximum Sum Assured||No limit|
The premium is a sum of money that one pays in exchange for an insurance policy, as per the premium payment mode. For the New Endowment Plan, you exact premium will vary based on your policy tenure, sum assured, age at entry, etc. Certain aspects of your premium payments and policy tenure are listed below.
|Minimum term of the policy||12 years|
|Maximum term of the policy||35 years|
|Premium Payment Mode||
* Premiums vary based on age, location, plan term, and other factors.
|Death Benefit||If the policyholder passes away during the policy tenure, the Sum Assured on Death, Final Additional Bonus, and the vested Simple Reversionary Bonus will be paid as the death benefit.|
|Maturity Benefit||If the policyholder survives till the end of the policy tenure, he/she will be paid a maturity benefit. The maturity benefit will include the Basic Sum Assured, Final Additional Bonus, and the vested Simple Reversionary Bonus.|
If one wishes to customise the policy or increase the level of protection offered by the base policy, the policy buyer can opt for LIC’s Accidental Death and Disability Benefit Rider, by paying an added premium. With this rider, if the policyholder succumbs to an untimely death due to an accident, his/her nominee will be paid the Accident Benefit Sum Assured in addition to the base policy’s death benefit. If the policyholder suffers from permanent disability due to an accident, the Accident Benefit Sum Assured will be paid in the form of equal instalments over a 10-year period. This is extremely beneficial since it can serve as an income replacement.
The New Endowment Plan has a suicide exclusion. If the life assured succumbs to death due to suicide within a year of purchasing the policy, LIC will return 80% of the overall premiums paid to the nominee. The standard death benefit will not be paid, in this case. If the policyholder commits suicide within a year of reviving the policy, the insurer will pay the nominee the surrender value of the policy or 80% of the overall premiums, based on whichever is higher.
|Free-Look Period||The policy buyer is given a 15-day free-look period to review the policy terms, and return it if they find it unsatisfactory.|
|Policy Loan||Once the policy has acquired a surrender value, one can avail a loan against the policy.|
|Surrender Value||The policy can only be surrendered if a minimum of 3 years’ due premiums have been paid. LIC may choose to pay the policyholder the Special Surrender Value or the Guaranteed Surrender Value, based on whichever is the higher out of the two.|
|Paid-Up Value||If the life assured has paid the due premiums for at least 3 years and has missed the subsequent premium payment, the policy will not wholly void, but will be converted into a paid-up policy.|
|Policy Revival||If due premiums are not paid by the end of the grace period, the policy will lapse. The policyholder can revive a lapsed policy within 2 years from the date of the first due unpaid premium.|
Policyholders can claim tax deductions for premiums paid and benefits received as per Section 80C and Section 10(10D) of the Income Tax Act, 1961.
There is nothing that can replace the loss of a loved one. But a life insurance policy ensures that, at the very least, one’s dependents don’t have to go through financial hardships in case of an unfortunate eventuality. The New Endowment Plan from LIC guarantees the policyholder/nominee a range of benefits including a comprehensive risk cover, a maturity benefit, payment of bonuses, the option to avail a loan, etc.
The Life Insurance Corporation of India or LIC is one of the leading life insurance firms in the country. The insurer has a claim settlement ratio (CSR) of 98.33% for FY15-16, which was one of the highest CSRs reported that year. The insurer also has a range of insurance product offerings in order to cater to the needs of their customers.