Life Insurance Corporation of India launched a new Unit Linked Insurance Plan (ULIP) on 19 August 2015. LIC’s new endowment plus plan is a unit linked assurance plan which offers investment – cum insurance during the period of policy.

Since 2010 ULIP sales have taken sharp increase, but when IRDA revamped the norms the ULIP sales which constituted 90% of private life insurance have fallen to less than 10%. LIC was contemplating to launch a new ULIP scheme and New Endowment plus plan is the first after the closure of all other products.

Key features of LIC New Endowment Plus Plan

Let’s have a look on the key features of new endowment plan.

Eligibility conditions LIC new endowment plan.

  • Minimum age of entry:  3 months or 90 days
  • Maximum age of entry:  50 years
  • Minimum maturity age:  18 years
  • Maximum maturity age:  60 years
  • Policy period:  10 to 20 years
  • Premium paying period: same as the policy term.

There is no maximum limit for the premium amount but the minimum premium amount is Rs. 20,000. There is no facility available for loan in this policy.Benefits

Death benefits: The policyholder’s fund value or an amount equal to the higher of basic sum assured will be payable.

Maturity benefits: An amount equal to the plan holder’s fund value shall be payable.

Fund Options: There are mainly four types of fund, there main characteristics are given.
Bond Fund:  Low risk.
Secured Fund: Steady income and lower to medium risk.
Balanced Fund: Balanced income and growth with medium risk.
Growth Fund:  Long term Capital Growth- high risk.

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Premium allocation Charges: In the first year it shall be 7.5& then in 2nd to 5th year it shall be 5% and after the 6th year it shall be 3%.

Fund management charge: it is 0.7% p.a. of Unit Fund for all the four fund types.

Minimum Lock-in Period:  it is 5 years. If you want to surrender the new endowment policy before the expiry of lock-in period of 5 years then the fund value after deducting the discontinuous charge will be transferred to the discontinuous policy fund. You will get 4% interest on this fund and you can redeem this fund after five years. If you surrender after 5 years of the policy then you will be given policyholder’s fund value on the day of surrender.

Our Suggestion to this Plan: ULIPs are generally represented as INVESTMENT cum INSURANCE cum TAX-SAVING product. Now if you Aim for Good Investment returns then ponder to these points.

  • ULIP generates decent returns if held for longer time. These ULIP scheme invest money in stock markets (indirectly). So why don’t you invest in mutual funds? Do think over it.
  • For getting a better return charges levied should be minimum and reasonable. If you compare both these funds you will find ULIP scheme costlier.

If you Aim for getting Insurance cover and Tax saving it is better to ignore this policy because there is difference between investment and insurance.

If your objective is to get good return and tax saving you can go for buying ELSS mutual funds.

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Summing up, Term Insurance and mutual funds are best alternative for ULIP investment, you can miss this policy because the former provide better coverage and more insurance.