- About Coverfox
LIC's New Endowment Plan is a non-linked participating plan that offers the benefits of protection and savings. It is a suitable investment option for individuals seeking to develop disciplined savings habit along with having a life insurance cover. LIC's New Endowment Plan provides financial support to the family of the policyholder in the event the individual passes away during the term of the plan. If the policyholder survives till the end of the term, maturity benefits - which is a lump sum amount - will be paid. This plan by the insurance giant also helps take care of the policyholder’s liquidity needs via its loan facility.
The features of LIC's New Endowment Plan are as under:
Following are the benefits payable under LIC's New Endowment Plan:
In the event of the demise of the policyholder during the policy period, provided all due premiums have been paid, death benefit, which is the total of sum assured on death plus vested simple reversionary bonuses and final additional bonus (if any) shall be paid. Here, the sum assured on death will be the higher of basic sum assured or ten times of annualised premium. This benefit shall not be below 105% of all the premiums paid as on the date of demise.
Basic sum assured, along with vested simple reversionary bonuses and final additional bonus, if any, shall be paid in lump sum, if the policyholder survives the term of the policy. However, the benefits will only be paid if all premium payments have completed.
Since the policy participates in the profits of LIC, the policyholder will be entitled to receive simple reversionary bonuses, declared as per the experience of the Corporation, provided the policy is in effect. Final (additional) bonus may also be declared during the year when a claim is filed - either by demise or on maturity - provided the policy has been in force for a certain term.
LIC’s Accidental Death and Disability Benefit Rider- This rider is available as an optional add-on by payment of additional premium. Should the policyholder pass away in an accident, the accident benefit sum assured will be paid as lump sum, along with the death benefit under the basic plan. In case of accidental permanent disability resulting from an accident (within 6 months from the accident date), an amount that equals the accident benefit sum assured shall be paid in equal monthly instalments spread over ten years. Additionally, there will be waiver of future premiums for accident benefit sum assured as well as premiums for basic sum assured, which is equal to Accident Benefit Sum Assured.
For Basic Plan
|Minimum Basic Sum Assured||Rs. 1 lakh|
|Maximum Basic Sum Assured||No Limit|
|Minimum Age at entry||8 years (completed)|
|Maximum Age at entry||55 years (nearest birthday)|
|Maximum Maturity Age||75 years (nearest birthday)|
|Minimum Term||12 years|
|Maximum Term||35 years|
|Minimum Age at entry||18 years (completed)|
|Maximum Age at entry||This cover can be taken at any policy anniversary during the policy period. However, this needs to be prior to the policy anniversary on which the age nearer birthday of the life assured is 70 years.|
|Maximum cover ceasing age||70 years (nearest birthday)|
Premiums may be paid on yearly, half-yearly, quarterly or monthly basis (through ECS only) or via salary deductions over the policy term. However, a grace period of one month, but not less than 30 days will be permitted for payment of yearly, half-yearly or quarterly premiums, and 15 days in case of monthly premiums.
Premium payment frequency: Premiums can be paid regularly at monthly, quarterly, half-yearly, yearly mode (through ECS only) or through salary deductions over the term of policy.
A one-month grace period shall be allowed for payment of quarterly, half-yearly or yearly premiums and 15 days for monthly premiums.
In case only premiums of at least three full years have been paid, the policy shall not become wholly void if the subsequent premiums are left unpaid - rather, it will continue as a paid-up policy. The coverage amount shall be brought down to such a sum, referred to as paid-up sum assured, and shall bear the same ratio to the basic sum assured as the premiums paid bears to the overall number of premiums i.e. basic sum assured *(number of premiums paid / number of premiums payable). This paid-up sum assured and vested simple reversionary bonuses (if any) shall be payable when the policy term ends or in the event of prior death. The reversionary bonuses, which are already accrued to the policy, on the date of paid-up, will stay attached to the policy. A paid-up policy will not gather any further bonuses. It must be noted that the rider will not acquire any paid-up value and its benefits shall no longer be applicable if the policy is in lapsed condition.
LIC's New Endowment Plan can be surrendered for cash, provided that premiums have been paid for three full years. The guaranteed surrender value will be a percentage of overall premiums paid (net of service tax), with the exclusion of extra premiums and premiums paid for riders, if selected. Along with this, the surrender value of vested simple reversionary bonuses (if any) shall be paid, which equals to vested bonuses multiplied by the surrender value factor that applies to vested bonuses.
An individual will have to submit certain documents to avail LIC’s New Endowment Plan. The documents include:
Loan: Individuals can avail a loan under this policy provided premiums of at least three full years have been paid. Interest on loan will be payable on compounding half-yearly basis to the Corporation at the rate specified (by the Corporation) during the time of taking the loan under this policy.
Tax Benefits: Individuals can claim tax deduction under Section 80C of the Income Tax Act, 1961, on the premiums paid toward the policy. The maximum deduction that can be claimed under this section is Rs. 1,50,000. The proceeds from the policy is tax-free in the hands of receiver under Section 10(10D) of the Income Tax Act.
Requirements for a claim: In the event of the life assured’s death, the documents that a claimant would need to submit include - claim forms, original policy document, proof of death, NEFT mandate for direct credit of the claim amount to the bank account, proof of title, medical treatment before death and employer's certificate, whichever is applicable, to the satisfaction of LIC.
In case of a maturity claim or policy surrender, the life assured would need to provide the discharge form, original policy document and NEFT mandate for direct credit of the claim amount to the bank account.
This policy shall become void if the policyholder - sane or insane - commits suicide at any time within a year from the date of commencement of risk. LIC will not pay out any claim under this policy, except to the extent of 80% of the premiums paid, with the exclusion of taxes, extra premium and rider premiums, if any, provided the policy is active. This policy shall become void if the policyholder - sane or insane - commits suicide within a year from revival date, an amount which is higher of 80% of the premiums paid till the demise (with the exclusion of taxes, extra premium and rider premiums, if any,) or the surrender value, provided the cover is active, shall be payable. LIC shall not accept any other claim under this plan.
LIC's New Endowment Plan offers the dual benefit of protection and saving. The policy provides financial support for the loved ones of the deceased policyholder any time before its maturity, and a sizeable pay-out during the time of maturity for the surviving policyholder. For a comprehensive coverage, individuals can include LIC’s Accidental Death and Disability Benefit Rider to the base plan.
What are the tax benefits I can get on the purchase of LIC's New Endowment Plan?
Under Section 80C of the Income Tax Act, 1961, life insurance premiums paid to keep the insurance cover active on the life of the assessee or on the life of the spouse or any child of assessee shall be eligible for deduction to the extent of 10% of the actual capital sum assured or actual premium paid, whichever is less. The maximum deduction that can be claimed by an individual under this section is Rs. 1,50,000. Additionally, as per Section 10(10D), the proceeds from the policy i.e. Maturity Benefit and Death Benefit, which includes the sum received as bonus on such policy, is exempt from tax.
Are maturity benefits payable under LIC's New Endowment Plan?
Yes, maturity benefits are payable under LIC's New Endowment Plan. The benefits that will be paid include basic sum assured, along with vested simple reversionary bonuses and final additional bonus, if any.
When can I surrender LIC's New Endowment Plan?
You can surrender LIC's New Endowment Plan for cash, once you have ensured that premiums payments have been maintained for three full years. The guaranteed surrender value will be a percentage of overall premiums paid (net of service tax), without the inclusion of any additional premiums or premiums paid for riders.
Does LIC's New Endowment Plan participate in profits of the Corporation?
Yes, LIC's New Endowment Plan is a participating endowment plan which means it takes part in the profits of the company. It accumulates Simple Reversionary Bonuses and final additional bonuses, which will be declared on the basis of the company's performance.
What are the documents required for making a death claim on LIC's New Endowment Plan?
The documents required to make a claim in the event of the demise of the life assured shall be the claim forms, along with original policy document, NEFT mandate from the claimant for direct credit of the claim amount to the bank account, proof of death, proof of title, medical treatment prior to death, employer's certificate, whichever is applicable, to the satisfaction of LIC.
What are the documents required to make accidental disability/death claim on LIC's New Endowment Plan?
In the event of a claim related to accidental disability or death, LIC may ask for the following documents to ascertain circumstances under which death or disability took place: 1) A certified copy of first information report (FIR) 2) A certified copy of police inquest report 3) Copy of panchanama 4) Post mortem report 5) Newspaper cuttings where accident is reported 6) If the cause of death is a vehicle accident, then a copy of driving licence will be required, if life assured was driving the vehicle 7) Sub-divisional magistrate final verdict about death 8) Hospital treatment records, etc.