LIC’s New endowment plan 2014

Posted by Admin on 3

LIC’s New endowment plan (Table no 814) is nothing but it’s Old endowment plan re-packaged with new IRDA rules. LIC,  like private companies seems to be doing away with low SA policies. Minimum SA is Rs. 100000 now. It also offers accidental and disability rider.

Basic terms and conditions:

Minimum age is 8 year and maximum age is 55 years.
Minimum term is 12 year and maximum is 35 years.
Minimum S.A is Rs. 100000 and Maximum no limits.

Death benefits:  Higher of BSA or 10 times of annualized premium.
Maturity benefit: BSA + Bonus + FAB.

As per LIC illustration, for term of 35 years and premium of Rs. 2881 PA (Total Premium: Rs. 100835) one can get Rs. 249000.   The calculation does not account additional burden of service tax.

Traditional plans always provide low returns and this policy will be no different. In addition to this, a high surrender charges makes this policy unattractive. for eg: on 15th year total premium paid is around Rs. 40, 000 and surrender value will only be Rs. 32000 appx.,
Conclusion:  There are many alternatives available in the market where there is nil or very low penalty on early exits and are also offer better returns and are tax efficient.  It is better to go for term plan + Mutual fund (debt or Equity depending on risk profile) and avoid this plan. If you still feel that traditional plan are the best , I suggest you better opt for LIC's New Jeevan Anand, which offers better features.


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