• This is a Unit Linked Deferred Pension Plan which is a mix of Insurance, Investment and Retirement benefit (Pension). Insurance is optional.
• Four types of investment Funds (Bond Fund, Secured Fund, Balanced Fund and Growth Fund). Premiums paid after allocation charge will purchase units of the Fund type chosen.
Benefits:
o Death Benefit: Fund Value + Insured Amount (if taken) + Accident Benefit (if taken). Policyholder’s Fund Value shall be payable either in a lump sum or as pension.
o Accident benefit and Critical Illness Benefit only opted when insurance is opted
o Benefit on Vesting: may opt to commute up to one-third of fund value and rest compulsorily be utilized to purchase annuity option for pension.
Surrender Charges: Nil
o If surrendered within first 3 years, the monetary value of fund calculated and that amount will be payable at the completion of 3 policy anniversary.
o In case of death of life assured after surrender but before completion of 3 years from date of commencement of policy, the calculated surrender value will be after completion of 3 years to the nominee.
Recommendation:
This is ULIP based Pension Plan by LIC which was launched in Mid 2008. The fund has performed well since inception with CAGR of 15% approx. The Sensex (when the plan was launched) was at approx 14000-15000 with downward trend. Initially, the fund collected in this plan were invested at lower price and hence performed well. Also, the new ULIP Regulation will be affected from 1st September 2010. As per the regulations, all ULIP pension/annuity products has to offer a minimum guaranteed return of 4.5% per annum or as specified by IRDA from time to time. The return of the fund may be around 8% for long term. LIC will have to change some features of the plan and make it to as per new regulation or to close the plan. The Plan withdrawn by LIC with effect from August 31st, 2010.
Eligibility Conditions and Other Restrictions:
Particulars Without Life Cover With Life Cover
Min Entry: Age 18 years 18 years
Max Entry Age: Regular Prem.: 75 years 65 years
Single Prem.: 80 years 65 years
Min/ Max Vesting Age: 40 years/ 85 Years 40 years/ 75 Years
Min Deferment Term Regular Prem.: 10 years Regular prem.: 10 years
Single Prem.: 5 years Single Prem.: 5 years
Sum Assured (Only in case of With life cover plan)
Min: Regular Premium: Rs. 30,000 Single Premium: upto Prem.
Max: Regular Premium: 10 times if more than 40 years of age (5 times if critical illness rider opted for)
Min. Premium Regular premium: For both with life cover and without life cover
o Single premium: Rs 30,000/-
o Regular premium:
Rs 5,000/- for 20 years & above
Rs 10,000/- for 15-19 years
Rs 15,000/- for 10-14 years
Single premium: Rs 30,000/-
o Payment of Premiums Yearly, half-yearly or quarterly or monthly (through ECS mode only) for regular premium.
o Top-up additional premium in multiples of Rs.1,000 without any limit at anytime during the term of policy
Incr. / Decr. of risk covers:
No increase of covers will be allowed under the plan. Can decrease in covers.
Partial Withdrawal: No partial withdrawal of units
Exclusions:
If Life Assured commits suicide at any time within one year, the LIC will not entertain any claim by virtue of the policy except to the extent of the Fund Value of the units held in the Policyholder’s Unit Account on death
Different Charges:
1. Premium Allocation Charge:
Single premium policies: 3.3% of the single premium
Regular premium policies:
Premium Band (per annum) % of Premium Paid
First Year Thereafter
5,000 to 75,000 16.50% 2.50%
75,001 to 1,50,000 15.75% 2.50%
1,50,001 to 3,00,000 15.00% 2.50%
3,00,001 to 5,00,000 14.25% 2.50%
5,00,001 and above 13.50% 2.50%
2. Policy Administration charge:
Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter
3. Fund Management Charge
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
4. Surrender Charge – Nil
5. Accident Benefit charge
Rs. 50/ Lac Accident Benefit Sum Assured per policy year.
6. Presently NAV moving around Rs14.
