Endowment Plan: Build your net worth with protection.
The New Endowment Plan from Insurance Companies is a non-linked, participating, life insurance policy. This policy guarantees a death/maturity benefit with additional bonuses. The higher the period of maturity the higher is the maturity amount as the bonuses are higher. 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 Endowment Plan by opting for 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.
There are many types of endowment policies. The most commonly used are non-profit, traditional with profits, full, low cost, and unit-linked. Endowment plans are ideal for child education and marriage savings. If you are looking for a plan which gives you guaranteed returns along with tax benefit then an Endowment Plan is the most appropriate option. It is the right policy for the people of any age group and saving capacity. An endowment plan will bring stability in your financial portfolio.
Policyholders who wish to purchase an insurance policy will have to ensure that they meet the eligibility criteria that are 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
Sum Assured- 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
Premiums- 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, the 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 *Yearly
*Half-Yearly
*Quarterly
*Monthly
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Death Benefit |
If the policy holder 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. |
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Maturity Benefit |
If the policy holder survives till the end of the policy tenure, he/she will be paid a maturity benefit. The maturity benefit will include Basic Sum Assured, Final Additional Bonus, and the vested Simple Reversionary Bonus. |
If one wishes to customize 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 installments over a 10-year period. This is extremely beneficial since it can serve as an income replacement.
The New Endowment Plan has 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.
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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. |
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Policy Loan |
Once the policy has acquired a surrender value, one can avail a loan against the policy. |
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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. |
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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. |
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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. |
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Rebates |
*Policyholders who pay their premiums on a yearly/half-yearly mode are entitled to receive a rebate on their total premium. *Policyholders who have opted for a sum assured over Rs.2 lakh are eligible to receive a rebate. |
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Grace Period |
*Annual, Bi-Annual, Quarterly Mode of Premium Payment: 30-day grace period *Monthly Mode of Premium Payment: 15-day grace period |
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.
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Features:
Low-risk plans as the maturity benefits are guaranteed and well defined.
Gives financial security to your loved ones.
Tax benefits under section 80 (C) under Income tax Act.
Bonus of two types are paid
Revisionary Bonus: It is the additional money to be paid to the nominee in the event of death of policyholder or added to maturity amount in case of with-profits policy. Once this option is taken it cannot be changed if the policy is in force till maturity or death of the insured.
Terminal Bonus: It is the discretionary amount of money that is added to the payments to be made at end of the policy or on the death of the policyholder.
Rider Benefits:
Following are the riders for the policyholders to choose as per requirements;
#Accidental Death Benefit
#Family Income Benefit
#Critical Illness Benefit
#Hospital Cash Benefit
#Waiver of Premium Benefit
#Accidental Permanent Total/Partial Disability Benefit
Premiums can be paid in monthly, quarterly, half yearly and annual options.
Policyholder gets benefits under Section 80 C and Section 10 (10) D
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• Maturity & Survival Claims
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The payment made by the insurance company on completion of the term of policy or maturity date is called maturity payment. The amount payable consists of sum assured plus any bonus/incentives.
The insurance company informs the policyholder in advance by sending bank discharge form for filling details in it. The form needs to be returned to the insurance company with an original policy document, ID proof, Cancelled Cheque and copy of passbook.
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• Life Insurance Claim Process
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The main purpose of taking an insurance policy is that it should come in use in times of crises.
Death claim settlement process
Step One: Intimation to the insurance company about the Claim
The nominee should inform the insurance company as soon as possible to enable the insurance company to start with the claim process. The details required for intimation are policy number, name of the insured, date of death, cause of death, place of death, name of the nominee etc. The claim intimation form can be obtained from us or even by downloading it from the insurance company website.
Step Two: Documents required
1.The nominee will be asked to furnish the following documents:
2.Death certificate
3.Age of the life insured (if not already given)
4.Original Policy document
5.Any other document as per the requirement of the particular insurer or case related.
6.For early death claims i.e. the claim that has arisen within three years of the policy is in force the company will do an extra investigation to ensure it is a genuine claim. They might do the following:
7.Check with the hospital if the deceased was admitted to the hospital.
8.In case of an air crash confirmation from the airline, authorities check if the policyholder was a passenger on the plane.
9.In case of death from medical causes, the insurance company will ask the hospital to provide doctor's certificate, treatment records etc If the policyholder dies due to murder, suicide, accident then police FIR report, post mortem report etc shall be required.
Step Three: Submission of required Documents for Claim Processing
For quicker claim processing, the nominee must submit complete documentation as early as possible and any other documents that the company needs to pass the claim.
Step Four: Settlement of Claim
As per the regulation 8 of the IRDAI (Policy holder's Interest) Regulations, 2002, the insurer is obligated to settle a claim within 30 days of receipt of all necessary documents including extra documents sought by the insurer. If the claim requires further investigation, the insurer needs to complete its procedures within 6 months from receiving the written intimation of claim.
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• Rider Claims
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Different riders can be attached to the base life insurance policy for enhanced protection. The riders can be an accidental rider, critical illness rider, waiver of premium rider etc. For different riders, different claim proceedings are required. Some riders may be valid with the death claim like accidental death rider or some riders need to processed standalone like a waiver of premium rider in case of disability.
For Critical Illness Rider- necessary medical documents such as first diagnosis report, Doctor's report, etc are required. For Accidental disability rider - a copy of FIR, Certificate of disability by the treating doctor, doctor's report etc are required.
