December 19, 2011 by akhilendra
Endowment Plus Review
Endowment Plus is a unit linked Endowment plan From LIC. This offers investment along with insurance. Endowment Plus allows insured to choose the insurance cover within the limits, which will depend on the mode and level of premium.
It comes with four funds and investors can invest their funds in any one of them. Premiums paid after deduction of allocation charge will purchase units of the Fund type chosen. The Unit Fund is subject to various charges and value of units may increase or decrease, depending on the Net Asset Value (NAV).
Endowment Plus’s sum Assured under the Basic Plan –
Minimum Sum Assured:
Regular Premium policies: (Policy Term +1) times the annualized premium
Single Premium:
For age at entry of below 45 years: 1.25 times of the single premium
For age at entry of 45 years and above: 1.10 times of the single premium
Maximum Sum Assured:
Regular Premium policies:
30 times of the annualized premium if age at entry is upto 45 years
25 times of the annualized premium if age at entry is 46 to 60 years
Single Premium Policies:
If Critical Illness Benefit Rider is opted for:
5 times the Single premium if age at maturity is upto 55 years.
3 times the Single premium if age at maturity is 56 to 60 years.
If Critical Illness Benefit Rider is not opted for:
5 times the Single premium if age at maturity is upto 65 years.
3 times the Single premium if age at maturity is 66 to 70 years.
Where the minimum Sum Assured is not in the multiples of Rs. 5,000, it will be rounded off to the next multiple of Rs. 5,000. Annualized Premiums shall be payable in multiple of Rs. 1,000 for other than ECS monthly. For monthly (ECS), the premium shall in multiples of Rs. 250/-.
- Charges under the Plan:
A) Premium Allocation Charge: This is the percentage of the premium deducted towards charges from the premium received. The balance constitutes that part of the premium which is utilized to purchase (Investment) units for the policy. The allocation charges are as below:
For Single premium policies: 3.3%
For Regular premium policies:
| Premium | Allocation Charge |
| First Year | 7.50% |
| 2nd to 5th Year | 5.00% |
| thereafter | 3.00% |
B) Charges for Risk Covers:
i) Mortality Charge – This is the cost of life insurance cover which is age specific and will be taken every month. The life insurance cover is the difference between Sum Assured under Basic plan and the Fund Value after deduction of all other charges.
The charges per Rs. 1000/- life insurance cover for some of the ages in respect of a healthy life are as under:
| Age | 25 | 35 | 45 | 55 |
| Rs. | 1.42 | 1.73 | 3.89 | 10.76 |
- Critical Illness Benefit rider Charge – This is the cost of Critical Illness Benefit rider (if opted for). These are age specific and will be taken every month.
C) Other Charges: The following charges shall be deducted during the term of the policy:
- Policy Administration charge – Rs. 30/- per month during the first policy year and Rs 30/- per month escalating at 3% p.a. thereafter, throughout the term of the policy shall be levied.
- Fund Management Charge –It is a charge levied as a percentage of the value of units at following rates:
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
Fund Management Charge shall be appropriated while computing NAV.
- Switching Charge – This is a charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch.
- Bid/Offer Spread – Nil.
- Discontinuance Charge – The discontinuance charge for regular premium policies is as under:
| Where the policy is discontinued during the policy year | Discontinuance charges for the policies having annualized premium up to Rs. 25,000/- | Discontinuance charges for the policies having annualized premium above Rs. 25,000/- |
| 1 | Lower of 10% * (AP or FV) subject to a maximum of Rs. 2500/- | Lower of 6% * (AP or FV) subject to maximum of Rs. 6000/- |
| 2 | Lower of 7% * (AP or FV) subject to a maximum of Rs. 1750/- | Lower of 4% * (AP or FV) subject to maximum of Rs. 5000/- |
| 3 | Lower of 5% * (AP or FV) subject to a maximum of Rs. 1250/- | Lower of 3% * (AP or FV) subject to maximum of Rs. 4000/- |
| 4 | Lower of 3% * (AP or FV) subject to a maximum of Rs. 750/- | Lower of 2% * (AP or FV) subject to maximum of Rs. 2000/- |
| 5 and onwards | NIL | NIL |
AP – Annualised Premium
FV – Policyholder’s Fund Value on the date of discontinuance
There shall not be any discontinuance charge under Single Premium.
- Service Tax Charge – A service tax charge, if any, will be as per the service tax laws and rate of service tax as applicable from time to time.
- Miscellaneous Charge – This is a charge levied for an alteration within the contract, such as reduction in sum assured, change in premium mode and grant of Accident Benefit after the issue of the policy. An alteration may be allowed subject to a charge of Rs. 50/-.
Benefits
A) Death Benefit:
Higher of Sum Assured and the Policyholder’s Fund Value shall be available as death benefit.
B) Maturity Benefit:
On the Life Assured surviving to the end of the policy term chosen, an amount equal to the Policyholder’s Fund Value is payable.
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