LIC's New Endowment Plan-914 is a non-linked participating plan that offers a combination of protection and savings to policyholders. This plan is designed to help individuals meet their long-term financial goals while providing financial security to their loved ones in case of an unfortunate event. In this article, we will explain LIC's New Endowment Plan here below.
Features of LIC's New Endowment Plan-914
- Policy Term: The policy term for LIC's New Endowment Plan ranges from 12 years to 35 years. The policyholder can choose the term as per their requirement.
- Premium Payment Term: The premium payment term is shorter than the policy term. It ranges from 6 years to the policy term. The policyholder can choose the premium payment term as per their convenience.
- Maturity Benefit: The maturity benefit is the sum assured plus the accrued bonus. The bonus is declared by LIC and is based on the company's performance. The policyholder receives the maturity benefit at the end of the policy term.
- Death Benefit: In case of the unfortunate event of the policyholder's demise, the nominee receives the sum assured plus the accrued bonus. The sum assured is the amount chosen by the policyholder at the time of buying the policy.
- Loan Facility: The policyholder can avail of a loan against the policy after the completion of the third policy year. The loan amount can be up to 90% of the surrender value.
- Surrender Value: The policyholder can surrender the policy after the completion of the third policy year. The surrender value is the amount payable to the policyholder on surrendering the policy. The surrender value depends on the premium payment term, policy term, and the number of premiums paid.
- Tax Benefits: The policyholder can avail of tax benefits under Section 80C of the Income Tax Act, 1961, for the premium paid. The maturity benefit and the death benefit are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
Advantages of LIC's New Endowment Plan-914
- Guaranteed Maturity Benefit: The policyholder is assured of receiving the sum assured plus the accrued bonus at the end of the policy term. This provides financial security to the policyholder.
- Death Benefit: In case of the unfortunate event of the policyholder's demise, the nominee receives the sum assured plus the accrued bonus. This provides financial security to the policyholder's family.
- Loan Facility: The policyholder can avail of a loan against the policy after the completion of the third policy year. This provides liquidity to the policyholder in case of any financial emergency.
- Tax Benefits: The policyholder can avail of tax benefits under Section 80C of the Income Tax Act, 1961, for the premium paid. The maturity benefit and the death benefit are also tax-free under Section 10(10D) of the Income Tax Act, 1961. This reduces the tax liability of the policyholder.
- Bonus: The policyholder is entitled to receive a bonus declared by LIC. The bonus is based on the company's performance and is added to the sum assured. This increases the policyholder's savings.
Disadvantages of LIC's New Endowment Plan-914
- Lower Returns: The returns on LIC's New Endowment Plan are lower than other investment options such as mutual funds and stocks. This is because a part of the premium is used to provide life cover, and the remaining amount is invested in a low-risk debt fund.
- Long-Term Commitment: The policy term for LIC's New Endowment Plan is 12 years to 35 years. The policyholder needs to commit to paying the premium for the entire policy term.
- No Partial Withdrawal: The policyholder cannot make any partial withdrawals during the policy term. This limits the liquidity of the policyholder.
- Limited Flexibility: The policyholder cannot alter the sum assured or the premium payment term once the policy is bought. This limits the flexibility of the policyholder.
Explain Via Simple Example
LIC's New Endowment Plan - 914 is a life insurance policy that provides both savings and protection to the policyholder. Let's understand how this plan works with the help of a simple example:
Suppose Mr. Sharma, a 35-year-old person, buys LIC's New Endowment Plan - 914 for a sum assured of Rs. 10 lakh for a policy term of 20 years. The premium payment term is also 20 years, which means Mr. Sharma has to pay a premium every year for 20 years.
Now, let's assume that Mr. Sharma pays an annual premium of Rs. 50,000 for 20 years. The total premium paid by him over the policy term of 20 years would be Rs. 10 lakhs (50,000 x 20). In case of the unfortunate event of Mr. Sharma's demise during the policy term, his nominee would receive the sum assured of Rs. 10 lakhs as death benefit.
However, if Mr. Sharma survives the policy term of 20 years, he would receive the maturity benefit, which includes the sum assured of Rs. 10 lakhs along with accrued bonuses. The accrued bonuses depend on the performance of the company and are declared by LIC from time to time.
In case Mr. Sharma wants to surrender the policy before the completion of the policy term, he would receive the surrender value, which is calculated based on the premiums paid and the policy term.
Overall, LIC's New Endowment Plan - 914 provides both financial protection to the family in case of the policyholder's untimely demise and savings for the policyholder in case of survival till the maturity of the policy.
Conclusion
LIC's New Endowment Plan is a suitable option for individuals who want a combination of protection and savings. The plan offers guaranteed maturity benefits, death benefits, tax benefits, and a loan facility. However, the returns are lower than other investment options, and the policyholder needs to commit to paying the premium for the entire policy term. Overall, individuals should carefully consider their financial goals and risk appetite before investing in LIC's New Endowment Plan.
FAQ
Q. What is LIC's New Endowment Plan?
LIC's New Endowment Plan is a traditional savings plan that offers life coverage and a guaranteed lump sum payout at maturity.
Q. What is the minimum and maximum entry age for this plan?
The minimum entry age for this plan is 8 years and the maximum entry age is 55 years.
Q. What is the policy term for LIC's New Endowment Plan?
The policy term for this plan ranges from 12 years to 35 years.
Q. What is the premium payment term for this plan?
The premium payment term for this plan ranges from 5 years to the policy term.
Q. What is the minimum and maximum sum assured under this plan?
The minimum sum assured under this plan is Rs. 1,00,000 and there is no maximum limit.
Q. What are the benefits of this plan?
The benefits of this plan include life coverage, maturity benefit, and optional riders such as accidental death and disability benefit, critical illness benefit, and term assurance rider.
Q. Is there any tax benefit available under this plan?
Yes, the premiums paid towards this plan are eligible for tax deduction under Section 80C of the Income Tax Act, and the maturity proceeds are tax-free under Section 10(10D) of the Income Tax Act.
Q. Can I surrender the policy before maturity?
Yes, you can surrender the policy before maturity, subject to the terms and conditions of the plan.
Q. What happens if I miss paying the premium?
If you miss paying the premium, a grace period of 30 days is allowed for yearly, half-yearly, and quarterly premium payment modes, and 15 days for monthly premium payment mode. If the premium is not paid within the grace period, the policy will lapse.
Q. How can I purchase LIC's New Endowment Plan?
You can purchase LIC's New Endowment Plan through LIC agents or by visiting the nearest LIC branch. You can also purchase the plan online through LIC's website.
Policy Document attached file is in PDF Document Format(788 KB)
Sales Brochure attached file is in PDF Document Format(754 KB)
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