Life is full of uncertainties, and having life insurance reduces stress by providing financial stability for the insured’s family. If an individual is his/her family’s primary breadwinner, he/she must purchase a life insurance policy that covers 15-20 times his/her yearly salary.
With a rising number of life insurance firms offering various plans, it is easy to become confused while selecting a life insurance plan. But when it comes to life insurance, a large portion of the Indian population chooses LIC policies. For the past two decades, the life insurance firm has consistently been the major participant in the insurance sector.
So, we’ve covered the two important life insurance plans, LIC New Endowment Plan (an endowment policy) and LIC Endowment Plus Plan (a withdrawal policy), from the company and highlighted their major differences.
What Is LIC New Endowment Plan?
The LIC New Endowment Policy is an endowment plan that provides the policyholder with the benefits of both investing and protection in a single plan. The plan provides financial security to the policyholder’s family in the event of the policyholder’s death. Aside from that, if he or she survives until the conclusion of the policy term, the plan will provide a maturity benefit.
What Is LIC Endowment Plus Plan?
LIC’s New Endowment Plus is a unit-linked, endowment, and withdrawal insurance plan. This plan combines investment and insurance throughout the policy term, giving it an excellent combination of protection and savings. The policy comes with four types of investment options (Bond Fund, Secured Fund, Balanced Fund, and Growth Fund), giving the policyholders a lot of options for where they want their money to go. After paying the premium and deducting the premium allocation expenses, the fund type can be chosen easily
Eligibility Criteria Of Both Policy
| Parameters | LIC New Endowment | LIC Endowment Plus |
| Minimum Entry Age | 8 Years | 7 Years |
| Maximum Entry Age | 55 Years | 60 Years |
| Maximum Maturity Age | 75 Years | 70 Years |
| Minimum Policy Term | 12 Years | 10 Years |
| Maximum Policy Term | 35 Years | 20 Years |
| Minimum Basic Sum Assured | Rs. 1,00,000 | Regular Premium Policies: (Policy Term +1) X Annualized Premium Single Premium:
|
| Maximum Basic Sum Assured | No Limit | Regular Premium Policies:
Single Premium Policies: If Critical Illness Benefit Rider is opted for:
If Critical Illness Benefit Rider is not opted for:
|
Common Features & Benefits Of LIC New Endowment & Endowment Plus Plan
To make it clear how LIC New Endowment and LIC Endowment Plus plans are different from and similar to each other, let’s compare their common features and benefits:
Death Benefit:
In case of death of the life assured during the policy tenure, the death benefit will be payable to the nominee. The death benefits for both plans are as follows:
- LIC New Endowment: Sum Assured on Death + Simple Reversionary Bonuses + Final Additional Bonus (if any), where, “Sum Assured on Death” is defined as higher of Basic Sum Assured or 7 times of Annualized Premium
- LIC Endowment Plus: Higher of Sum Assured and the Policyholder’s Fund Value
Maturity Benefit:
If the life assured survives the policy term while the policy is in force, he/she will get a maturity benefit. The maturity benefits under both plans are as follows:
- LIC New Endowment: Sum Assured on Maturity + Simple Reversionary Bonuses + Final Additional Bonus (if any), where “Sum Assured on Maturity” is equal to Basic Sum Assured
- LIC Endowment Plus: An amount equal to the policyholder’s fund value
Rider Benefits:
To enhance the coverage, both policies offer some additional riders, which can be purchased by the policyholders by paying an extra premium amount. The following options for riders are available under both plans:
- LIC New Endowment
- LIC’s Accidental Death and Disability Benefit Rider
- LIC’s Accident Benefit Rider
- LIC’s New Term Assurance Rider
- LIC’s New Critical Illness Benefit Rider
- LIC’s Premium Waiver Benefit Rider
- LIC Endowment Plus
- Accident Benefit Rider
- Critical Illness Benefit Rider
Payment Of Premiums:
Under the LIC’s New Endowment Plan, premiums can be paid on a yearly, half-yearly, quarterly, or monthly basis (through NACH exclusively) or by salary deductions over the policy’s term. Whereas, under the LIC’s Endowment Plus Plan, one can pay premiums at yearly, half-yearly, quarterly, or monthly (via ECS mode only) intervals during the policy’s term. A single premium can be paid instead.
Policy Loan:
Subject to various terms and conditions, a loan facility is available with both of the plans. At periodic periods, the interest rate to be charged for the policy loan and as applicable for the entire term of the loan will be determined. The corporation shall declare the applicable interest rate using the IRDAI-approved method.
Exclusions:
Under both plans, if the life insured commits suicide, whether medically sane or insane, within one year of the policy’s issuance, the insurance is null and void, and the firm is only responsible to only reimburse the premiums paid thus far.
Unique Features Of LIC New Endowment Plan & LIC Endowment Plus
It is important to note that the features listed below are only available with their respective plans.
LIC Endowment Plus Plan:
Fund Types & Investment Patterns:
| Fund Type | Investment In Government/Government Guaranteed Securities/Corporate Debt | Short-Term Investments | Investment In Listed Equity Shares |
| Bond Fund | Not Less Than 60% | Not More Than 40% | Nil |
| Secured Fund | Not Less Than 45% | Not More Than 40% | Not Less Than 15% & Not More Than 55% |
| Balanced Fund | Not Less Than 30% | Not More Than 40% | Not Less Than 30% & Not More Than 70% |
| Growth Fund | Not Less Than 20% | Not More Than 40% | Not Less Than 40% & Not More Than 80% |
Option To Take Maturity Benefit In Instalments Spread Over A Period Of Not More Than 5 Years From The Date Of Maturity
Charges Under Plan:
- Premium Allocation Charge
- Mortality Charge
- Critical Illness Benefit Rider Charge
- Accident Benefit Charge
- Policy Administration Charge
- Fund Management Charge
- Switching Charge
- Discontinuance Charge
- Service Tax Charge
For more details, refer to the policy brochure!
A guaranteed minimum interest rate of 3.5 % per annum on discontinued policy funds shall be payable.
LIC New Endowment Plan:
The plan offers the following rebates to its policyholders:
Mode Rebate:
- Yearly Mode: 2% Of Tabular Premium
- Half-Yearly Mode: 1% Of Tabular Premium
- Quarterly, Monthly Mode & Salary Deduction: NIL
High Sum Assured Rebate:
| Basic Sum Assured (B.S.A) (In Rs.) | Rebate |
| 1,00,000 To 1,95,000 | Nil |
| 2,00,000 To 4,95,000 | 2% Of BSA |
| 5,00,000 & 9,95,000 | 3% Of BSA |
Option To Take Death Benefit In Instalment Of 5/10/15 Years
Benefit Illustration Of LIC New Endowment & LIC Endowment Plus Plan
To understand the differences between the plans deeply, we can take a look at their benefit illustration. This section will highlight the benefits received by the policyholders and their family members from both plans. Let’s look at them one by one!
LIC New Endowment Plan:
Let’s take the example of Mr. Manish Gupta, a 30 years old male, who wishes to purchase an LIC New Endowment plan. The policy details are as follows:
- Policy Term: 35 Years
- Premium Payment Mode: Yearly
- Basic Sum Assured: Rs. 1,00,000
- Premium: Rs. 2,881
The plan will work for him in the following manner!
| End Of Year | Total Premiums Paid Till The End Of The Year (In Rs.) | Guaranteed Benefits | Total Maturity Benefit | Total Death Benefit | |||
| Sum Assured On Maturity | Sum Assured On Death | @4% | @8% | @4% | @8% | ||
| 5 | 14,405 | – | 1,00,000 | – | – | 1,05,750 | 1,15,000 |
| 15 | 43,215 | – | 1,00,000 | – | – | 1,17,250 | 1,45,500 |
| 25 | 72,025 | – | 1,00,000 | – | – | 1,28,750 | 1,85,000 |
| 30 | 86,430 | – | 1,00,000 | – | – | 1,34,500 | 2,14,000 |
| 35 | 1,00,835 | 1,00,000 | 1,00,000 | 1,40,250 | 2,49,000 | 1,40,250 | 2,49,000 |
LIC Endowment Plus Plan:
Suppose Mr. Arijit Aggarwal, a 20-year-old male, has purchased the LIC Endowment Plus plan. He has opted for the ‘Growth Fund’. Other details of the plan are as follows:
- Service Tax Rate: 10.30%
- Sum Assured: Rs. 4,20,000
- Policy Term: 20 Years
- Premium Paying Term: 20 Years
- Mode Of Premium Payment: Yearly
- Amount Of Instalment Premium: Rs. 20,000
- FMC (Fund Management Charge): 0.80% P.A.
The plan will work for Mr. Aggarwal in the following ways!
| Assuming Gross Interest Of 8% PA | Assuming Gross Interest Of 10% PA | ||||
| Policy Year (In Years) | Annualized Premium (In Rs.) | Fund At The End (In Rs.) | Death Benefit (In Rs.) | Fund At The End (In Rs.) | Death Benefit (In Rs.) |
| 1 | 20000 | 18487 | 420000 | 19201 | 420000 |
| 5 | 20000 | 104473 | 420000 | 117415 | 420000 |
| 10 | 20000 | 241302 | 420000 | 302006 | 420000 |
| 15 | 20000 | 417008 | 420000 | 587116 | 587116 |
| 20 | 20000 | 641774 | 641774 | 1025089 | 1025089 |
Which One Is Better: LIC New Endowment OR LIC Endowment Plus Plan?
Both LIC New Endowment and LIC Endowment Plus plans have their own unique sets of features and benefits. Therefore, finding an answer to ‘which one is better’ totally depends on what type of life insurance you require or wish to have.
For those who wish to have long and disciplined savings with life coverage, LIC New Endowment Plan is the best option among the two. The combination of saving and protection offers a financial cushion to the family of the deceased insurance holder. Furthermore, if the insurance buyer survives the whole policy term, the lump-sum payment is paid to them as a maturity benefit at the time of policy maturity.
Whereas, for those who are looking for a life insurance plan that can customize their cash flow and redeem their investment in a phased manner, a withdrawal plan like the LIC Endowment Plus plan is the best choice. In contrast to lump sum withdrawals, the plan allows you to withdraw money in installments. You can also take only the capital gains on your investment or a fixed amount. You will still have your money invested in the plan, but you will also have access to regular income and returns. You have the option of reinvesting the money you withdraw in another fund or keeping it in cash.
Whatever plan you choose, make sure that it has the potential to fulfill your financial goals!
