What is LIC New Pension Plus Plan?
LIC’s New Pension Plan is a unit-linked, non-participating, individual investment plan offering guaranteed additions. The plan allows the policyholder to invest in a single premium or regular sums throughout the term. The New Pension Plus Plan from LIC of India is available for online and offline purchases. The plan provides multiple benefits and additions to maximize the overall benefits for a policyholder.
Highlights of LIC New Pension Plus Plan 867
Below mentioned are the highlights of New Pension Plus Plan launched by Life Insurance Corporation of India.
Plan Type: Unit-Linked Pension Plan
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Premium Payments
Flexible
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Payout Benefit
Market-Linked Payouts
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Policy Term
10 Years - 42 Years
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Basic Sum Assured
Not Applicable
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Fund Option
Bond, Secured, Balanced, Growth
Eligibility Criteria of LIC New Pension Plus Plan
To buy New Pension Plus Plan from LIC of India, you need to meet the following criteria and restrictions.
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Entry Age
25 years - 75 years
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Vesting Age
35 years - 85 years
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Minimum Premium Payment
Single: Rs. 1,00,000
Monthly: Rs. 3,000
Quarterly: Rs. 9,000
Half-yearly: Rs. 16,000
Annually: Rs. 30,000 -
Maximum Premium Payment
No Limit
Investment of Funds Under LIC New Pension Plus Plan
A policyholder can choose any of the following 4 funds to invest premiums or for switching. According to the fund selected, the premium will be used to buy the units. The fund option available and the investment pattern are followed as:
| Fund Type | Investment in Government/ Government Guaranteed Securities/ Corporate Debts | Short-term investments such as money market instruments | Investment in Listed Equity Shares | Objective | Risk Profile |
|---|---|---|---|---|---|
| Pension Bond Fund | 60% to 100% | 0% to 40% | NIL | To provide a relatively safe and less volatile investment option (investment in fixed income securities) | Low Risk |
| Pension Secured Fund | 50% to 90% | 0% to 40% | 10% to 50% | To provide steady income (investment in both equities and fixed-income securities) | Lower to Medium Risk |
| Pension Balanced Fund | 30% to 70% | 0% to 40% | 30% to 70% | To provide balanced income and growth (similar proportion investment in equities and fixed-income securities) | Medium Risk |
| Pension Growth Fund | 0% to 60% | 0% to 40% | 40% to 100% | To provide long-term capital growth (investment primarily in equities) | High Risk |
* All the data has been provided from the official LIC of India sources.
Benefits of LIC New Pension Plus 867
Say you buy LIC New Pension Plus Plan and duly pay all the premiums on time; you are eligible to receive the following benefits.
a. Benefits Payable on Death
The following amount shall be paid if the life assured dies before the vesting date.
- Unit Fund Value on the date of intimation of death, or
- Assured death benefit of 105% of total premiums received (any partial withdrawal made before two years period immediately before the death shall be reduced).
Whichever the above is higher is payable.
b. Benefits Payable on Vesting
If the life assured survives the vesting date, an amount equal to the Unit Fund Value shall vest on the vesting date.
Optional Benefits Under LIC New Pension Plus Plan
Besides the inbuilt benefits, some optional benefits are offered under LIC New Pension Plus Plan.
a. Partial Withdrawal
- The policyholder is allowed to partially withdraw the units anytime after the lock-in period of 5 years (from the date of commencement of the policy) in the following conditions
- Higher education for children
- Marriage of children
- Purchase/ construction of the residential house
- Critical illness treatment for self or spouse
- Other reasons per the regulations by IRDAI
- You are only allowed up to 3 times during the policy term.
- Each partial withdrawal shall not exceed the following percentage of Unit Fund Value
For Regular Premium Policies
| Annual Premium | % of Unit Fund Value |
|---|---|
| Less than Rs. 50,000 | 10% |
| Rs. 50,000 to Rs. 1,00,000 | 15% |
| Rs. 1,00,000 and above | 25% |
For Single Premium Policies
| Single Premium | % of Unit Fund Value |
|---|---|
| Less than Rs. 2,00,000 | 10% |
| Rs. 2,00,000 to Rs. 5,00,000 | 15% |
| Rs. 5,00,000 and above | 25% |
* All the data has been provided from the official LIC sources.
If the policyholder dies within two years of the partial withdrawal, the nominee will receive an assured death benefit of 105% of the total premium after reducing the partial withdrawals made.
(b) Options to Extend the Date of Vesting
The policyholder can extend the deferment or accumulation period within the following conditions
i. The age shall be less than 60.
ii. The request should be submitted before the original vesting date.
iii. Extension of the deferment period should be, at most, the maximum vesting age.
iv. The sum of original and extended policy terms should not exceed the maximum policy term of 42 years.
(c) Switching
LIC’s New Pension Plus Plan allows you to switch between any of the four funds during the policy term. When you switch, the entire amount will switch to the new fund opted for. Only 4 switches are allowed free of cost within a year. A charge of Rs. 100 will be applicable after the following switches.
(d) Settlement Option
The settlement option allows the nominee to receive the death benefit in instalments. This option can be used by the nominee or the beneficiary before the vesting date.
Additional Features of LIC New Pension Plus 867
The following additional features make LIC New Pension Plus 2022 a suitable investment option, offering expanded flexibility and gaining a suitable corpus for retirement.
Payment of Premiums
A policyholder can choose from the premium payment frequency in a single or regular premium. The regular premium payment includes the Yearly, Half-yearly, Quarterly, or Monthly modes.
Grace Period
If you missed paying the premium within the premium paying date, a grace period is allowed to make the payment. A 30-day grace period will be allowed for yearly/ quarterly/ half-yearly premiums and 15 days for monthly (NACH) premiums. The policy lapses if you miss paying the premium within the grace period.
Guaranteed Additions
LIC of India’s New Pension Plus adds some guaranteed additions to the fund value at the end of the following years mentioned until maturity.
| End of the Policy Year | Guaranteed Additions Per Annum (as a % of one annual premium) | Guaranteed Additions Per Annum (as a % of a single premium) |
|---|---|---|
| 6 | 5% | 4% |
| 10 | 10% | 5% |
| 11 to 15 | 4% | 1.25% |
| 16 to 20 | 5.50% | 1.50% |
| 21 to 25 | 7% | 2% |
| 26 to 30 | 8.75% | 2.50% |
| 31 to 35 | 10.75% | 3% |
| 36 to 40 | 13.00% | 3.75% |
| 41 to 42 | 15.50% | 4.50% |
* All the data has been provided from the official LIC sources.
Surrender Value
A policyholder is allowed to surrender the policy anytime during the policy term in the following considerations
a. In case you surrender the policy during the 5 years lock-in period
The discontinuance charges will be deducted from the Unit Fund Value. The funds will be transferred to the Discontinued Policy Fund till the end of the lock-in period. The Fund Management Charge shall be levied from the fund. After the lock-in period ends, the Discontinued Policy Fund proceeds will be practised for annuitization provision.
Suppose the policyholder dies after the surrender but before the end of the lock-in period. In that case, the proceeds of the Discontinued Policy Fund will be payable immediately to the nominee/ beneficiary as per the provision mentioned.
b. In case you surrender the policy after the 5 years lock-in period
No discontinuance charge will be applicable, and the Unit Fund Value on the date of surrender will be utilized as per the annuitization provision mentioned.
Discontinuance Under the Regular Premium Policy
If the regular premium is not duly paid within the grace period, the policy will become discontinuous.
Compulsory Termination
If the policy is duly paid for at least 5 years and the Unit Fund balance is less than
One Annuliaed Premium (for regular premium policy)
Or 30% of Single Premium (for a single premium policy)
In such case, the policy shall be compulsorily terminated, and the balance amount shall be returned to the policyholder. The proceeds will be utilized to purchase the annuity under the options.
Revival of the Policy
The following terms are applicable for the revival of LIC New Pension Plus Plan.
| Conditions | Revival Period | Revival Process |
|---|---|---|
| Revival of Discontinued Policy During the Lock-in Period | Within 3 years from the first unpaid premium | • On payment of all due and unpaid premiums without interest. • Any charges will be deducted from the Unit Fund. • Discontinued charges, if applied, shall be added back to the Unit Fund. |
| Revival of Discontinued Policy After the Lock-in Period | Within 3 years from the first unpaid premium or up to the vesting date, whichever is earlier | • On payment of all due and unpaid premiums without interest. • Any charges will be deducted from the Unit Fund. |
If the Unit Fund Value is insufficient to cover any charges during the revival period, the policy terminates, and the revival is not allowed.
Free Look Period
If the policyholder is not satisfied with the policy’s terms and conditions, they can return the policy within 30 days from the date of receipt of the policy document. The policyholder needs to state the reasons for objections to receiving the policy. The corporation shall cancel the policy and return the value of units in the Unit Fund after deducting any charges.
Tax Benefits
Tax benefits apply to the premium paid and the benefits received under Section 80C and 10 (10D) of the Income Tax Act 1961.
Charges Under LIC New Pension Plus Plan
LIC New Pension Plus Plan exercises some charges to use some of the features available for most of the benefits of both the company and the life assured.
a. Premium Allocation Charge
These charges are levied on the premium paid and are used to purchase units of the policy fund selected. The premium allocation charges are levied by Life Insurance Corporation of India as follows
| Year | Offline | Online | |
|---|---|---|---|
| Annual Premium Less than Rs. 50,000 | Annual Premium Greater or Equal to Rs. 50,000 | ||
| As a % of Instalment Premium | As a % of Instalment Premium | As a % of Instalment Premium | |
| 1st | 7.00% | 7.00% | 2.50% |
| 2nd to 5th | 4.50% | 4.00% | 1.50% |
| 6th and onwards | 3.50% | 3.00% | 1.00% |
For Single Premium Payment Policies
| Year | Offline | Online |
|---|---|---|
| As a % of Single Premium | As a % of Single Premium | |
| 1st | 3.30% | 1.50% |
| 2nd and onwards | NIL | NIL |
* All the data has been provided from the official LIC sources.
b. Policy Administration Charge
An amount is charged at the beginning of every month from the unit funds in the first 5 years of the purchase of the plan.
c. Fund Management Charge
These charges are levied as a percentage of the value of assets and shall be managed by adjusting the NAV.
d. Switching Charge
The switching charges are applicable while switching between the available fund options. The charges are levied, cancelling some units from the Unit Fund Value. Only the first 4 switches made are free of cost, and subsequent switches are charged Rs. 100 for each.
e. Discontinuance Charge
These charges are levied by cancelling an adequate number of units from the Unit Fund Value.
f. Partial Withdrawal Charge
On every partial withdrawal, an amount of Rs. 100 is charged, which will be deducted by cancelling specific units from the Unit Fund Value.
g. Right to Revise Charges
The corporation can revise or modify the charges as per the prior approval of IRDAI, which will be notified through the official website. The life assured will be given 3 months of notice before making any changes into effect.
In case you disagree with the changes made, you are allowed to withdraw the Unit Fund Value (only after the expiry of the 5 years lock-in period).
Exclusions Under New Pension Plus Plan of LIC
By now, you are well aware of all the features and flexibilities of the New Pension Plus Plan by Life Insurance Corporation of India, but you need to be aware of exclusions under this plan.
Suppose the policyholder (sane or insane) commits suicide within 12 months of the commencement of the policy or from the date of policy revival of the policy. The nominee will receive the Unit Fund Value on the day of intimation of death immediately. Any guaranteed additions made after the date of the death shall be recovered from the Unit Fund. The LIC of India will entertain no further claims under this plan.
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Final Words
The LIC New Pension Plus Plan returns are safe and provide significant profits to the policyholder for their retirement years. The optional benefits and additional features of the plan make it worth investing in. With the fund received, you can envision your post-retirement life being financially stable and stress-free. If you plan to invest in LIC New Pension Plus Plan, this is the right time to start with the purchase process.
For any difficulties in the process, connect with the experts at RenewBuy, who will help you calculate the interest rate, maturity benefits, and other features. Want to make LIC New Pension Plan purchase? Visit nearest LIC of India Branch or get assistance from RenewBuy POSP advisors.