LIC Wealth Plus was a unit linked insurance plan which offered to pay the fund value at the end of the policy term to safeguard one’s investments from market fluctuations. LIC Wealth Plus was available for a limited period only. The fund value paid at the end of the policy term is higher of the highest Net Asset Value (NAV) recorded over the first 7 years of LIC Wealth Plus or NAV at the end of the LIC Wealth Plus policy term. The entire premium is invested in money market instruments from the date of sale to the date of closure of the LIC Wealth Plus plan. Post the date of closure of the plan, the investment pattern will follow that of the Wealth Plus Fund.
Life Insurance Corporation is India’s oldest and most trusted life insurance company. In fact even today, it has a majority market share of a whopping 77% of the total life insurance business in the country, with competition from 23 other life insurers. LIC has an enviable claim settlement ratio of 98.14%, the highest amongst all life insurance companies, making it the first choice of customers. This means that of all the claims the company receives, it honours 98 cases out of 100. LIC continues to dominate new premium collections. Being a public sector undertaking having government backing, the company is unlikely to fail unlike many of its private counterparts. LIC has a massive customer base of over 250 million people.
LIC Wealth Plus – Features
LIC Wealth Plus – Benefits
LIC Wealth Plus – Product Specification
|Entry Age (Last Birthday)||10 years||65 years|
|Policy Term||8 years (Extended Life Cover – 2 years after the completion of policy term)|
|Premium Amount||3 years Premium Paying policies: Rs. 20,000 p.a. (other than monthly ECS mode)
Monthly ECS mode: Rs. 2,000 p.m. (for monthly ECS mode, premium has to be in multiples of Rs. 500)
Single premium policies: Rs. 40,000 p.a. (annualised premiums has to be paid in multiples of Rs. 1,000.)
|Sum Assured||3 years Premium Paying Term: 5 times the annualised premium
Single Premium: 1.25 times the single premium
(minimum Sum Assured will be rounded off to the next multiple of Rs. 5,000)
|3 years Premium Paying Term:
• 10 times the annualised premium if age at entry is up to 50 years
• 5 times the annualised premium if age at entry is 51 years and above
• 5 times the Single premium if age at entry is less than 40 years
• 2.5 times the Single premium if age at entry is 41 - 50 years
• 1.25 times the Single premium if age at entry is 51 years and more
|Premium Paying Term||3 years on a regular basis or single premium|
|Premium Paying Frequency||Yearly, half-yearly, quarterly or monthly (only through ECS mode)|
Grace Period: LIC Wealth Plus policy lapses if the premium is not paid within the days of grace available under the LIC Wealth Plus policy. LIC Wealth Plus – Policy Details
Value based on units in the policyholder’s fund
(+) Unallocated premium
(-) Policy Administration charge
(-) Charges @ Rs. 0.20 per every Rs. 1,000 of Sum Assured under the basic LIC Wealth Plus plan
(-) Cost of medical examination and special reports (if any) at actuals
For those of you wondering how ULIPs can help you, read to find the many benefits of these insurance plans. ULIPs are ideal wealth creation instruments. Some of their noteworthy benefits are mentioned below:
Potential for Good Returns
ULIPs offer the prospect of promising returns by investment in equity, debt and other forms of investment. Depending on one’s investment appetite and risk taking capability, one may choose a fund with higher skew towards equities which offer higher returns, albeit with greater risk. Or one may choose a fund with greater representation of debt to reduce the volatility of returns. Young people can opt for equity-focussed funds in their 20s and 30s, and gradually move towards debt funds.
ULIPs are one of the most transparent financial products available in the market. Their charge structure, expected Internal Rate of Return (IRR), value of investment, etc. are shared before hand with prospective customers. The account statement, quarterly investment portfolio and daily Net Asset Value (NAV) ensure that policyholders are adequately aware of the status of their investment portfolios. Life insurance companies publish the latest NAVs on their websites on a daily basis.
Another great advantage of a ULIP is their liquid nature. ULIPs allow partial withdrawals to take care of emergencies and sudden requirements of funds. Most ULIPs allow the policyholder to withdraw funds after 5 years to a great extent, leaving only a minimum stipulated amount in the unit linked account.
Flexibility and Control of Investments
Another hallmark of ULIPs is the flexibility to control one’s investments. Based on one’s investment objectives, goals, life stage and risk-taking ability, one can choose from available funds under a unit linked life insurance plan. Each fund has a different objective and consequently invests in different degrees in equity, debt, bonds, cash, government securities etc. A range of high, medium and low risk investment options are available under a single unit linked plan.
If at any point in time, one feels that a fund is not meeting one’s requirements, one can switch the fund to another available fund which meets requirements better. This is called fund switching. ULIPs also allow premium redirection i.e. future allocation of premiums in chosen funds. If additional funds are available to a policyholder, he or she can by way of top-up, increase the existing investment in a ULIP.
Multiple Benefits in One Product
A single product, a unit linked life insurance plan, offers several benefits. Not only does it provide a life cover, it also provides various investment opportunities in addition to tax benefits.
Inculcate the Habit to Save Regularly
ULIPs are a great way to instil discipline and the habit to save regularly. It has been found that the average unit costs are likely to be lower than the cost of one time investment.
Good for Hands-Off Investors
ULIPs are a good choice of investment for investors who do not have sufficient time to actively monitor their investments. A unit linked life insurance plan allows one to take the advantage of market linked growth without actually participating in the stock market. If at any point, one feels that one wants greater returns, one can switch to a high-growth fund having higher investment in equity.
ULIPs are also an effective tax saving instrument. One can avail several tax benefits under the Income Tax Act 1961 by investing in ULIPs. Life insurance plans are eligible for deduction under Section 80C. Section 80D allows tax relief for life insurance plans as well as critical illness riders. Maturity proceeds and withdrawals are exempt under Section 10(10D) subject to norms prescribed in the section.
Ability to Enhance the Cover by Choosing a Rider
ULIPs also allow flexibility of customising the plan by choosing an option rider. Riders grant additional, supplementary benefits and enhance the cover of the main insurance policy. Examples of common riders are critical illness benefit rider, accident and disability benefit rider, premium waiver rider.
More Useful Resources
LIC Online Services
LIC Investment Plans
LIC Other Plans