Public life insurer Life Insurance Corporation of India has floated a New Pension Plus plan, which focuses on building a corpus for retirement by systematic and disciplined savings. The unit-linked, individual pension plan can be later converted into regular income by the purchase of an annuity plan on completion of the term. The plan, which was launched on September 5, can be purchased offline through agents and brokers, or one can also download the form from LIC’s official website.
Features and term
LIC has termed the policy as a non-participating, unit-linked, individual pension plan, which is meant for long-term regular savings.
Investors can either buy a single premium payment policy or a regular premium payment. Under the regular premium policy, one can pay the premium over the entire term of the policy.
Investors can opt for the desired amount of premium and the policy term depending upon the minimum and maximum limits of premium, policy term, and vesting age.
Also read: Are you in your 20s or 30s? Here's how much you should save every month to retire at 45!
An individual can invest premiums in one of the four available types of funds. The premiums paid by the policyholder will have a premium allocation charge levied on them.
The balance amount known as the allocation rate, which is part of the paid premium, will be used to purchase units of a fund chosen by the policyholder. A policyholder can opt for four free switches for change of funds in a policy year. If more, he will be charged for the service.
The accumulation period can also be extended after following certain terms and conditions.
Guaranteed additions will be paid to the policyholders as a percentage of one annual premium under the in-force policy. The guaranteed addition for regular premium will be between 5.0 and 15.5%. For the single premium, up to 5% of the paid premium will be paid on completion of a certain policy year. For both plans, the number of guaranteed additions shall be utilised to purchase units as per the opted fund type.
The net asset value will be computed on a daily basis and will depend on the overall performance, and the fund management charge of each fund type chosen by the policyholder.
The life assured shall utilise the proceeds of the policy on vesting, i.e. at the end of the policy term, or on surrender/discontinuance as per the annuitisation provision. Partial withdrawal of units is allowed for five years.
The Life Insurance Corporation of India was formed in 1956 under the Life Insurance of India Act. In May, it launched its much-discussed IPO and witnessed a good response from market participants. On September 7, LIC’s shares were trading at Rs 650.30 apiece on the BSE at 2.05 PM.
Also read: LIC Q1 Results: Net profit climbs 232 times to Rs 683 crore, net premium income jumps over 20%
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