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Life Insurance Corporation of India (LIC) will launch a new unit-linked insurance plan (Ulip) tomorrow, 19 months after its earlier product was withdrawn from the market.
Called the ‘New Endownment Plus (Ulip) Plan’, this product will be an insurance-cum-investment plan.
Officials said that the premium allocation charges would range from 7.5% of premium paid in the first year to 3% from the sixth year onwards.
It is anticipated that the new plan would have four funds namely Bond Fund, Secured Fund, Balanced Fund and Growth Fund. The premiums paid by the policyholder would be subject to premium allocation charge and would be used to purchase units in the desired fund.
The product is likely to be available only offline.
The minimum age at entry for this product would be 90 days whereas the maximum age at entry would be 50 years. The policy term would be 10-20 years and the minimum annual premium would be Rs 20,000 with no limit on the maximum premium payable annually.
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The basic sum assured would be higher of 10 times the annualised premium and 105% of the total premiums paid. At the time of maturity, the policyholder would get an amount equal to their fund value.
After the risk has commenced, an amount equal to the higher of basic sum assured or policyholder’s fund value would be payable. This product also has an optional rider, which is LIC’s Linked Accidental Death Benefit Rider.
A fee would be charged for fund switching from the fifth switch onwards. The first four switches would be free of cost in a year. As in other Ulip plans, the minimum lock-in would be five years. If the policy is surrendered before that, an additional charge would be levied for that.
LIC had earlier launched a Ulip plan in January 2013 after a gap of two years.
After the new norms for traditional products kicked in from January 1, 2014, life insurance companies had to stop selling existing products and introduce new ones.
After the new norms for traditional products kicked in from January 1, 2014, life insurance companies had to stop selling existing products and introduce new ones.
LIC, too, had to withdraw its products from the market and introduce new variants compliant with guidelines, which included money-back plans. However, there was no Ulip launch in 2014.
Ulips make up less than 10% of the total product mix of LIC. The rest are traditional life insurance products.
In a recent interview to Business Standard, LIC Chairman S K Roy had said they have all the necessary approvals for Ulips and would be launching them during the second quarter (July-September). He had also said that historically, their Ulip products have done well and they are optimistic about the new product.
In September 2010 new regulations had made minimum lock-in term for Ulips as five years compared to three years earlier. Product structures including NAV disclsoures were also made very transparent in order to curb misselling of these products.
