Introduction
we bring you a detailed review of the LIC Index Plus Plan, This plan is a unit-linked life insurance plan that combines the potential for market growth with guaranteed death benefits. Let’s explore the key features, benefits, cons, and exclusions of this policy.
Key Features of LIC Index Plus Plan
- Flexible Investment Options: The plan offers flexible investment choices that can be adjusted based on your risk appetite. You can select your premium amount, policy term, and maturity age according to your financial goals.
- Guaranteed Additions: Every year, 1% of your annual premium is added to your unit fund, increasing your earnings and helping you acquire more units.
- Enhanced Protection with Riders: You can add riders to the plan for additional coverage.
- Fund Options: The plan provides two fund options:
- Flexi Growth Fund
- Flexi Smart Growth Fund
- Entry and Maturity Age:
- Minimum entry age: 90 days
- Maximum entry age: 50 years
- Policy term: 10 to 25 years
- Maturity age: 18 to 85 years
- Premium Payment Modes: Payments can be made yearly, half-yearly, quarterly, or monthly.
- Sum Assured: The basic sum assured is a minimum of seven times and a maximum of ten times the annual premium.
Benefits of LIC Index Plus Plan
- Death Benefit:
- If the policyholder dies before the risk coverage begins, the nominee receives the invested amount.
- If death occurs after the commencement of risk coverage, the nominee gets the higher of:
- Basic sum assured
- 105% of the total premium paid (after withdrawals)
- Invested amount
- Maturity Benefit:
- If the life assured survives till the maturity date, they receive the unit fund value.
- Refund of Mortality Charges:
- If the policyholder survives the maturity period and has paid all due premiums, the deducted mortality charges for life insurance coverage are refunded.
- This refund does not include taxes or charges levied under underwriting decisions.
- It is not applicable to surrendered or discontinued policies.
- Free-Look Period:
- Policyholders can review the plan within 30 days after receiving the policy document.
- If unsatisfied, they can return the policy and receive a refund, including:
- Unit value
- Unallocated premium
- Mortality and accident benefit charges
- Applicable tax charges
Charges Associated with LIC Index Plus Plan
- Premium Allocation Charge: Deducted from the premium paid by the policyholder.
- Mortality Charge: Covers the cost of life insurance coverage.
- Accident Benefit Charge: Applied if the policyholder opts for the accident benefit rider.
- Fund Management Charge: 1% of the fund value is deducted for managing investments.
- Policy Administration Charge: Charged monthly from the 6th policy year onwards.
- Switching Charge: Applied when switching between funds.
- Partial Withdrawal Charge: Applicable on partial withdrawals.
- Discontinuation Charge: Levied if the policy is discontinued before maturity.
Cons of LIC Index Plus Plan
- Market-Linked Risks: Since it is a unit-linked plan, the returns depend on market performance, making it unsuitable for risk-averse investors.
- High Charges: Several charges, such as premium allocation, mortality, fund management, and policy administration charges, can reduce the overall returns.
- Limited Fund Choices: The plan only offers two fund options, which may not provide sufficient diversification.
- Lock-in Period: The plan comes with a lock-in period of five years, limiting liquidity and early withdrawal flexibility.
- Complexity: The various charges and investment aspects make it more complex compared to traditional life insurance policies.
- Lower Returns Compared to Pure Investment Products: Due to insurance components and charges, the returns may be lower than pure mutual funds or other market-based investment options.
Exclusions of LIC Index Plus Plan
- If the policyholder commits suicide within 12 months of policy commencement or revival, the nominee will only receive the unit fund value. No further claims will be entertained, and the policy will terminate.
- Extra charges and taxes will be refunded after deducting the applicable amount.
Conclusion
LIC Index Plus Plan is an excellent option for individuals seeking life insurance coverage with market-linked returns. With flexible investment choices, guaranteed additions, and enhanced protection options, it caters to various financial needs.