ENDOWMENT POLICYENDOWMENT POLICY

By: By: PRATEEK BINDALPRATEEK BINDAL

INTRODUCTIONINTRODUCTION An endowment policy is a major part of life An endowment policy is a major part of life

insurance in which a contract is prepared or insurance in which a contract is prepared or designed to pay a specified amount of money designed to pay a specified amount of money after a specified term or in case of an earlier after a specified term or in case of an earlier death of the policy holder. Typical maturities death of the policy holder. Typical maturities of endowment policy are ten, fifteen or of endowment policy are ten, fifteen or twenty years up to a specific age limit. But, twenty years up to a specific age limit. But, some endowment policies are also paid out some endowment policies are also paid out against the case of severe illness or some against the case of severe illness or some health issues. health issues.

Endowment policies can be cashed in earlier Endowment policies can be cashed in earlier stage. It is called surrender. In this case, the stage. It is called surrender. In this case, the policy holder receives the surrender amount policy holder receives the surrender amount which is determined by the insurer or the which is determined by the insurer or the insurance company depending on the period insurance company depending on the period or how long the policy has been running. It or how long the policy has been running. It also depends on the policy amount that is left.also depends on the policy amount that is left.

During adverse investment conditions, the During adverse investment conditions, the surrender value or encashment value may be surrender value or encashment value may be cut down by a 'Market Value Adjuster'. This cut down by a 'Market Value Adjuster'. This means that the policy holder or investor would means that the policy holder or investor would receive the entire surrender value with a low receive the entire surrender value with a low cost or less than the market value adjuster.cost or less than the market value adjuster.

  Types of Endowment Types of Endowment policy:policy:

Unit-linked endowment:Unit-linked endowment: It is a major  It is a major category of endowment policy. In this kind category of endowment policy. In this kind of investment, the insurance premium is of investment, the insurance premium is endowed in several units of a specified endowed in several units of a specified unitized insurance fund. Moreover, the unitized insurance fund. Moreover, the insurance holders can often select the funds insurance holders can often select the funds where they want to invest their premiums.where they want to invest their premiums.

Traded endowment:Traded endowment: These endowment  These endowment policies are also called second hand policies are also called second hand endowment policies.endowment policies.

Low cost endowment (LCE):Low cost endowment (LCE): A low cost  A low cost endowment is a blend of a particular endowment is a blend of a particular investment where an expected future growth investment where an expected future growth rate will meet up a target amount and a rate will meet up a target amount and a declining life insurance component to make declining life insurance component to make sure that the entire target amount will be sure that the entire target amount will be paid as a minimum if any accident occurs paid as a minimum if any accident occurs (any kind of physical illness or death).(any kind of physical illness or death).

Full endowment:Full endowment: A full endowment one of  A full endowment one of the major categories of the endowment the major categories of the endowment policy. It is basically a with-profits policy. It is basically a with-profits endowment in which the basic amount endowment in which the basic amount ensured is equivalent to the death benefit ensured is equivalent to the death benefit from the beginning of the policy. Later, from the beginning of the policy. Later, assuming the expansion or growth, the final assuming the expansion or growth, the final payout or return would be much higher than payout or return would be much higher than the initial sum.the initial sum.

ENDOWMENT PLANS

Jeevan Anand 149Endowment with Profit 14Limited Payment Endowment with profit 48Jeevan Mitra 88Jeevan Saathi 89Marriage Educational Annuity 90New Janaraksha 91Jeevan Mitra Triple Cover 133

Jeevan Anand   149 Features

This With-Profit plan is a combination of the Whole Life Plan and the most popular Endowment Assurance Plan. The plan provides the pre-decided Sum Assured and Bonuses at the end of the stipulated premium paying term, but the risk cover on the life continues till death.

Moderate Premiums High bonus High liquidity Savings oriented

Special Features Accident Benefit:

The double Accident Benefit is available during the premium paying term and thereafter up to age 70. The premium for this has been built into the tabular premium rates. Maximum Accident Cover available under this plan will be Rs. 5 lakh ( this limit excludes accident benefit taken under other plans)

Premium Stoppage: If payment of premiums ceases after at least 3 years'

premiums have been paid , a free paid-up policy for a reduced sum assured will be automatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs. 250/-. The reduced sum assured will become payable on the event as stipulated in the policy. 

Survival benefits:

Sum assured along with all vested bonuses payable at the end of the premium paying term (Endowment term)

Death Benefits:

Sum Assured along with vested bonuses are payable on death during the premium  paying term and policy ceases. An amount equal to the Sum Assured is payable if death occurs after the premium paying term.Simple Reversionary Bonus accrues during the premium paying term and is payable at the end of the premium paying term or on earlier death along with Final Additional Bonus, if any. No Bonus is paid on death after the premium paying term

Plan Parameters  Min Max

Entry Age 18 completed 65 nbd Sum Assured 1,00,000 No Limit

Term  5 57

Mode of Payment: Yly, Hly  Qly, Mly or SSS Max. Maturity age: 75 Years Policy Loan available: Yes

Endowment With profit - 14 Features

This policy not only makes provisions for the family of the Life Assured in event of his early death but also assures a lump sum at a desired age. The lump sum can be reinvested to provide an annuity during the remainder of his life or in any other way considered suitable at that time.

Moderate PremiumsHigh bonus

High liquiditySavings oriented

Special Features Disability Benefit: In case policy holder  becomes totally and

permanently disabled due to an accident before  reaching  the age of 70 and  the policy is in full force, he will not be required to pay further premiums, (the Disability Benefit is available in respect of the first Rs.20,000 sum assured on any one life) and the policy will continue to be in force. 

Survival benefits:Payment of full Sum Assured + Vested Bonus + Final Additional bonus, if any

Accident Benefit

The Double Accident Benefit equal to the Sum Assured and not exceeding Rs.25 lacs can be availed by paying a small extra premium of Re.1 per Rs.1000/- Sum Assured per year. Even students above the age of 18 years can avail of this benefit.

Death Benefits:

Payment of full sum assured + Vested  Bonus

Plan Parameters  Min Max

Entry Age 12 nbd 65 Sum Assured 20000 No Limit Term 5 55

Mode of Payment: Yearly, half yearly  quarterly, monthly or SSS Max.

Maturity age: 75 Years Policy Loan available: Yes

Limited Payment Endowment

with Profits 48 Features

The payment of premium can be limited either to a single payment or to a term shorter than the policy. The Sum Assured and Vested Bonus are, however, payable only at the end of the policy term, or on death of the policy holder if it takes place earlier.

Special Features

If payment of the premiums ceases after at least three years' premiums have been paid, a free paid-up Policy for an amount bearing the same proportion to the sum assured as the number of premiums actually paid bears to the number stipulated for in the policy, will be automatically secured provided the reduced sum assured, exclusive of any attached bonus, is not less than Rs.250. 

Such reduced paid-up Policy will not be entitled to participate in the profits declared thereafter, but such Bonus as has already been declared on the Policy will remain attached hereto.

Benefits

This is the most popular form of life assurance since it not only makes provision for the family of the Life Assured in the event of his early death, but also assures a lump sum at any desired age. The amount assured, if not paid by reason of his earlier death, becomes payable at the end of the endowment term when it may be invested to provide an annuity during the remainder of his life or in any other way he may think most suitable at the time.

Plan Parameters 

Min Max

Entry Age 12 nbd 60 Sum Assured 20000 No Limit Term  5 50

Mode of Payment: All modes Max Maturity Age: 70 Policy loan available: No loan under policies issued on minors until vesting.

Jeevan Mitra 88

Features

The benefits of this policy are considered normally for standard and substandard lives up to Class VI. It cannot be allowed for people engaged in hazardous occupations. Female lives under Category I  & II allowed. Non-medical special is allowed only if the Sum Assured does not exceed Rs.1,00,000/-

Special Features Besides the usual benefits offered by any

endowment insurance plan, this policy provides for an additional insurance cover equal to the sum assured in the event of a policy holder’s death during the term of the policy. In other words, the death claim in the case of this policy is twice the basic sum assured. The survival claim, on the other hand, is the basic sum assured, plus the accrued bonuses. Bonus is, similarly, calculated only on the basic sum assured at rates applicable to endowment policies.

Benefits

Survival benefits: 

Sum Assured + vested Bonus on the basic Sum Assured.

Death Benefits:

Double the Sum Assured + vested  Bonuses on the basic Sum Assured Or Double Accident benefits, if taken and paid for will treble the amount of Sum Assured

Plan Parameters

Min Max

Entry Age 18 lbd 50 Sum Assured 20000 No Limit Term  15 30

Mode of Payment All modes Max Maturity Age 70 Years Policy loan available Yes

Jeevan Saathi 89 Special Features This policy is issued on the lives of the husband and

wife including those under Category II & III. The Sum Assured will be payable on the first death and again on the death of the survivor during the term of the policy. Vested Bonuses would also be paid along with the Sum Assured on the second death.

The Premium under this Plan is payable during the joint life time of the two lives and ceases on the first death or the expiry of the selected term, whichever is earlier.

Benefits Survival benefits: If one or both the lives survive to the maturity

date, the sum assured, along with the accumulated bonus, is payable.

Death Benefits: In case either of the couple dies during the policy’s

term, two things happen. One, LIC pays to the surviving spouse the full sum assured. And, two, the policy continues on the life of the surviving partner without him/her having to pay any further premiums, i.e. the life cover on the survivor continues free of cost. The sum assured is again be payable on the death of the other partner in case both the husband and wife were to die during the term of the policy. Vested bonus would also be paid along with the sum assured on the second death.

Plan Parameters

Min Max

Entry Age 20 nbd 50 Sum Assured 20000 No Limit Term  15 30

Mode of Payment All modes Max Maturity Age 70 Years Policy loan available Yes

Marriage Endowment & Educational Annuity - 90

Features

The Marriage Endowment/ Educational annuity plan provides a sum assured to be kept aside for the expenses of marriage or higher education of the policyholder's children. Premiums payable for selected term or till death of the life Assured. Benefits will be given only after the selected term.

Special Features Under this plan the policy monies and bonus are

paid only at the end of the selected term, irrespective of whether the policy holder survives till the term or not, i.e. the survival or death benefit is payable at the same time. In case the policy holder were to die during the term of the policy, no further premiums are payable but the bonus continues to accrue for the full-term of the policy. The sum assured, plus the accumulated bonus for the full term, are then paid to the family at the end of the policy’s term. Further, one can opt to receive the money either in one lump sum, or in ten half-yearly installments. In case, the Double Accident Benefit is availed, then an additional sum equal to the basic Sum Assured becomes payable immediately on death due to accident during the policy term.

Benefits Survival benefits: (Sum Assured +  Bonus) payable in lump sum

(or) (Sum Assured + Bonus) payable in 10 half-yearly installments at the option of the life assured.

Death Benefits:  (Sum Assured +  Bonus) payable in lump sum or

in 10 half-yearly installments at the option of beneficiary at the end of the policy term. Accident: Accident benefit equivalent to basic sum assured would be available by paying appropriate additional premiums in that behalf. An amount equivalent to Sum Assured become payable immediately.

Plan Parameters 

Min Max

Entry Age 18 lbd 60 Sum Assured 20000 No limit Term 5 25

Mode of Payment All modes Max Maturity Age 70 Years Policy loan available Yes

New Janaraksha 91 Features Ideal for Farmers and Workers, since farmers have

to depend on the vagaries of the climate while workers are subject to changes in trade cycles, depressions, strikes, labor disputes, etc. Provides full life insurance cover for 3 years even when the premiums are not paid. (This benefit is available after at least 2 years premiums are paid). Non-medical General up to Rs.50,000/- with declaration of age up to 40 without any extra premium. Non-medical Special is allowed up to Rs. 1,00,000/-.Accident benefit available without payment of any extra premium.

Special Features

The non-medical limit is exclusive to this policy. Double Accident benefit and Bonus is also granted. A special feature of the New Jana Raksha Policy is that it continues to provide full life insurance cover to the assured for three years, even when the premium payments are stopped due to certain reasons, provided that at least 2 years premiums have been received.

Benefits1) Maturity Benefit: Payment of Sum Assured + Accrued bonus.2) Death Benefits: Natural: Payment of Sum assured + Accrued bonus . Accident / Permanent Disability: Payment of double the Sum Assured + Accrued

bonuses on the Sum Assured as defined on the policy document.

Plan Parameters

Min Max Entry Age 18 50 Sum Assured 20000 750000

Term 12 30

Mode of Payment All modes Max Maturity Age 70 Policy loan available Yes

Jeevan Mitra Triple Cover 133

FeaturesFeatures

The benefits of this policy can be considered only for standard and substandard lives upto Class VI. It cannot be allowed for people engaged in hazardous occupations. Individuals engaged in dangerous pursuits will be rated against the revised tabular occupational extra rates.

Special Features

This policy provides the benefits of an Endowment Assurance policy and additional insurance cover equal to three times of Sum Assured in the event of death during the term of the policy so that the total insurance cover is thrice the basic Sum Assured.

Benefits Maturity Benefit: Basic Sum assured along with vested bonuses will

be payable on the life assured surviving till the end of the term.

Death Benefit: Three times the basic sum assured together with

vested bonuses if any, will be payable on death of the life assured during the term of assurance.

Bonuses: Bonus additions will be reckoned on the basic sum

assured at rates applicable to endowment assurance and will be payable at the end of the selected term or at death if it occurs earlier.

Plan Parameters

Min Max

Entry Age 18 50 Sum Assured 20000 No limit Term 15 30

Mode of Payment All modes Max Maturity Age 70 Years Policy loan available Yes

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