LIC introduces unit-linked plan, Index Plus. What is it? Here are the key features

Life Insurance Corporation of India, or LIC, launched a new plan, Index Plus. This plan is a Unit-linked individual life insurance scheme with regular premiums, providing a combination of life insurance coverage and savings throughout the policy's duration. The plan is effective from February 5.

In this policy, guaranteed additions, calculated as a percentage of the annualised premium, will be incorporated into the unit fund at specified intervals during the policy's active years. These additions will be utilized to acquire additional units, enhancing the overall benefits of the plan.

According to the LIC press release, "Guaranteed additions as a percentage of annualized premium shall be added to the unit fund on completion of a specific duration of policy years under an in-force policy and shall be utilised to purchase units."

The eligibility criteria for entry into the insurance plan specify a minimum age of 90 days (completed) and a maximum age at entry of 50 or 60 years (nearer birthday), contingent on the basic Sum Assured.

The Basic Sum Assured is set between 7 and 10 times the Annualized premium for individuals entering the plan between 90 days (completed) and 50 years (nearer birthday). For those entering between 51 and 60 years (nearer birthday), the Basic Sum Assured is fixed at 7 times the Annualized premium.

The plan also outlines a minimum age at maturity of 18 years (completed) and a maximum age at maturity of 75 or 85 years (nearer birthday), depending on the chosen Basic Sum Assured. These age-related parameters are designed to provide flexibility and align with the diverse needs of policyholders.

The insurance plan stipulates a minimum policy term of 10 or 15 years, contingent on the annualized premium, with a maximum term capped at 25 years. The premium paying term aligns with the policy term.

The minimum premium varies based on the chosen payment frequency, with amounts set at Rs 30,000 (Yearly), Rs 15,000 (Half-Yearly), Rs 7,500 (Quarterly), and Rs 2,500 (Monthly through NACH). There is no maximum limit on the premium, subject to underwriting decisions. These specifications offer policyholders flexibility in choosing the duration and payment frequency that best suit their financial preferences and requirements.

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There is an option to choose any one of the two funds to invest premiums initially and at the time of switching, i.e. Flexi Growth Fund and Flexi Smart Growth Fund, wherein investment will be primarily in selected stocks which are a part of NSE NIFTY 100 index or NSE NIFTY50 index respectively.

This non-participating plan provides several features to cater to the diverse needs of policyholders. Partial withdrawals are permitted, subject to specified conditions.

Upon the life assured surviving the date of maturity, an amount equivalent to the unit fund value as of the date of maturity is payable. The payout on the death of the life assured varies depending on whether the death occurs before or after the date of the commencement of risk.

A refund of mortality charges is contingent upon the terms and conditions outlined in the policy. Policyholders have the option to include LIC's Linked Accidental Death Benefit rider for added protection. Furthermore, after a 5-year lock-in period is completed, there is the flexibility to withdraw units, subject to specific conditions partially. These features contribute to the comprehensive and customisable nature of the plan.