LIC has launched 4 new plans in the calendar year 2020 (till Dec 2020). In this post I have tried to list down the important features, details and my recommendations on all LIC New Plans that are launched in 2020-21.
From January 2020 to till-date (8th Dec, 2020), LIC has launched two ULIP Insurance plans and two Pension plans.
Before discussing more on the LIC New Plans list, let us understand more about the different types of Life Insurance plans.
Types of Life Insurance plans
What is an Endowment plan? – It is a combination of insurance and investment. The insured will get a lump sum along with bonuses (if any) on policy maturity (or) on death event.
What is an ‘Whole-Life Insurance Plan’? – It is a life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime. The Sum assured is paid to the Policyholder’s nominee in the event the insured dies.
What are Money-back policies? – They provides life coverage during the term of the policy and the maturity benefits are paid in installments by way of Survival Benefits (money-back payments).
What are Limited Premium Payment Insurance Plans? – A limited premium payment plan is a plan where you pay the premium for a shorter span of time and enjoy the benefits of an insurance cover for a long time.
What is a Single Premium Plan? – It is the insurance policy where you pay insurance only in the first year but continue to enjoy the life cover and other plan related benefits throughout the term of the policy.
What is Term Life Insurance Plan? – Term insurance is the simplest and most fundamental insurance product. These insurance plans are designed to ensure that in the event of the policyholder’s death, the family gets the sum assured (the cover amount). Term plan provides risk coverage for a certain period of time (policy term/duration). If the insured dies during the time period specified in the policy and the policy is active – or in force – then a death benefit will be paid. It is the cheapest form of Life insurance in terms of premium.
What is an ULIP? – Unit Linked Insurance Policies or ULIPs are insurance policies which can offer you the potential of wealth creation while providing the security of a Life Cover.
What is a Pension Plans? – A pension plan is the retirement amount, which an individual gets from their insurance companies on a regular basis ((annuity) or in the form of a lump sum.
LIC New Plans 2020 – 2021 List | Snapshot
The list of LIC new plans 2020-21 are namely;
- LIC Nivesh Plus
- LIC SIIP Plan
- LIC Jeevan Akshay VII Pension Plan
- LIC New Jeevan Shanti Pension Plan
I have listed down the important features of LIC of India’s new plans that are launched in 2020 along with my recommendations (whether to ignore a plan or to buy).
LIC Nivesh Plus – Single Premium ULIP Plan
- LIC had launched this latest Single Premium ULIP plan in March 2020.
- LIC Nivesh Plus is a Single Premium unit linked plan which offers potential to grow your money and offers life cover also. Being a unit linked plan, it offers growth potential if invested over a long period of time.
- The money which you pay is invested in the funds of your choice – you have 4 funds to choose from (with equity component ranging from 0% to 80%). Based on the amount you invest and the choice of funds, you will be allocated Units of these funds.
- The performance of the funds (market linked) you invest the money in will determine the overall returns of your investment.
- This plan offers Guaranteed Additions as a % of Annual Premium on completion of certain years.
Related article : Mutual Funds Vs ULIPs – Which is better?
LIC SIIP ULIP Plan
- LIC had launched this latest Premium ULIP plan in March 2020.
- There are no major differences between the above Nivesh Plan and this SIIP plan except that SIIP is a Regular pay plan and Nivesh Plan is a Single premium ULIP plan.
- In this plan too, the premium which you pay is invested in the funds of your choice – you have 4 funds to choose from (with equity component ranging from 0% to 80%). Based on the amount you invest and the choice of funds, you will be allocated Units of these funds.
- This plan also offers Guaranteed Additions as a % of Annual Premium on completion of certain years and return of Mortality charges on maturity date.
LIC Jeevan Akshay VII Pension Plan
- LIC has launched this latest single premium pension plan – ‘LIC Jeevan Akshay VII Plan on 25th August 2020.
- Under this immediate annuity plan, you pay a lump sum amount once and the insurance company pays you a pension (annuity) for life. The pension payment starts immediately on purchase of insurance policy. The insurer will pay you a pension for life.
- Below is an illustration of annuity payment under different plan options.
- You may expect annuity rates of around 4 to 6% under this plan.
- For a detailed review of this Pension plan, you may kindly visit this link – LIC Jeevan Akshay VII Pension Plan (857) – Details & Review
LIC New Jeevan Shanti Pension Plan
- LIC launched its latest deferred pension plan LIC New Jeevan Shanti on 21st October 2020.
- LIC has discontinued (old) Jeevan Shanti plan which had both immediate & deferred options and introduced this plan with ‘Deferment’ option only.
- Under this deferred annuity pension plan, you make payment to the insurance company (in form of a single premium or regular premium). The money gets invested as per the investment mandate of the plan. After the end of the deferment period, you (policyholder) will start receiving the Annuities (periodic pension).
- You may expect annuity rates of around 4 to 6% under this plan.
- Life insurance cover : Are you buying a life insurance plan for insurance cover? – The main point to note here is, ‘quantum of life cover’. If your requirement is to get adequate life cover, affordable Term insurance plans are the right choice. So, you can surely consider buying term insurance plans like LIC Tech Term plan. (Related article : How much Term Life Insurance Cover do I need? | Online Insurance coverage Calculator )
- Returns : Are you investing in a life insurance plan with an aim to get investment returns? – The traditional or pension life insurance plans can offer returns in the range of 4 to 6%.
- ULIPs : ULIPs plans returns are market linked and also dependent on the fund you have chosen. In my view, mutual funds offer better choice and options.
- Pension Plans : If you want a fixed pension for life-long, do not want to take any ‘interest rate’ risk and not worried about the impact of ‘inflation’ on your purchasing power, you can consider buying a pension plan. Are you investing in these kind of plans for periodic Pension (Annuities)? – Kindly keep in mind the below points ;
- The quantum of your pension is highly dependent on factors like Age, deferment period, type of plan (annuity variant) etc.,
- Kindly remember that the pension amount is dependent on the annuity rates. The current prevailing annuity rates are very low (can be in the range of 4% to 6%).
- Annuity (pension) payments are not adjusted to Inflation rate.
You got to consider Real Rate of Return and not just Annuity rate during Withdrawal stage (Retirement or Consumption phase).
- Surrendering a pension plan before maturity has serious tax implications.
- Last but not the least, Annuity Income is taxable as per your applicable tax slab rate.
- Immediate Pension : If you have lump sum corpus (can be your retirement corpus) and would like to pick an immediate annuity plan then you can consider investing a portion of your lump sum corpus in LIC Jeevan Akshay VII plan. But, kindly do not invest entire corpus in this product alone. There are better alternatives as well, like;
- Senior Citizen Savings Scheme
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Bank Fixed Deposits
- NCDs & Bonds
- Debt or Hybrid Mutual Funds (relatively riskier options) etc.,
Generally, December to March is the peak season for the life insurance companies in India. Most of the life insurance plans are offered as ‘tax-saving cum investment’ schemes. So, kindly be aware of the pros & cons of the financial products before you invest.
Continue reading :
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- Top 5 Best Online Term Life Insurance Plans 2020 | Comparison & FAQs
(Post first published on : 08-December-2020)