LIC has launched 7 new plans in the last one year or so. In this post I have tried to list down the important features, details and my recommendations on all the latest LIC Plans that have been launched during 2022-23.
From January 2022 to till-date (22nd Aug, 2023), LIC has launched four Endowment Life Insurance plans, one ULIP Insurance plan, one Pension plan and one return of premium Term life insurance plan.
Before discussing more on the LIC New Plans list (2023), 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 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 Plan? – 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.
You may go through my previous Annual Reviews :
LIC New Plans list 2022 – 2023 | Snapshot & Review
Below is the list of LIC new plans 2022-2023. Are these the best LIC Plans of 2023-24, let’s understand;
- LIC Bima Ratna (Endowment Plan)
- LIC Dhan Sanchay (Endowment Plan)
- LIC New Pension Plus (ULIP with Annuity option)
- LIC Jeevan Azad (Endowment Plan)
- LIC Saral Pension (Pension & immediate annuity plan)
- LIC Dhan Vriddhi Plan (Endowment Plan)
- LIC Jeevan Kiran Term insurance plan
I have listed down the important features of LIC of India’s new plans that are launched during 2022-23 along with my recommendations (whether to ignore a plan or to buy). Let’s first look at the four new endowment plans!
LIC Bima Ratna Plan
- Bima Ratna is a non-linked, participating, endowment insurance plan.
- LIC has launched this plan on 27-May-2022.
- Maturity Benefit : On Life Assured surviving the stipulated Date of Maturity provided the policy is in-force, “Sum Assured on Maturity” along with accrued Guaranteed Additions, shall be payable. Where “Sum Assured on Maturity” is equal to 50% of Basic Sum Assured.
- Death Benefit payable on death of Life Assured during the policy term after the date of commencement of risk shall be “Sum Assured on Death” along with Accrued Guaranteed Additions.
- The expected returns on this plan can be around 4 to 5%. But do remember that the returns are highly dependent on the Guaranteed additions.
LIC Dhan Sanchay Plan
- Dhan Sanchay was launched by the LIC on 14-June-2022.
- It is a non-linked, participating, endowment insurance plan.
- Maturity Benefit under this plan : On Life Assured surviving the stipulated Date of Maturity, maturity benefit shall be payable in the form of Guaranteed Income Benefit and Guaranteed Terminal Benefit.
- This plan provides financial support to the family in case of unfortunate death of the life assured during the policy term. It also provides guaranteed income stream during the Payout Period from the date of maturity.
- The expected returns on this plan can be around 3% to 5%.
LIC Jeevan Azad Plan
- Jeevan Azad is a limited premium endowment plan.
- The premium payment term is less than the policy term.
- The maximum sum assured that one can take under this plan is Rs 5,00,000 only.
- The expected returns on this endowment plan can be around 3 to 4%.
LIC Dhan Vriddhi Plan
- Dhan Vriddhi is a single premium and guaranteed endowment policy.
- Maturity Benefit : On Life Assured surviving the stipulated Date of Maturity, “Basic Sum Assured” along with accrued Guaranteed Additions shall be payable.
- Death benefit payable, on death of the life assured during the policy term after the date of commencement of risk but before the date of maturity, shall be “Sum Assured on Death” along with accrued Guaranteed Additions.
- The expected returns on LIC Dhan Vriddhi plan can be around 5 to 6%.
Related article : LIC Dhan Vriddhi Plan – Should you Invest?
Let’s now look at the other three new LIC plans!
LIC New Pension Plus
- New Pension Plus is a Unit Linked Plan with an option to commute the accumulated fund value.
- LIC’s New Pension Plus” is similar to a pension plan which accumulates the corpus through the market-linked fund and then the vesting corpus (during distribution phase) can be commuted partially or can be invested in any annuity product of any Insurer.
- The policy is available with regular pay or single premium option.
- This plan provides guaranteed additions to the market-linked fund.
- This plan is similar to the NPS (National Pension System).
- The expected returns are dependent on the type of the investment fund that a policyholder chooses.
LIC Saral Pension Plan
- LIC has launched this revised single premium pension plan on 01-Mar-2023.
- 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 and also return of purchase price to the nominee.
- This plan also comes with Joint Life (spouse) last Survivor Annuity option and with Return of 100% of Purchase Price on death of the last survivor.
- Only Senior Citizens (above 60 years of age) can buy this pension plan.
- The expected returns are dependent on the quantum of annuity amount, can be around 5 to 6%.
LIC Jeevan Kiran Term Life Insurance Plan
- LIC New Term Plan Jeevan Kiran, is a traditional term life insurance plan with an added feature of ‘return of premium‘ on maturity of policy.
- Return of Premium Plans are primarily for those individuals who believe that buying a ‘term life insurance plan’ is just a ‘waste of money’, as they don’t get anything in return on their investments (premium installments).
- As this plan offers you ‘the return of premium’, the quoted premiums are higher than the plain vanilla term life insurance plans (without return of premium option).
- The minimum Basic Sum Assured that one can take under this term plan is Rs. 15,00,000/-
Related Article : LIC New Term Plan Jeevan Kiran Review | A ‘Return of Premium’ Policy
My standard suggestions
- 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 Saral Pension plan. But, kindly do not invest entire corpus in this product alone. There are better alternatives as well, like;
- Senior Citizen Savings Scheme
- RBI Floating Rate Bonds
- Bank Fixed Deposits
- NCDs & Bonds
- Debt or Hybrid Mutual Funds (relatively riskier options) etc.,
Generally, September to March is the peak season for the life insurance companies in India. During this time of the year, most of the life insurance plans are projected as ‘tax-saving cum investment’ schemes. So, kindly be aware of the pros & cons of the financial products before you invest.
(Post first published on : 22-Aug-2023)