Review: LIC Market Plus
Overview -
Market Plus is a unit linked deferred pension plan from Life Insurance Corporation available with or without risk cover. You can choose from single premium or regular premium. Being a unit linked plan your premium will be applied to purchase units as per the fund type you choose from bond fund, secured fund, balanced fund, and growth fund.
You may choose to invest in any of these funds depending on your risk profile. The bond fund invests 100% in the debt market, while secured fund invests upto 85% in the debt market and a maximum of 35% in equities. The balanced fund invests upto 50% in debt and upto 50% in equities. Similarly the growth fund invests upto 40% in debt and upto 80% in equities.
If you are risk averse you could consider bond fund, but if you can take some amount of risk, balanced fund is the right one for you. On the contrary if you’re young and can afford to take high risks and are also keen about higher returns you could park you money in growth fund.
The allocated premiums will be applied to purchase units as per the Fund type chosen. Your Unit Account will be subject to deduction of charges as specified in the Policy Conditions. The value of the units in the Unit Fund may increase or decrease, depending on the investment return of the assets representing the chosen Fund.
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Payment of Premiums: You may pay premiums regularly at yearly, half-yearly or quarterly intervals over the term of the policy. The minimum annual premium will be Rs.5,000/- increasing thereafter in multiples of Rs.1,000/-. Alternatively, a Single premium can be paid subject to a minimum of Rs.10,000 and thereafter in multiples of Rs.1,000.
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Benefits:
A) Death Benefit:If the Life cover is opted for, the Sum Assured under the Basic Plan together with the Fund Value of units either as a lump sum or as pension. In case the policy is taken without life cover, then the Fund Value of the units held in the Policyholder’s Unit Account shall be payable either as a lump sum or as a pension.
The amount of pension will depend on the then prevailing immediate annuity rates under the annuity option chosen.B) Benefit on Vesting:
On your surviving to the date of vesting, the Fund Value of the units held in your Unit Account will compulsorily be utilised to provide a pension based on the then prevailing immediate annuity rates under the relevant annuity option. However, you may opt to commute up to one-third of the Benefit to be paid as a lump sum. Further, you may choose to purchase pension from LIC or other life insurance company.
- Accident Benefit Option: If you have opted for life cover, you may opt for Accident Benefit equal to life cover subject to minimum Rs. 25,000 and maximum Rs. 50 lakh (taken all policies with LIC of India and other insurers). In case of death by Accident, an additional sum equal to Accident benefit will be payable.
- Eligibility Conditions And Other Restrictions:
Minimum Age of entry – 18 years. Max age of entry – 70 years
5. Investment of Funds:The premiums allocated to purchase units will be strictly invested according to the investment pattern committed in various fund types. Various types of fund and their investment pattern will be as under:
- Bond Fund
- Secured Fund
- Balanced Fund
- Growth Fund
(A) Premium Allocation Charge: This is the percentage of the premium appropriated towards charges from the premium received. The balance known as allocation rate constitutes that part of the premium which is utilized to purchase (Investment) units for the policy. The allocation charges are as below:
For Single premium policies: 3.3%
Allocation charge for Top-up: 1.25%
(B) Charges for Risk Covers:
Mortality Charge: This is the cost of insurance cover. These are age specific and will be taken every month.
Accident Benefit charge: This is the cost of Accident Benefit rider and will be levied every month at the rate of Rs. 0.50 per thousand Accident Benefit Sum Assured per policy year.
(C) Other Charges:
Policy Administration charge: Rs. 60/- per month during the first policy year and Rs. 20/- per month thereafter, throughout the term of the policy.
Fund Management Charge: This is the charge levied as a percentage of the value of units and shall be appropriated by adjusting NAV at following rates: 0.75% p.a. of Unit Fund for �Bond� Fund 1.00% p.a. of Unit Fund for �Secured� Fund 1.25% p.a. of Unit Fund for �Balanced� Fund 1.50% p.a. of Unit Fund for �Growth� Fund
Switching Charge: This is the charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch.
Bid/Offer Spread: Nil.
Surrender Charge: Nil
Service Tax Charge: A service tax charge shall be levied on the Mortality and Accident Benefit rider charge, if any, on a monthly basis. The level of this charge will be as per the rate of service tax as applicable from time to time. Presently, the rate of Service Tax is 12% with an educational cess at the rate of 2% thereon and hence effective rate is 12.24%.
Miscellaneous Charge: This is a charge levied for an alteration within the contract, such as reduction in policy term, change in premium mode, etc. An alteration may be allowed subject to a charge of Rs. 50/-.
(D) Right to revise charges: The Corporation reserves the right to revise all or any of the above charges except the premium allocation charge and charges for risk covers, with the prior approval of IRDA .
Although the charges are reviewable, they will be subject to a cap for which please refer to the policy document.
No partial withdrawal of units will be allowed under this plan.
i)Top-up (Additional Premium): The policyholder can pay additional premium in multiples of Rs.1,000 without any limit at anytime during the term of the policy. In case of yearly, half-yearly or quarterly mode of premium payment such Top-up can be paid only if all premiums have been paid under the policy.
ii)Switching: You can switch between any fund types during the policy term subject to switching charges, if any.
iii)Discontinuance of premiums and revival: If premiums are payable either yearly, half-yearly or quarterly and the same have not been duly paid within the days of grace under the Policy, the Policy will lapse. A lapsed policy can be revived during the period of two years from the due date of first unpaid premium.
If you have opted for life cover, under Regular premium policies where at least 3 years’ premiums have been paid, and the subsequent premiums are not paid, the life cover and accident benefit cover, if any, will be compulsorily available under the policy and the charges for the same if any, shall be taken, in addition to other charges, by cancelling an appropriate number of units out of the Policyholder’s Unit Account every month subject to the following :
two years from the due date of first unpaid premium, or
two years from the due date of first unpaid premium, or
till such period that the Policyholder’s Unit Account reduces to one annualized premium, whichever is earlier.
iv)Increase / decrease of benefits: No increase (except to the extent of Top-up stated above) or decrease of benefits will be allowed under the plan.
iiv)Conversion to annuity at Vesting date:The rate at which the amount at vesting date will be converted to an annuity is not guaranteed and will be based on the prevailing immediate annuity rates under the relevant annuity option at the vesting date.
i) Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors.
ii) The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.
iii) Life Insurance Corporation of India is only the name of the Insurance Company and LIC�s Market Plus is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.
iv) Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer.
v) The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.
vi) All benefits under the policy are also subject to the Tax Laws and other financial enactments as they exist from time to time.
Summary -
Market plus is a unit linked deferred pension plan from life insurance corporation available with or without risk cover. You can choose from single premium or regular premium. Being a unit linked plan your premium
will be applied to purchase units as per the fund type you choose from bond fund, secured fund, balanced fund, and growth fund.
You may choose to invest in any of these funds depending on your risk profile. the bond fund invests 100% in the debt market, while secured fund invests upto 85% in the debt market and a maximum of 35% in equities.
The balanced fund invests upto 50% in debt and upto 50% in equities. Similarly the growth fund invests upto 40% in debt and upto 80% in equities. You can also enjoy tax benefits under section 80C of the income tax act.
The first year allocation charges are 16.50% and 2.50% from the second year onwards. apart from this there are other charges like policy maintenance charges and fund management charges which are also levied.
Benefit on vesting - on your surviving to the date of vesting, the fund value of the units held in your unit account will compulsorily be utilized to provide a pension based on the then prevailing immediate annuity rates under the relevant annuity option. you may opt to commute up to one-third of the benefit to be paid as a lump sum. In other words you can withdraw upto one third of the total corpus tax-free. And with the balance amount you can choose to buy an annuity from LIC or any other insurer. But note that annuities are taxable.
Please note that withdrawal after 3 years will attract taxes as it would be a premature withdrawal as the minimum tenure for a ULIP as specified by the IRDA is 5 years. Also the return shown by LIC market plus in the growth option over last one year period has been just 17% compounding your money at the same rate will yield you Rs. 16,000 and post deduction of charges it would be Rs.14,000
For over the years equities are known to outperform other investment avenues. But equity investment needs to be long term for you take advantage of the full benefit. Please invest in market plus if you are willing to hold it till the vesting period - this is not the instrument for short term investment.
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