LIC New Endowment Plan 714: Secure Your Future Along With Savings
LIC New Endowment Plan 714 is a type of life insurance policy that provides you multiple benefits. This policy not only provides you with the benefit of insurance but also offers you a savings plan. This policy ensures a death benefit that the beneficiaries are assured that must equal the coverage.
Who Would Benefit from LIC New Endowment Plan 714?
This plan is ideal for individuals who:
- Those desiring a tension-free, secure future for their dear ones.
- Those looking at their long-term savings.
- Those wanting to earn tax benefits.
Key Features of LIC New Endowment Plan 714
| Feature | Details |
|---|---|
| Plan Type | Endowment plan |
| Entry Age | Minimum: 8 years, Maximum: 55 years |
| Policy Term | 12 to 35 years |
| Sum Assured | Minimum: ₹1,00,000, No Maximum Limit |
| Death Benefit | Sum Assured + Bonuses + Final Additional Bonus (FAB) |
| Maturity Benefit | Sum Assured + Bonuses + Final Additional Bonus (FAB) |
| Premium Payment Modes | Yearly, Half-yearly, Quarterly, Monthly |
| Loan Facility | Available after paying premiums for 3 years |
| Surrender Value | Available after 3 years of premium payment |
| Grace Period | 30 days for Yearly,Half-Yearly,Quarterly payments |
| Free Look Period | 15 days from receipt of the policy |
| Tax Benefits | Premiums qualify for tax deductions under Section 80C |
Detailed Analysis of LIC New Endowment Plan 714
LIC New Endowment Plan 714 offers a combination of long-term savings and life protection. Let’s break down how this policy works:
How the Plan Works:
- Savings Component: The policyholder pays regular premiums, which help accumulate savings. If the policyholder survives the policy term, they receive the sum assured along with accumulated bonuses as a lump sum.
- Insurance Component: If the policyholder passes away during the policy term, the death benefit will be received by the nominee, which includes the sum assured and all bonuses accrued until the date of death.
Bonus Structure:
- Reversionary Bonuses: These are declared annually by LIC and added to the policy. The bonuses accumulate and are paid out either upon maturity or death.
- Final Additional Bonus (FAB): This is a one-time bonus that may be paid out at the end of the policy term or upon death, depending on the policy’s performance.
Key Benefits:
- Death Benefit: Provides the nominee with the sum assured along with all vested bonuses, in case you die during the policy term to secure your family’s financial future.
- Maturity Benefit: The sum assured plus all bonuses accumulated and the Final Additional Bonus (FAB) are also paid to the policyholder, in case he outlives the stipulated policy term.
- Loan Benefit : After the policyholder has paid premium for 3 years, he can take a loan against the policy.
- Extra Riders: There are non-compulsory riders comparable to, Accidental Death and Disability Benefit which gives further safety by the plan.
Sumit’s Example: Premium and Maturity Calculation
Let’s use Sumit’s case to demonstrate how the LIC New Endowment Plan 714 works.
- Policyholder: Sumit
- Age at Purchase: 30 Years
- Sum Assured: ₹12,00,000
- Policy Term: 20 Years
- First Year Premium: ₹58,500 (Including GST)
- Second Year Onwards Premium: ₹56,000 (Including GST)
Premium Payment Calculation :
The premium is calculated based on Sumit’s age, the sum assured, and the policy term. The Goods and Services Tax (GST) applies differently for the first year and subsequent years.
Premium Year | Base Premium (₹) | GST Rate | GST Amount (₹) | Total Premium (₹) |
First Year Premium | ₹56,000 | 4.5% | ₹2,520 | ₹58,500 |
Second Year Onwards Premium | ₹56,000 | 2.25% | ₹1,260 | ₹56,000 |
- First Year GST Calculation:
- Base premium = ₹56,000
- GST on the first year = ₹56,000 × 4.5% = ₹2,520
- Total first-year premium = ₹56,000 + ₹2,520 = ₹58,500
- Second Year Onwards GST Calculation:
- Base premium = ₹56,000
- GST on the second year onwards = ₹56,000 × 2.25% = ₹1,260
- Total premium from second year onwards = ₹56,000 + ₹1,260 = ₹56,000 (rounded)
Death Benefit Calculation :
If Sumit passes away during the policy term, his nominee will receive the death benefit, which consists of:
Component | Description | Amount (₹) |
Death Sum Assured | The guaranteed life cover Sumit chose | ₹12,00,000 |
Accrued Bonuses | Bonuses declared annually. Assume ₹40,000 bonus per year for 10 years | ₹40,000 × 10 = ₹4,00,000 |
Final Additional Bonus (FAB) | One-time bonus declared by LIC at the time of death (assumed) | ₹50,000 |
Total Death Benefit | Sum Assured + Accrued Bonuses + FAB | ₹12,00,000 + ₹4,00,000 + ₹50,000 = ₹16,50,000 |
Explanation: If Sumit passes away during the 10th year, his family will receive ₹16,50,000 as the death benefit, which includes the death sum assured, accrued bonuses over 10 years, and a final additional bonus.
Maturity Benefit Calculation :
If Sumit survives the entire policy term of 20 years, he will receive a maturity benefit, which includes:
Component | Description | Amount (₹) |
Sum Assured | The guaranteed maturity payout | ₹12,00,000 |
Accrued Bonuses | Annual bonuses declared by LIC. Assume ₹40,000 bonus per year for 20 years | ₹40,000 × 20 = ₹8,00,000 |
Final Additional Bonus (FAB) | One-time bonus declared by LIC at the time of maturity (assumed) | ₹50,000 |
Total Maturity Benefit | Sum Assured + Accrued Bonuses + FAB | ₹12,00,000 + ₹8,00,000 + ₹50,000 = ₹20,50,000 |
Explanation: If Sumit survives the entire 20-year policy term, he will receive ₹20,50,000 as the maturity benefit. This includes the sum assured, accrued bonuses over the 20 years, and a final additional bonus.
Year-wise Breakdown of Benefits (For a 20-Year Policy):
| Year | Age | Premium Paid (₹) | Accrued Bonuses (₹) | Total Death Benefit (₹) | Accidental Death Benefit (₹) |
|---|---|---|---|---|---|
| 2024 | 30 | ₹58,500 | ₹40,000 | ₹12,40,000 | ₹24,40,000 |
| 2025 | 31 | ₹56,000 | ₹80,000 | ₹12,80,000 | ₹24,80,000 |
| 2026 | 32 | ₹56,000 | ₹1,20,000 | ₹13,20,000 | ₹25,20,000 |
| 2027 | 33 | ₹56,000 | ₹1,60,000 | ₹13,60,000 | ₹25,60,000 |
| 2028 | 34 | ₹56,000 | ₹2,00,000 | ₹14,00,000 | ₹26,00,000 |
| 2029 | 35 | ₹56,000 | ₹2,40,000 | ₹14,40,000 | ₹26,40,000 |
| 2030 | 36 | ₹56,000 | ₹2,80,000 | ₹14,80,000 | ₹26,80,000 |
| 2031 | 37 | ₹56,000 | ₹3,20,000 | ₹15,20,000 | ₹27,20,000 |
| 2032 | 38 | ₹56,000 | ₹3,60,000 | ₹15,60,000 | ₹27,60,000 |
| 2033 | 39 | ₹56,000 | ₹4,00,000 | ₹16,00,000 | ₹28,00,000 |
| 2034 | 40 | ₹56,000 | ₹4,40,000 | ₹16,40,000 | ₹28,40,000 |
| 2035 | 41 | ₹56,000 | ₹4,80,000 | ₹16,80,000 | ₹28,80,000 |
| 2036 | 42 | ₹56,000 | ₹5,20,000 | ₹17,20,000 | ₹29,20,000 |
| 2037 | 43 | ₹56,000 | ₹5,60,000 | ₹17,60,000 | ₹29,60,000 |
| 2038 | 44 | ₹56,000 | ₹6,00,000 | ₹18,00,000 | ₹30,00,000 |
| 2039 | 45 | ₹56,000 | ₹6,40,000 | ₹18,40,000 | ₹30,40,000 |
| 2040 | 46 | ₹56,000 | ₹6,80,000 | ₹18,80,000 | ₹30,80,000 |
| 2041 | 47 | ₹56,000 | ₹7,20,000 | ₹19,20,000 | ₹31,20,000 |
| 2042 | 48 | ₹56,000 | ₹7,60,000 | ₹19,60,000 | ₹31,60,000 |
| 2043 | 49 | ₹56,000 | ₹8,00,000 | Maturity: ₹20,50,000 | N/A |
Key Takeaways:
- The Accrued Bonuses grow by ₹40,000 every year (assumed based on LIC’s performance).
- The Total Death Benefit increases yearly as bonuses accumulate.
- Accidental Death Benefit is double the sum assured, and it increases as the base death benefit grows.
- Maturity Amount at the end of the 20th year is ₹20,50,000, which includes the sum assured of ₹12,00,000, bonuses of ₹8,00,000, and a final additional bonus (FAB) of ₹50,000.
This comprehensive breakdown shows how Sumit’s benefits increase year after year, providing both protection and savings.
Frequently Asked Questions (FAQs)
Q1. What is the LIC New Endowment Plan 714?
It is a non-linked, participating insurance plan that combines savings and protection.
Q2. Who is eligible to purchase this plan?
Anyone between the ages of 8 and 55 can purchase this plan.
Q3. What is the minimum sum assured?
Anyone between the ages of 8 and 55 can purchase this plan.
Q4. What happens if I stop paying premiums?
Anyone between the ages of 8 and 55 can purchase this plan.
Q5. What bonus will I receive?
You will receive reversionary bonuses declared annually and a Final Additional Bonus (FAB) on maturity or death.
Q6. Can I take a loan against this policy?
Yes, you can take a loan after paying premiums for 3 years.
Q7. Are there tax benefits available under this plan?
Yes, premiums paid are eligible for tax deductions under Section 80C, and the maturity amount is tax-free under Section 10(10D).
Q8. Is there a grace period for late premium payments?
Yes, there is a 30-day grace period for yearly, half-yearly, and quarterly premium payments.
Q9. Can I surrender the policy?
Yes, after paying premiums for 3 years, you can surrender the policy and receive a surrender value.
Q10. What happens if the policyholder dies after the policy term?
No death benefit is payable after the maturity of the policy unless the policyholder has opted for an additional rider.
Also Read – LIC New Jeevan Anand Plan (715)