Life Insurance Corporation (LIC) of India has launched a new unit linked pension plan (plan for life long celebration) — LIC Pension Plus — based on the new rules put in place by the market regulator for products launched on September 2, 2010.

Anybody between ages 18 – 75 years can buy this policy. Minimum deferment term allowed is 10 years. Minimum vesting age is 40 years while the maximum vesting age allowed is 85 years.

On surviving to the date of vesting, the higher of policyholder’s fund value or guaranteed maturity proceeds will compulsorily be utilized to provide an annuity based on the then prevailing immediate annuity rates. However, the policyholder may opt to commute up to one-third of the benefit to be paid as a lump sum.

Premiums can be paid through regular modes at yearly, half-yearly or quarterly or monthly (through ECS mode only) intervals over the term of the policy. Single premium payment facility is also allowed. The minimum regular premium that can be opted through modes other the ECS mode is Rs 15000 per annum while the maximum allowed for regular premium is Rs 1,00,000. For the ECS mode of payment, the minimum premium is Rs 1500 per month. The minimum single premium that can be paid is Rs 30000 while there is no limit on the upper side. Top up facility is available under this plan which enables the customer to pay additional premiums in multiples of Rs 1000 without any limit at anytime, during the term of the policy.

The unique feature of the plan is the minimum guarantee on contributions that it offers. As per the plan, if all due premiums are paid till maturity, a guaranteed interest shall accrue on the gross premium, including top-up premiums if any. The guaranteed interest rate shall be 50 basis points above the average of the reverse repo rate. However, it shall be subject to a maximum of 6% and a minimum of 3%. Currently, a minimum guaranteed rate of 4.5% p.a. would be available on all premiums received up to March 31, 2011.

In case of death, the policyholder’s fund value shall be payable either in a lump sum or as an annuity, as desired by the nominee. The amount of annuity will depend on the payable lump sum and the then prevailing immediate annuity rates under the annuity option chosen.

According to IRDA figures, LIC has a market share of 71.33 per cent in First Premium Income on 31st July, 2010 and 71.68 per cent on policies. LIC has already completed over one crore new policies in the current fiscal by 14 August with a ‘first premium income’ of Rs15, 917 crore, on a growth rate of 96.17 per cent.

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