Are you looking for a financial product that bridges the gap between life insurance protection and long-term wealth creation? LIC’s New Endowment Plus (Plan No. 735) might be exactly what you need.
LIC New Endowment Plus (735)
UIN: 512L301V03 | ULIP Return & Maturity Estimator
Policy Details
Premium Summary
Pol. Yr = Policy Year. Charges (PAC, Mort, Admin, Rider) include 18% GST. FMC is 0.75%. SV = Surrender Value (post disc. charges). DB = Death Benefit.
Expected Benefits
| Particulars | @ 4% p.a. | @ 8% p.a. |
|---|
Maturity Benefit is the Unit Fund Value at the end of Policy Term.
| Death Benefit (Yr 10) | @ 4% p.a. | @ 8% p.a. |
|---|
Death Benefit after risk commencement is Highest of (Basic SA, Unit Fund Value, 105% Premiums Paid).
In today’s dynamic economic environment, relying solely on traditional savings plans might not be enough to beat inflation. The Life Insurance Corporation of India (LIC) understands this, which is why they offer Plan 735—a Unit Linked Insurance Plan (ULIP) that gives you the freedom to invest in market-linked funds while ensuring your family remains financially protected in your absence.
In this comprehensive guide, we will break down everything you need to know about the LIC New Endowment Plus Plan (UIN: 512L301V03), including its eligibility criteria, fund options, hidden charges, death benefits, and maturity payouts.
What is LIC’s New Endowment Plus (Plan 735)?
LIC’s New Endowment Plus is a Regular Premium, Non-Participating, Unit-Linked, Individual Life Insurance Savings Plan.
To put it simply, a portion of the premium you pay goes towards providing you with life insurance coverage (mortality charge), while the remaining balance is invested in the financial markets (equity, debt, or a mix of both) based on your personal risk appetite.
Because it is a “Non-Participating” plan, it does not earn traditional LIC bonuses. Instead, your returns are directly linked to the performance of the financial markets. The investment risk in this portfolio is borne entirely by you, the policyholder. As mandated by the IRDAI, this ULIP comes with a strict 5-year lock-in period, meaning you cannot surrender or withdraw your money completely or partially during the first five years of the contract.
LIC Plan 735: Quick Overview
Before we dive deep into the specific mechanics of the policy, here is a quick glance at the primary eligibility conditions and restrictions of the plan:
| Parameter | Details |
|---|---|
| Plan Name | LIC’s New Endowment Plus |
| Plan Number | 735 (UIN: 512L301V03) |
| Minimum Age at Entry | 90 Days (Completed) |
| Maximum Age at Entry | 50 Years (Nearer Birthday) |
| Minimum Maturity Age | 18 Years (Completed) |
| Maximum Maturity Age | 60 Years (Nearer Birthday) |
| Policy Term | 10 to 20 Years |
| Premium Paying Term | Same as Policy Term (Regular Premium) |
| Minimum Premium | Yearly: ₹42,000 | Half-Yearly: ₹21,000 | Quarterly: ₹10,500 | Monthly: ₹3,500 |
| Maximum Premium | No Limit (Subject to underwriting) |
| Basic Sum Assured | 10 times the Annualized Premium |
LIC New Endowment Plus Plan 735 :Investment Fund Options
One of the biggest advantages of LIC Plan 735 is that it puts you in the driver’s seat of your investments. Upon purchasing the policy, you are given the flexibility to choose from four different types of investment funds.
Depending on your financial goals, age, and risk tolerance, you can direct your premiums into:
- Bond Fund (Low Risk): This fund is for conservative investors. It invests a minimum of 60% in government or government-guaranteed securities and corporate debt. It aims to provide relatively safe, steady income and less volatile returns.
- Secured Fund (Lower to Medium Risk): If you want steady income with a tiny exposure to the stock market, this is a great choice. It invests 45% to 85% in government securities and corporate debt, and 15% to 55% in listed equity shares.
- Balanced Fund (Medium Risk): Designed for those seeking a balance between safety and capital appreciation. It invests 30% to 70% in fixed-income securities and 30% to 70% in equity shares, providing a balanced portfolio of growth and income.
- Growth Fund (High Risk): For aggressive investors looking for long-term wealth creation. This fund invests primarily in equities (40% to 80%) and a smaller portion in fixed-income securities (20% to 60%).
Note: You are not permanently tied to one fund. LIC allows you to switch between these funds to adapt to changing market conditions. You get 4 free switches every policy year. Any subsequent switch in the same year carries a nominal charge of ₹100.
LIC New Endowment Plus Plan 735: Benefits Breakdown
What do you or your family get out of this policy? Let’s explore the guaranteed and market-linked benefits of the LIC New Endowment Plus.
LIC New Endowment Plus Plan 735 Maturity Benefit
If you survive the entire policy term, you will receive the Maturity Benefit. This is simply an amount equal to your Unit Fund Value on the date of maturity. Since it is a market-linked plan, the final payout will depend entirely on the Net Asset Value (NAV) of the fund you chose and how the market performed over your policy term.
LIC New Endowment Plus Plan 735 Death Benefit
If the unexpected happens and the Life Assured passes away during the policy term, the payout structure is designed to heavily protect the family. However, the payout depends on whether the death occurred before or after the “Date of Commencement of Risk”.
- Death BEFORE Risk Commencement: The nominee receives an amount equal to the Unit Fund Value as on the date the death is intimated to LIC.
- Death AFTER Risk Commencement: The nominee will receive the Highest of the following three amounts:
- The Basic Sum Assured (reduced by any partial withdrawals made during the 2 years immediately preceding the death).
- The Unit Fund Value as on the date of intimation of death.
- 105% of the total premiums received up to the date of death (reduced by partial withdrawals made in the last 2 years).
A Note on Risk Commencement for Minors:
If the policy is purchased for a child whose entry age is less than 8 years, the life cover (risk) does not start immediately. It will commence either on the completion of 2 years from the date of policy commencement, OR on the policy anniversary following the child’s 8th birthday—whichever is earlier. For anyone aged 8 or above, the risk commences immediately upon policy issuance.
LIC New Endowment Plus Plan 735: Optional Rider Benefit
To bolster your protection, you can opt for the LIC’s Linked Accidental Death Benefit Rider. If this rider is active and the policyholder dies due to an accident, an additional “Accident Benefit Rider Sum Assured” is paid to the family in a lump sum along with the base death benefit.
LIC New Endowment Plus Plan 735 Settlement Option
Instead of forcing the nominee to take a massive lump sum payout upon the policyholder’s death, LIC provides a Settlement Option. The policyholder can specify that the death benefit should be paid to the nominee in installments (Yearly, Half-Yearly, Quarterly, or Monthly) spread over a period of up to 5 years. During this time, the fund remains invested and is subject to market risks, but no charges other than the Fund Management Charge are deducted.
Understanding the Hidden Charges of LIC Plan 735
When investing in any ULIP, it is crucial to understand the charges deducted from your premium, as these directly impact your final returns. All charges under this plan (except FMC) are subject to prevailing GST taxes (currently 18%).
- Premium Allocation Charge (PAC): This is deducted upfront from your premium before the money is invested into your chosen fund.
- 1st Year: 7.50%
- 2nd to 5th Year: 5.00%
- 6th Year and onwards: 3.00%
- Mortality Charge: This is the actual cost of your life insurance cover. It is age-specific and is deducted at the beginning of each policy month by canceling an appropriate number of units from your fund. It is calculated based on the “Sum at Risk.”
- Policy Administration Charge: A fee for managing policy paperwork and maintenance. For the first year, it is relatively low (0.35% of the instalment premium multiplied by a mode factor, capped at ₹100/month). However, from the 6th year onwards, it jumps to ₹150 per month and escalates by 5% every year (capped at a maximum of ₹500 per month).
- Fund Management Charge (FMC): LIC charges a very competitive FMC of 0.75% per annum of the Unit Fund for the four active funds. This is adjusted directly in the daily Net Asset Value (NAV). If your policy moves to the “Discontinued Policy Fund,” the FMC drops to 0.50% p.a.
- Partial Withdrawal & Switching Charges: After 4 free fund switches in a year, you pay ₹100 per switch. Similarly, every partial withdrawal attracts a flat charge of ₹100.
- Discontinuance Charge: If you stop paying premiums or surrender the policy within the 5-year lock-in period, a penalty is levied. For annualized premiums up to ₹50,000, the charge ranges from a maximum of ₹3,000 in Year 1 down to ₹1,000 in Year 4. From the 5th year onwards, the discontinuance charge is NIL.
Liquidity: Rules for Partial Withdrawals
While ULIPs are long-term commitments, life is unpredictable. LIC provides liquidity through partial withdrawals any time after the fifth policy anniversary, provided all due premiums have been paid.
- For Minors: Withdrawals are only allowed after the Life Assured turns 18.
- Minimum Balance Rules:
- From the 6th to 10th policy year, you must leave a minimum balance of 3 annualized premiums or 50% of the Unit Fund value (whichever is higher) in the fund.
- From the 11th to 20th policy year, the minimum balance required is 3 annualized premiums or 25% of the Unit Fund value (whichever is higher).
Important: If you make a partial withdrawal, your Basic Sum Assured will be temporarily reduced by the exact withdrawal amount for a period of two years. After two years, the original Basic Sum Assured is restored.
What Happens if You Stop Paying Premiums?
ULIPs strictly enforce a 5-year lock-in period. If you fail to pay your premium within the 30-day grace period (15 days for monthly NACH) during the first 5 years, your policy becomes “discontinued.”
The life cover will immediately cease, and your fund value (after deducting the discontinuance charge) will be moved to the Discontinued Policy Fund. Here, it will earn a guaranteed interest rate (currently 4% p.a.) minus a 0.50% fund management charge. The money will remain locked here until the 5-year period ends, after which the proceeds will be paid out to you, and the policy will terminate.
You do, however, get a 3-year “Revival Period” from the date of the first unpaid premium to clear your dues and restart the policy.
Conclusion: Should You Buy LIC Plan 735?
LIC’s New Endowment Plus (Plan No. 735) is an excellent investment vehicle for disciplined investors who want to harness the wealth-creating power of the stock market without sacrificing the safety net of life insurance.
Because of the initial Premium Allocation Charges (7.5% in year 1) and the strict 5-year lock-in, this plan is not suitable for short-term investors. However, if you have an investment horizon of 10 to 20 years, the lower allocation charges in later years combined with compounding market returns can result in a highly substantial maturity corpus.
Always ensure you align your fund choice (Bond, Secured, Balanced, or Growth) with your actual risk appetite, and carefully review the policy illustration to understand how charges will impact your specific premium over the years.
Disclaimer: ULIPs are subject to market risks. The various funds offered under this contract are the names of the funds and do not indicate the quality of the plans, their future prospects, or returns. Please read the official LIC plan 735 sales brochure carefully before investing.
