LIC New Pension Plus Plan No. 867

Planning for Your Retirement: A Journey Towards Financial Independence

Welcome to Ashuram Insurance Expert. As your trusted local advisor serving since 1990, we are committed to bringing you transparent, honest, and highly detailed insights into long-term financial planning. Today, we are exploring a specialized, market-linked retirement solution: LIC’s New Pension Plus Plan No. 867.

Please read this comprehensive guide carefully. We will explain exactly how this plan functions, the strict rules regarding liquidity, the market risks involved, and how it can help you build a substantial corpus for your golden years.

What is LIC New Pension Plus Plan 867?

LIC's New Pension Plus is a Non-Participating, Linked, Pension, Individual Savings plan. In simple terms, this is a Unit Linked Insurance Plan (ULIP) that is designed exclusively to function as a pension product. The primary objective of this plan is to help you build a substantial corpus through systematic and disciplined savings, which can later be converted into a regular income during your retirement.

Key Features and Investment Funds

This plan offers remarkable flexibility for individuals who wish to actively participate in the market to build their retirement fund. You can choose to purchase the plan with either a Single Premium (a one-time lump sum) or a Regular Premium payment frequency. It gives you the flexibility to choose the amount of premium payable, the policy term, and your preferred Vesting Age (the age at which you wish to retire and start receiving your pension).

Each premium you pay, after the deduction of a Premium Allocation Charge, is utilized to purchase units in an investment fund of your choice. To suit different risk appetites, you have the choice of investing your premiums in one of four distinct types of investment funds:

• Pension Bond Fund: Designed to provide a relatively safe and less volatile investment option, investing 60% to 100% in Government or Corporate Debt. It carries a low risk profile.
• Pension Secured Fund: Aims to provide steady income by investing 50% to 90% in Debt and 10% to 50% in Listed Equity Shares, carrying a lower to medium risk profile.
• Pension Balanced Fund: Provides a balanced mix of income and growth, investing 30% to 70% in Debt and 30% to 70% in Equity Shares, presenting a medium risk profile.
• Pension Growth Fund: Aimed at long-term capital growth, investing heavily in equities (40% to 100%) and carrying a high risk profile.

You also have the option to switch between any of these four funds during the policy term to adjust to changing market conditions.

Guaranteed Additions Explained in Detail

To reward long-term financial discipline, the plan offers Guaranteed Additions. Under an in-force policy, Guaranteed Additions as a percentage of your Annual Premium (or Single Premium) shall be added to your Unit Fund at the end of specific policy durations. These allocated additions are converted into units and credited to your chosen fund type.

The rate of these additions scales up significantly over the long term, and they differ depending on how you pay your premiums:

• End of 6th year: 5.00% for Regular Premium / 4.00% for Single Premium.
• End of 10th year: 10.00% for Regular Premium / 5.00% for Single Premium.
• 11th to 15th year: 4.00% for Regular Premium / 1.25% for Single Premium.
• These rates continue to scale up in 5-year blocks. By the 41st to 42nd year, the additions reach 15.50% for Regular Premium and 4.50% for Single Premium.

Important Rule on Reductions: It is vital to know that these Guaranteed Additions are subject to a pro-rata reduction if you choose to make partial withdrawals from your fund or if you exercise the option to extend your vesting date without paying further premiums.

Death Benefit and Vesting Benefit (Annuity Rules)

In the unfortunate event of the Life Assured's death before the date of Vesting, the policy provides a death benefit to protect the family. The amount payable shall be equal to the higher of the Unit Fund Value as on the date of intimation of death, or the Assured Death Benefit. The Assured Death Benefit is strictly calculated as 105% of the Total Premiums received up to the date of death, reduced by any Partial Withdrawals made during the two-year period immediately preceding the death.

On survival of the Life Assured till the date of Vesting (the end of the policy term), an amount equal to the Unit Fund Value shall vest. As stated earlier, this is a pension product where benefits must be taken in the form of annuity. You must utilize the proceeds to purchase an immediate or deferred annuity at the prevailing annuity rates. You are permitted to commute (withdraw as a lump sum) up to 60% of the proceeds, but the remaining balance must be used to purchase your regular pension. Please note that IRDAI regulations apply to all annuity purchases and commutations.

The 5-Year Lock-in Period and Liquidity Rules

It is absolutely critical to understand the strict liquidity constraints of a ULIP. Unit linked insurance products do not offer any liquidity during the first five years of the contract. You will not be able to surrender or withdraw your monies completely or partially until the end of the fifth year.

If you discontinue paying your premiums or apply to surrender the policy during this 5-year lock-in period, a severe penalty applies. Your Unit Fund Value, after deducting applicable Discontinuance Charges, will be forcefully transferred to a "Discontinued Policy Fund". Your money will remain locked in this fund until the 5-year period ends. During this time, it will only earn a minimum guaranteed interest rate (currently 4% p.a.), and absolutely no life risk cover will be available to your family.

Partial Withdrawal Rules

After the mandatory 5-year lock-in period has expired, the plan provides some flexibility. You may partially withdraw units from your fund, but only for specific, stipulated reasons. These reasons include the higher education or marriage of children, the purchase or construction of a residential house, treatment of critical illnesses, or expenses incurred for skill development or establishing a start-up.

Partial withdrawals are strictly limited. They are allowed only up to 3 times during the entire policy term. The maximum amount you can withdraw ranges from 10% to 25% of the Unit Fund Value at the time of withdrawal, depending on the size of your annual or single premium.

Understanding the Policy Charges

Managing a market-linked fund incurs operational costs, and you must be aware that these charges impact returns over time. The charges under this plan include:

• Premium Allocation Charge: A percentage deducted from your premium before units are purchased.
• Policy Administration Charge: A monthly fee levied by cancelling units, deducted only in the first 5 years.
• Fund Management Charge: A fee of 1.35% p.a. of the Unit Fund, which is adjusted directly from the NAV on a daily basis.
• Discontinuance Charge: A heavy penalty applied if you stop paying premiums or surrender the policy within the first few years.
• Switching Charge: You are allowed 4 free fund switches per year. Any subsequent switch incurs a flat switching charge.

Furthermore, all benefits subject to tax laws are impacted by prevailing government regulations, meaning GST is applicable on these charges.

Eligibility Conditions

To begin your retirement planning with the LIC New Pension Plus Plan, you must meet the following criteria:

1. The Minimum Entry Age is 25 years (last birthday), and the Maximum Entry Age is 75 years (last birthday).
2. The Minimum Vesting Age is 35 years (last birthday), and the Maximum Vesting Age is 85 years (last birthday).
3. The minimum premium for a regular monthly payment (through NACH) is ₹3,000. For yearly payments, the minimum is ₹30,000. For Single Premium policies, the minimum is ₹1,00,000.
4. The policy term must be between a minimum of 10 years and a maximum of 42 years.

Who Should Buy and Who Should Avoid This Plan

This plan is well-suited for individuals in their late 20s to 40s who understand market dynamics and wish to actively utilize equity or debt markets to build a retirement corpus that can potentially outpace inflation. If you have a high risk appetite, a long-term investment horizon, and the discipline to pay premiums without breaking the lock-in period, this ULIP offers excellent growth potential.

Conversely, you should entirely avoid this plan if you are seeking 100% guaranteed, fixed maturity returns without any exposure to market volatility. Furthermore, if you anticipate needing emergency access to your funds within the next five years, the strict 5-year lock-in period and the Discontinued Policy Fund penalties make this plan highly unsuitable for short-term liquidity needs.

Local Advantage: Serving Bhadra and Surrounding Villages

While our primary office is centrally located near Ambedkar Chowk on the Main Bus Stand Road in Bhadra (335501), Ashuram Insurance Expert proudly extends its dedicated advisory services across the entire Nohar and Hanumangarh district. We understand the specific financial challenges faced by agricultural families and local business owners throughout our region.

Our trusted door-to-door services and financial consultations are actively available in areas like Bharwana and Khachwana. We know that traveling into the city for complex financial planning can be time-consuming. Whether you need to understand how market-linked pensions can secure your post-farming years in Ujjalwas or Nathwania, or you require assistance with authorized premium collections in Gogameri, we travel the extra mile to provide personalized, localized support directly to your community.

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Do not leave your golden years to chance. Start building a robust retirement corpus today with careful, disciplined planning. You may contact Ashuram Modi for personalized LIC guidance in Bhadra to schedule your comprehensive retirement assessment. You can also explore our complete range of LIC services in Bhadra to find the perfect traditional or market-linked solution tailored precisely for your family's future.

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