INSURANCE

ASSIGNMENT – 2

SUBMITTED TO

DR. ANSUMAN CHATTERJEE

SUBMITTED BY

NAME – SUDIPA BHOWMIK

USN NO. 19MBAR0082

SECTION – MF1

CMS BUSINESS SCHOOL, JAIN DEEMED-TO-BE UNIVERSITY,

BANGALORE, KARNATAKA

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 1) LIC’s NEW ENDOWMENT PLAN (UIN: 512N277V02) :
Date of Launch : 01.02.2020

LIC's New Endowment Plan is a participating non-linked plan which offers an attractive combination
of protection and saving features. This combination provides financial support for the family of the
deceased policyholder any time before maturity and good lump sum amount at the time of maturity
for the surviving policyholders. This plan also takes care of liquidity needs through its loan facility.

The endowment plan offered by LIC is a participating endowment plan that

offers the dual benefit of protection cum saving plan. As a simple vanilla policy LIC endowment plan
comes with both death and maturity benefit. Unlike pure term insurance plan LIC endowment plan is
beneficial for those who want to have a disciplined saving long with life coverage. The combination
of saving cum protection provides financial cushion to the family of the deceased insurance holder
during the tenure of the policy. Moreover, if the insurance buyer survives the entire tenure of the
policy then he/she receives the lump-sum amount as maturity benefit at the time of policy maturity.
Moreover, by providing loan facility, LIC Endowment Plan also takes care of the liquidity needs.

Key Features : -

 Plan with guaranteed returns and bonus

 Simple Reversionary Bonus is payable on maturity or earlier death

 Large Sum Assured Rebate is available

 LIC’s Accidental Death and Disability Benefit Rider can be taken

2) BENEFIT ILLUSTRATION :

 Death Benefit - Death benefit payable in case of death of the Life Assured before the
stipulated Date of Maturity provided the policy is in-force shall be “Sum Assured on Death”
along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any, where,
“Sum Assured on Death” is defined as higher of Basic Sum Assured or 7 times of
Annualized Premium. This death benefit shall not be less than 105% of total premiums
paid(excluding any extra premium, any rider premium and taxes) upto the date of death. The
Death Benefit shall be paid in lumpsum as specified above and/or in instalments, as specified
in Condition 8 of Part D of this Policy Document, as per the option exercised by the

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 Policyholder/Life Assured.
 Maturity Benefit - On Life Assured surviving the stipulated Date of Maturity provided the
policy is in-force, “Sum Assured on Maturity” along with vested Simple Reversionary
Bonuses and Final Additional Bonus, if any, shall be payable. Where “Sum Assured on
Maturity” is equal to Basic Sum Assured. The Policyholder/Life Assured shall have an
option to receive the Maturity benefit in lumpsum as specified above and/or in instalments
(Settlement Option), as specified in Condition 9 of Part D of this Policy Document.
 Participation in Profits - The policy shall participate in profits of the Corporation and shall
be entitled to receive Simple Reversionary Bonuses declared as per the experience of the
Corporation, provided the policy is in full force. Final (Additional) Bonus may also be
declared under the policy in the year when the policy results into a claim either by death or
maturity, provided the policy has run for certain minimum term.
 Optional Benefit - LIC’s Accidental Death and Disability Benefit Rider: LICs Accidental
Death and Disability Benefit Rider is available as an optional rider by payment of additional
premium. In case of accidental death, the Accident Benefit Sum Assured will be payable as
lumpsum along with the death benefit under the basic plan. In case of accidental permanent
disability arising due to accident (within 180 days from the date of accident), an amount
equal to the Accident Benefit Sum Assured will be paid in equal monthly installments spread
over 10 years and future premiums for Accident Benefit Sum Assured as well as premiums
for the portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured
under the policy, shall be waived.
 Accidental Death and Disability Benefit Rider - LIC Endowment Plan offers additional
benefit as rider under which the policy provides add-on benefit along with the basic coverage
to the beneficiary of the policy in case of accidental demise of the insured person. Under this
rider benefit and extra sum assured amount is paid to the beneficiary of the policy along with
the basic sum assured amount.
 There is mode saving for yearly and half-yearly premium payments and for higher
sum assured chosen by the policyholder.
 The insured can save bundles on taxes as the premium paid and the maturity proceeds
are eligible for tax deduction under section 80C and 10(10D) of Income Tax Act.

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 3) PRODUCT SPECIFICATION :

4) POLICY HOLDER DETAILS :

 Name – Sudipa Bhowmik

 Age – 24 years

 Sum Assured – Rs. 5,00,000

,00,000

 Policy Term – 20 years

 Premium to be paid –

Mode of Instalment Minimum instalment

payment amount
Monthly Rs. 1,984.08/-
Quarterly Rs. 5,952.25/-
Half-Yearly Rs. 11,904.5/-
Yearly Rs. 23,809/-

Assuming that the policy holder has chosen Yearly premium payment and the policy holder surrenders

the policy at the end of 5th year, then premium to be paid is Rs. 23,809.

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 5) CALCULATION OF GSV (Guaranteed Surrender Value) :

The Guaranteed Surrender Value payable during the policy term shall be equal to the total
premiums paid (excluding any extra premium, any premiums for rider(s), if opted for and taxes)
multiplied by the Guaranteed Surrender Value factor applicable to total premiums paid. These
Guaranteed Surrender Value factors expressed as percentages will depend on the policy term and
policy year in which the policy is surrendered and are contained in Annexure - 4 of this policy
document.
The surrender value of vested simple reversionary bonuses shall also be
payable, which is equal to vested bonuses multiplied by the Guaranteed Surrender Value factor
applicable to vested bonuses. These Guaranteed Surrender Value factors will depend on the policy
term and the policy year in which policy is surrendered and are contained in Annexure – 5 of this
policy document.

 Total Premium for 5 years – 50% * (Rs. 23,809 * 5 years)

= 50% * Rs. 1,19,045

= Rs. 59,522.50

Assuming a 4% Simple Reversionary Bonus every year, bonus for each year = Rs. 5,00,000 * 0.04

= Rs. 20,000

 Vested Bonus for 5 years – 17.03% * (Rs. 20,000 * 5 years)

= 17.03% * Rs. 1,00,000

= Rs. 17,030

The policy holder’s total Guaranteed Surrender Value for the policy at the end of 5th
year = Rs. (59,522.50 + 17,030) = Rs. 76,552.50

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  SVB Rate Table -

 GSV Rate Table -

6) REFERENCES :

https://www.licindia.in/Products/Insurance-Plan/n-endowment

https://www.policybazaar.com/insurance-companies/lic-india-investment-plans/new-endowment-
plan/

https://www.myinsuranceclub.com/life-insurance/companies/lic-of-india/new-endowment-plan