New Endowment Plan (714) Details with Example

The New Endowment Plan (714) is an updated version of the New Endowment Plan (914), introduced in line with the 2024 IRDA surrender guidelines. This is a classic endowment plan, offering both savings and protection. It is a non-linked, participating plan, making it ideal for individuals looking for financial security and long-term savings.

In this article, we will cover all key aspects of the plan, including eligibility, available riders, maturity benefits, death benefits, paid-up value, surrender options, loans, policy revival, and the free-look period. Lastly, we will illustrate the plan with a real-life example, including detailed benefit illustrations.

Plan Details

Age of Entry	8-50 Years
Policy Duration	12-35 Years
Maximum Maturity Age	75 Years
Minimum Sum Assured	₹2,00,000
Premium Payment Modes	Yearly, Half-Yearly, Quarterly, Monthly (NACH Only)
Premium Mode Rebate	2% for Yearly, 1% for Half-Yearly, Nil for Quarterly
High Sum Assured Rebate	0% for ₹2,00,000 to ₹4,95,000 2.5% for ₹5,00,000 to ₹10,00,000 4% for ₹10,00,000 and above
Surrender and Loan Availability	After One Year
Revival	Within 5 years of first unpaid premium

Maturity Benefit

In the New Endowment Plan (714), upon completion of the policy term, the policyholder will receive the maturity amount, which is the sum of the Basic Sum Assured, Simple Reversionary Bonus, and Final Additional Bonus, provided all premiums have been paid.

Death Benefit

In case of death during the policy term, the nominee will receive a death claim amount equal to the Basic Sum Assured, plus the accumulated Simple Reversionary Bonus up to the time of death, and the Final Additional Bonus (if any).

Past Simple Reversionary Bonus rates for previous versions of this plan are available here.

Policy Surrender

The New Endowment Plan (714) can be surrendered after the completion of the first policy year, provided at least one full year’s premium has been paid. The policy becomes eligible for the Guaranteed Surrender Value (GSV) if the premiums for the first two years have been fully paid. It becomes eligible for the Special Surrender Value (SSV) if the full premium for the first policy year has been paid. The policyholder will receive the higher of the SSV or GSV.

Guaranteed Surrender Value (GSV)

The GSV is a percentage of the total premiums paid, plus a percentage of the total accumulated bonuses at the time of surrender. The specific GSV applicable to the premiums paid and the GSV Factors applicable to vested bonuses are detailed in the policy document.

Special Surrender Value (SSV)

The SSV for the New Endowment Plan (714) is calculated using the following formula:

SSV = (Death Paid-Up Sum Assured + vested bonuses) * Factor 1 + (Maturity Paid-Up Sum Assured + vested bonuses) * Factor 2

Paid-Up Sum Assured

The Paid-Up Sum Assured is a reduced sum assured, calculated as:

• Maturity Paid-Up Sum Assured = Sum Assured on Maturity * (Total premiums paid / Maximum premiums payable)
• Death Paid-Up Sum Assured = Sum Assured on Death * (Total premiums paid / Maximum premiums payable)

Note: In the New Endowment Plan (714), the Sum Assured on Maturity and the Sum Assured on Death are the same and equal to the Basic Sum Assured.In the SSV calculation, Factor 1 and Factor 2 are revised periodically, typically on a yearly basis.

Revival

If the premium is not paid within the grace period, the policy lapses. It can be revived within 5 years from the first unpaid premium by paying all overdue premiums with interest and meeting insurability requirements.

Loan

A loan will be available once the full premium for the first policy year has been paid. In the new plans, the percentage of the loan amount in relation to the surrender value is predefined. In the case of a paid-up policy, the loan percentage differs from that of a fully in-force policy. The following table provides these rates.

Policy Status	Before Payment of Two Full Year’s Premiums	After Payment of Two Full Year’s Premiums
Under In-force Policies	50%	75%
Under Paid-up Policies	40%	65%

Free Look Period

Policyholders who are not satisfied with the terms and conditions of the policy may return the policy within 30 days of receipt, stating their reasons for returning it.

Suicide Clause

In the event of suicide within 12 months of policy commencement or revival, the nominee will receive either 80% of premiums paid or the available surrender value, whichever is higher.

Settlement Option

Maturity or death benefits can be received as a lump sum or in instalments over a period of 5, 10, or 15 years. The policyholder can choose to receive either the full amount or a percentage of the benefit, with instalments paid monthly, quarterly, half-yearly, or yearly, subject to minimum amounts. If the net claim amount is insufficient to meet the minimum instalment requirement, it will be paid as a lump sum. This option must be exercised at least three months before the maturity date for maturity benefits, and alterations to the instalment payments are not allowed once set.

Mode of Instalment Payment	Minimum Instalment Amount
Monthly	Rs. 5,000/-
Quarterly	Rs. 15,000/-
Half-Yearly	Rs. 25,000/-
Yearly	Rs. 50,000/-

Optional Riders

• LIC’s Accidental Death and Disability Benefit Rider
• LIC’s Accident Benefit Rider
• LIC’s New Term Assurance Rider
• LIC’s Premium Waiver Benefit Rider

Benefit Illustration with Example

To understand the New Endowment Plan (714) in practical terms, let's take the example of a 29-year-old policyholder who opts for a policy with a 21-year term and a basic sum assured of ₹10,00,000. The following table illustrates the year-wise policy progress.

Benefit Illustration Explanation

1. The latest simple reversionary bonus rate for the New Endowment Plan (914) is used in the illustration. The bonus continues to accumulate yearly.
2. The final additional bonus (FAB) is based on a similar plan group (Table No. 14). Generally, FAB is declared for policies that have completed at least 15 years.
3. In the example, the maturity amount is ₹10,00,000 (basic sum assured) + ₹9,45,000 (accumulated bonus over 21 years) + ₹1,00,000 (FAB), totaling ₹20,45,000.
4. If death occurs at age 45, the death claim amount would be ₹10,00,000 (sum assured) + ₹7,65,000 (bonus) + ₹30,000 (FAB), totaling ₹17,95,000. At that time, total premiums paid would be ₹8,13,073.
5. The above example simplifies understanding of the plan. Actual values may differ.

We have tried to provide comprehensive details of the LIC New Endowment Plan (714) along with an example. If you need further clarification, please feel free to write in the comment box.