LIC’s Flexi-Plus is a unit linked insurance plan (ULIP), which offers two fund options – Debt and Mixed. However, the equity component in the product will not exceed 25%, which means that its returns will be capped.
Salient Features of Flexi-Plus ULIP
|Minimum Age at entry||18 years|
|Maximum Age at entry||50 years|
|Maximum Maturity Age||60 years|
|Policy Term||10 to 20 years|
|Sum Assured||10 times the annual premium|
Charges under the Flexi-Plus
A- Premium Allocation Charge
This is the percentage of the premium deducted towards charges from the premium received.
|2nd to 5th Year||5.00%|
B- Mortality Charge
Mortality charge will be taken every month by canceling appropriate number of units out of the Policyholder’s Fund value. This charge will be deducted till the Life Assured is alive.
C- Other Charges
Some other charges shall be deducted during the term of the policy:
1- Policy Administration charge – This charge shall be deducted on monthly basis by cancelling appropriate number of units out of the Policyholder’s Fund Value.
|Policy Year||Policy Admin Charge (per month)|
|1st Year||Rs. 50|
|2nd Year||Rs. 41.20|
|3rd Year||Rs. 42.44|
|4th Year||Rs. 43.71|
|5th Year||Rs. 45.02|
|6th Year & Thereafter||Rs. 34.78 in 6th year escalating at 3% p.a. thereafter|
2- Fund Management Charge – This is a charge levied as a percentage of the value of assets at following rates:
1- 0.50% p.a. of Unit Fund for “Debt” Fund
2- 0.60% p.a. of Unit Fund for “Mixed” Fund
3- Switching Charge – This is a charge levied on switching of monies from one fund to another. Within a given policy year 4 switches will be allowed free of charge. Subsequent switches in that year shall be subject to a switching charge of Rs. 100 per switch.
4- Discontinuance Charge – The discontinuance charge for regular premium policies is as under:
|Where the policy is discontinued during the policy year||Discontinuance charges for the policies having annualized premium up to Rs. 25,000/-||Discontinuance charges for the policies having annualized premium above Rs. 25,000/-|
|1||Lower of 15% * (AP or FV) subject to a maximum of Rs. 2500/-||Lower of 6% * (AP or FV) subject to maximum of Rs. 6000/-|
|2||Lower of 7.5% * (AP or FV) subject to a maximum of Rs. 1750/-||Lower of 4% * (AP or FV) subject to maximum of Rs. 4000/-|
|3||Lower of 5% * (AP or FV) subject to a maximum of Rs. 1250/-||Lower of 3% * (AP or FV) subject to maximum of Rs. 3000/-|
|4||Lower of 3% * (AP or FV) subject to a maximum of Rs. 750/-||Lower of 2% * (AP or FV) subject to maximum of Rs. 2000/-|
|5 and onwards||Nil||Nil|
Where: AP – Annualised Premium & FV – Policyholder’s Fund Value on the date of discontinuance
5- Miscellaneous Charge– This is a charge levied for an alteration within the contract, such as change in premium mode to higher frequency, and shall be a flat amount of Rs. 50/- which will be deducted by canceling appropriate number of units out of the Policyholder’s Fund.
On death during the policy term, when the cover is in full force:
1- By Immediate lumpsum payment equal to Sum Assured shall be paid to the nominee / legal heir.
2- An amount equal to sum of all future premiums payable after the date of death shall be credited to the Policyholder’s Fund. The units shall be allocated at the unit price applicable for the fund type opted under the policy on the date of booking of liability of death.
3- On maturity date, units available in the Policyholder’s Fund will be multiplied the NAV as on that date and the total fund value will be given to the nominee/legal heir.
On Life Assured surviving the date of maturity, an amount equal to Policyholder’s Fund Value shall be payable.
1- Premium Allocation Charges are low.
2- Flexibility to choose the premium paying mode as per your convenience but always select annual premium payment mode.
3- The Policyholder has following two fund options
A- Debt Fund – Suitable for Low risk
B- Mixed Fund Steady Income – Suitable for Lower to Medium risk
4- Flexibility of partial withdrawals to meet your emergency needs
5- Maturity Benefits payable irrespective of survival of the Life Assured during the term
6- On Surrender of the policy, Policyholder’s Fund Value is payable. There is no Discontinuance Charge after completion of 5 policy years.
1- Short Policy Term of 10-20 Years
2- Equity Exposure only – 15%-25%. So no option for high risk investors.
3- So many charges – Premium Allocation Charge, Policy Administration charge, Fund Management Charge, Discontinuance Charge and Miscellaneous Charge etc.
The Bottom Line : Avoid
LIC’s Flexi-Plus ULIP charges are very competitive, if you compare it with the Mutual Funds charges. But 15%-25% equity exposure and time horizon of only 10-20 years is very less. And secondly, what would you do if the LIC Flexi Plus is not performing after 5-7 years, you have got no option but just switching your funds between different funds. We would recommend LIC’s Flexi-Plus, only for long term – low risk investors.