LIC's New Children's Money Back Plan (732)

How the plan works

The policy is taken on the life of a child aged 0 to 12 years (last birthday) by a parent or grandparent. The policy term is fixed so that it always ends when the child reaches age 25, so the term is 25 minus the child's age at entry. Premiums are paid throughout the policy term.

• Start of risk cover: If the child is below 8 years at entry, life cover starts 2 years after the policy begins or on the policy anniversary on or after the child turns 8, whichever comes first. For children aged 8 or more, cover starts immediately.
• Vesting: On the policy anniversary on or after the child turns 18, the policy automatically vests in the child, who then becomes the owner of the contract.

Basic Sum Assured must be in multiples of ₹5,000 (₹2,00,000 to ₹4,50,000), ₹50,000 (above ₹4,50,000 to ₹9,00,000) and ₹1,00,000 (above ₹9,00,000).

Sample annual premiums (Basic Sum Assured ₹2 lakh, standard life, excluding taxes): age 0 – ₹9,006; age 5 – ₹11,682; age 10 – ₹16,395; age 12 – ₹19,002.

Death benefit

If the child dies after the risk cover has started and before maturity, with the policy in force, the nominee receives the Sum Assured on Death plus vested Simple Reversionary Bonuses and Final Additional Bonus, if any.

• Sum Assured on Death is the higher of the Basic Sum Assured or 7 times the annualised premium.
• The death benefit will never be less than 105% of total premiums paid up to the date of death.
• If a child who entered below age 8 dies before the risk cover starts, total premiums paid (excluding taxes, extra premium and rider premium) are returned without interest.

Survival benefits

If the child is alive and the policy is in force, 20% of the Basic Sum Assured is paid on the policy anniversary on or after the child completes each of these ages:

You may choose to defer a survival benefit and take it any time later during the policy term; a higher amount is then paid using factors given in the brochure annexure. This choice must be informed in writing six months before the due date.

Maturity benefit

When the policy ends at the child's age 25 with the policy in force, the Sum Assured on Maturity (40% of the Basic Sum Assured) is paid along with vested Simple Reversionary Bonuses and Final Additional Bonus, if any. Bonuses depend on LIC's experience and are not fixed in advance.

Optional riders

• LIC's Premium Waiver Benefit Rider (UIN: 512B204V04) – on the life of the proposer; if the proposer dies, future base premiums are waived until the end of the rider term. It can be opted on a policy anniversary within the premium paying term if at least 5 years of premium term remain, and is not allowed if rider term plus proposer's age exceeds 70 years.

Loan, surrender & revival

• Loan: Available after the first policy year once one full year's premium is paid, within the surrender value. Up to 50% of surrender value (in-force) or 40% (paid-up) before two full years' premiums; 75% (in-force) or 65% (paid-up) after two full years' premiums.
• Surrender: Allowed after completion of the first policy year if one full year's premium is paid. Guaranteed Surrender Value is acquired after at least two full years' premiums; the higher of Guaranteed and Special Surrender Value is paid.
• Paid-up: If at least one full year's premium is paid and premiums stop, the policy continues as paid-up with reduced benefits; future survival benefits are not paid separately.
• Revival: A lapsed policy can be revived within 5 consecutive complete years from the first unpaid premium by paying arrears with interest, subject to continued insurability.

Other key terms

• Grace period: 30 days for yearly, half-yearly and quarterly premiums; 15 days for monthly.
• Free-look period: 30 days from receipt of the policy document.
• Death benefit in instalments: Can be opted for payment over 5, 10 or 15 years.
• Settlement option: Maturity benefit can be taken in instalments over 5, 10 or 15 years (opt at least 3 months before maturity).
• Minimum instalment: ₹5,000 monthly, ₹15,000 quarterly, ₹25,000 half-yearly, ₹50,000 yearly.
• Mode rebate: Yearly 2% and half-yearly 1% of tabular premium; nil for quarterly and monthly.
• High Sum Assured Rebate: Nil for ₹2,00,000 to below ₹5,00,000; ₹2.50 per thousand for ₹5,00,000 to below ₹10,00,000; ₹4.00 per thousand for ₹10,00,000 and above.
• Suicide exclusion: Within 12 months of risk commencement, 80% of total premiums paid is payable (not applicable if entry age is below 8 years).