LIFE INSURANCE CORPORATION OF INDIA

CENTRAL OFFICE

Dept: Product Development “Yogakshema”

Jeevan Bima Marg
Mumbai – 400 021

Ref : CO/PD/ 3 31st August, 2010

To,
All HODs of Central Office
All Zonal Offices
All Divisional Offices
All Branch Offices (through DOs)
MDCs, ZTCs, STCs, NIA and
Audit & Inspection Depts. of Zonal Offices.

Re: INTRODUCTION OF LIC’s PENSION PLUS (Plan No. 803)

1. INTRODUCTION
It has been decided to introduce LIC’S Pension Plus (Plan No. 803) with effect from
2nd September, 2010. The Unique Identification Number (UIN) for LIC’s Pension Plus plan is
512L260V01. This number has to be quoted in all relevant documents furnished to the
policyholders and other users (public, distribution channels).

It is a unit linked deferred pension plan which offers investment of contributions during the
term of the policy. The plan is without risk cover. The allocated premium will be utilized to
purchase units as per the selected fund type. The Policyholder’s Fund Value will be subject
to deduction of charges mentioned in para 3 of this circular. Units will be allotted and
cancelled based on the Net Asset Value (NAV) of the respective fund applicable to the date
of allotment / cancellation. There is no Bid-Offer spread (both the Bid price and Offer price
of units will be equal to the NAV). The NAV will be computed on daily basis and will be
based on the investment performance, Fund Management Charges (FMC) and whether fund
is expanding or contracting under each fund type.
Other details of this plan are as follows.

2. INVESTMENT FUND TYPES

The premiums allocated to purchase units will be invested according to the investment
pattern prescribed for different fund types. The types of fund and their investment pattern
are as under:

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Fund Investment in Short-term Investment in Listed Details and
Type Government / investments such Equity Shares objective of the
Government as money market fund for risk
Guaranteed instruments /return
Securities /
Corporate Debt
Debt Not less than 60% Not more than 40% Nil Low risk
Fund

Mixed Not less than 45% Not more than 40% Not less than 15% & Steady Income
Fund Not more than 35% –Lower to
Medium risk
The policyholder must opt for any ONE of the above 2 funds to invest his premiums.

The NAV will be computed on a daily basis as under:

When Appropriation price is applied (when fund is expanding):

Market value of investment held by the fund plus the expenses incurred in the purchase of
the assets plus the value of any current assets plus any accrued income net of fund
management charges less the value of any current liabilities less provisions, if any divided
by the number of units existing at the valuation date (before any new units are allocated).

When Expropriation price is applied (when fund is contracting):

Market value of investment held by the fund less the expenses incurred in the sale of the
assets plus the value of any current assets plus any accrued income net of fund management
charges less the value of any current liabilities less provisions, if any divided by the number
of units existing at the valuation date (before any units redeemed).

3. CHARGES AND FREQUENCY OF CHARGES

i. Premium Allocation Charge:
This is the percentage of the premium appropriated towards charges from the premium
received. The balance known as allocation rate constitutes that part of the premium which is
utilized to purchase (Investment) units for the policy.

The allocation charges are as below:

Single premium: 3.3%

Regular premium:

Premium Allocation Charge

First Year 6.75%
2nd to 5th Year 4.50%
thereafter 2.50%

Allocation charge for Top-up: 1.25%

ii. Other Charges

a) Policy Administration Charge
The Policy Administration charge of Rs. 30/- per month during the first policy year and
Rs 30/- per month escalating at 3% p.a. thereafter, throughout the term of the policy will
be deducted on monthly basis by canceling appropriate number of units out of
Policyholder’s Fund Value.

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b) Fund Management Charge
Fund Management Charges (FMC) are dependent on type of Fund and are deductible
on the date of computation of NAV at the following rates:
0.7% p.a. of Unit Fund for “Debt” Fund
0.8% p.a. of Unit Fund for “Mixed” Fund
The NAV, thus declared, will be net of FMC.

c) Switching Charges
This is a charge levied on switching of monies from one fund to another. This charge
will be levied at the time of effecting switch at the rate specified under Para 11 (a) below.

d) Bid/Offer Spread
Nil.

e) Discontinuance Charges
The discontinuance charge for regular premium policies is as under:

Where the policy is Discontinuance charges for Discontinuance charges for

discontinued the policies having the policies having
during the policy annualized premium up to annualized premium above
year Rs. 25,000/- Rs. 25,000/-
Lower of 10% * (AP or FV) Lower of 6% * (AP or FV)
1 subject to a maximum of Rs. subject to maximum of Rs.
2500/- 6000/-
Lower of 7% * (AP or FV) Lower of 4% * (AP or FV)
2 subject to a maximum of Rs. subject to maximum of Rs.
1750/- 5000/-
Lower of 5% * (AP or FV) Lower of 3% * (AP or FV)
3 subject to a maximum of Rs. subject to maximum of Rs.
1250/- 4000/-
Lower of 3% * (AP or FV) Lower of 2% * (AP or FV)
4 subject to a maximum of Rs. subject to maximum of Rs.
750/- 2000/-
5 and onwards NIL NIL
AP – Annualised Premium
FV – Policyholder’s Fund Value excluding the fund value in respect of Top-up
premiums paid, if any, on the date of discontinuance.

“Date of discontinuance of the policy” shall be the date on which the insurer receives
the intimation from the insured or policyholder about discontinuance of the policy (i.e.
complete withdrawal from the policy) or on the expiry of the notice period of 30 days,
whichever is earlier.

There shall not be any discontinuance charge under Single Premium.

Further, there shall not be any discontinuance charge for direct business in respect of
Corporation Employees.

f) Service Tax Charge

A service tax charge shall be levied on all applicable charges as per the prevailing
service tax laws and/or any other laws as applicable from time to time.
At present, service tax charge under this plan is based on 10.30% of maximum Fund
Management Charge (i.e. 1.35% p.a.) allowed by IRDA in terms of circular Ref:

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 055/IRDA/Actl/ULIP/2009-10 dated 24th September, 2009.

g) Miscellaneous Charge
This is a charge levied for an alteration within the contract, such as change in premium
mode to higher frequency, may be allowed subject to a charge of Rs. 50/- which will be
deducted by canceling appropriate number of units out of the Policyholder’s Fund value
and the deduction shall be made on the date of alteration in the policy. The alteration
will be effective from the policy anniversary coincident with or following the alteration.
The Corporation reserves the right to accept or decline the alteration in the policy. The
alteration shall take effect from the policy anniversary coincident or following the
alteration only after the same is approved by the Corporation and is specifically
communicated in writing to the Life Assured.

iii. Right to revise charges

The Corporation reserves the right to revise all or any of the above charges except
Premium Allocation charge. The modification in charges will be done with prospective
effect with the prior approval of IRDA and after giving the policyholders a notice of 3
months.

In case the policyholder does not agree with the revision of charges the policyholder shall
have the option to withdraw the Policyholder’s fund value which shall be utilised to
provide an annuity as specified in para 5.c.

4. APPLICABILITY OF NET ASSET VALUE (NAV)

The allotment of units will be as per IRDA guidelines. The present guidelines state as under:

The premiums received up to 3 p.m. by the corporation through ECS or by way of a local
cheque or a demand draft payable at par at the place where the premium is received, the
closing NAV of the day on which premium is received shall be applicable. The premiums
received after 3 p.m. by the corporation through ECS or by way of a local cheque or a
demand draft payable at par at the place where the premium is received, the closing NAV of
the next business day shall be applicable.

The outstation cheque / Demand draft shall not be accepted.

In respect of the valid applications received for surrender, complete withdrawal, death
claim, switches etc up to 3 p.m. by the Servicing Branch the same day’s closing NAV shall be
applicable. For the valid applications received in respect of surrender, complete withdrawal,
death claim, switches etc after 3 p.m. by the Servicing Branch the closing NAV of the next
business day shall be applicable

In case of discontinuance, wherein the policyholder does not exercise the option within the
period of 30 days of receipt of notice then the NAV as on the date of expiry of notice period
shall be applicable.

In respect of amount available on vesting, NAV of the date of vesting of annuity shall be
applicable.

5. BENEFITS
a) Benefits payable on death before vesting
In case of death of the policyholder within the deferment term, the Policyholder’s Fund
Value as at the date of booking the liability, shall be payable to the nominee. The benefit
may be chosen either in lump sum or in the form of annuity as desired by the nominee.
The nominee can also take the proceeds partially as a lump sum and the balance as an

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 annuity subject to the terms and conditions for payment of an immediate annuity
applicable at that time.

b) Benefit on vesting
On the policyholder surviving up to the date of vesting, the higher of Policyholder’s Fund
Value and Guaranteed Maturity Proceeds, as defined in para 9, will compulsorily be
utilised to provide an annuity as specified in para 5.c.

c) Conversion to annuity: The benefit amount, payable in case of surrender or on

discontinuance of premium or on vesting, shall compulsorily be utilized to provide an
annuity subject to the following conditions:
1. The policyholder will have an option to commute upto a maximum of one third of the
i. Higher of Policyholder’s Fund Value and Guaranteed Maturity Proceeds, in the
event of vesting, or
ii. Proceeds of the discontinued policy, if policy is discontinued or surrendered
within 5 years from the date of commencement of policy, or
iii. Policyholder’s Fund Value, if policy is discontinued or surrendered after 5 years
from the date of commencement of policy,
whichever is applicable.
The commutation will be allowed provided the balance amount is sufficient to purchase a
minimum amount of annuity as per the provisions of section 4 of Insurance Act, 1938 as
applicable on the date of payment of annuity.
The balance amount shall compulsorily be utilised to provide an annuity based on the
then prevailing immediate annuity rates under the relevant annuity option.

2. The minimum amount of annuity payable shall be subject to the provisions of section 4 of
Insurance Act, 1938 as applicable on the date of payment of annuity. In case the applicable
amount as mentioned in (i) to (iii) of Para 5.c.1 above is insufficient to purchase the
minimum amount of annuity, then the said amount shall be refunded as a lump sum to
the Policyholder.

3. The policyholder shall have an option to purchase immediate annuity from any other life
insurance company “registered with IRDA” subject to Regulatory provisions. In such
cases, LIC will transfer his Fund amount directly to the chosen Insurer.

If the policyholder opts to purchase immediate annuity from any other life insurance
Company, he/she will have to inform his/her such intention to the Corporation six
months prior to the vesting date.

6. Surrender:
If all due premium have been paid and the policy is surrendered, the surrender value, if
any, is payable as under:

i) If the policy is Surrendered within 5 years from the date of commencement of the policy:
If a policyholder applies for surrender of the policy within 5 years from the date of
commencement of policy, then the Policyholder’s Fund Value after deducting the
Discontinuance Charge as specified in para 3.ii.e shall be converted into monetary terms
as specified in para 8 below. This monetary amount shall be credited to the
Discontinued Policy Fund and no charges shall be deducted thereafter. The Proceeds of
the Discontinued Policy, as specified in para 8 below, shall be utilized for payment of an
annuity as specified in Para 5.c, on completion of 5 years from the date of
commencement of policy.

In case of death of life assured after the date of surrender but before the completion of 5

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 years from the date of commencement of policy the Proceeds of the Discontinued Policy
shall be payable to the nominee/ legal heir immediately.

ii) If the policy is Surrendered after 5 years from the date of commencement of the
policy:
If a policyholder applies for surrender of the policy after 5 years from the date of
commencement of policy, then the Policyholder’s Fund Value, as at the date of
surrender, shall be utilized for payment of an annuity as specified in Para 5.c. There will
no Discontinuance Charge.

7. Discontinuance of Premiums:
If premiums under the policy have not been paid within the days of grace, a notice shall be
sent to the policyholder within a period of fifteen days from the date of expiry of grace
period to exercise one of the following options within a period of thirty days of receipt of
such notice:
i) Revival of the policy, or
ii) Complete withdrawal from the policy

During the notice period of 30 days, the policy shall be treated as in force till the date of
discontinuance of the policy (i.e. till the date on which the intimation is received from the
policyholder for complete withdrawal of the policy or till the expiry of the notice period)
and recovery of all charges as specified for an inforce policy shall continue by cancelling an
appropriate number of units out of the Policyholder’s Fund Value.

The benefits payable under the policy during the notice period shall be same as that
under an inforce policy.

The benefits payable when the policyholder exercises the option for complete
withdrawal or does not exercise any option during the notice period shall be as under:
I) If the policy is discontinued within 5 years from the date of commencement of the
policy: If policyholder exercises the option for complete withdrawal from the policy, or does
not exercise the option within the period of 30 days of receipt of notice, then the policy shall
be compulsorily terminated. The Policyholder’s Fund Value as on the date of
discontinuance of policy after deducting the Discontinuance Charge as specified in para
3.ii.e shall be converted into monetary terms as specified in para 8 below and Proceeds of
the discontinued policy as specified in para 8 below will compulsorily be utilized to provide
an annuity as specified in para 5.c, and shall be payable after completion of 5 years from the
date of commencement of the policy.

II) If the policy is discontinued after 5 years from the date of commencement of the
policy: If policyholder exercises the option for complete withdrawal from the policy, or does
not exercise the option within the period of 30 days of receipt of notice, then the policy shall
be compulsorily terminated and Policyholder’s Fund value will compulsorily be utilized to
provide an annuity as specified in para 5.c.

8. Method of calculation of Monetary amount and Proceeds of the Discontinued Policy:

The conversion to monetary amount shall be as under:

The NAV on the date of application for surrender or as on the date of discontinuance of the
policy (in case of complete withdrawal of the policy), as the case may be, multiplied by the
number of units in the Policyholder’s Fund Value as on that date will be the monetary
amount.

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 The Proceeds of the Discontinued Policy shall be calculated as under:
The monetary amount calculated as above shall be transferred to the Discontinued Policy
Fund. This Fund will earn a minimum interest rate of 3.5% p.a. from the date of
discontinuance of the policy to the date of completion of 5 years from the commencement of
the policy. In case of death of the life assured after discontinuance of policy but before
completion of 5 policy years, the interest shall accrue from the date of discontinuance of the
policy to the date of booking of liability. The Proceeds of the discontinued policy shall be
the monetary amount plus the interest accrued on the Discontinued Policy Fund.

9. Guaranteed Maturity Proceeds:

If all due premiums are paid till maturity, a guaranteed interest shall accrue on the gross
premium, including Top-up premium if any, at the end of each financial year. The
guaranteed interest rate shall be 50 basis points above the average of the reverse repo rate
prevailing as on the last working day of June, September, December and March of the
preceding year. However, the guaranteed interest rate shall be subject to a maximum of 6%
and a minimum of 3%. This guaranteed interest rate is not applicable to a discontinued
policy.

The minimum guaranteed rate of 4.5% p.a. is applicable to all premiums received upto 31st
March, 2011, including any Top-up premiums paid.

10. ELIGIBILITY CONDITIONS AND FEATURES:

a) Minimum Sum Assured Not Applicable

b) Maximum Sum Assured Not Applicable

c) Minimum Premium Rs. 15,000 p.a. for Regular premium (other

than monthly (ECS) mode)
Rs. 1,500 p.m. for monthly (ECS) mode,
increasing thereafter in multiples of Rs. 250.
Rs. 30,000 for Single premium

d) Maximum Premium Rs. 1,00,000 p.a. for Regular premium

No Limit for Single premium

(In years)
e) Minimum Entry Age 18 last birthday
f) Maximum Entry Age 75 nearest birthday
g) Minimum Deferment Term 10 years
h) Minimum Vesting Age 40 completed
i) Maximum Vesting Age 85 nearest birthday
Age at entry for the policyholder is to be taken as age nearest birthday except for the
minimum age at entry i.e. 18 years.
Annualized Premiums shall be payable in multiple of Rs. 1,000 for other than ECS monthly.
For monthly (ECS), the premium shall in multiples of Rs. 250/-. Single Premiums shall be
payable in multiple of Rs. 1,000.

11. ADDITIONAL FEATURES:

a. Switching
The policyholder can switch between any fund types during the policy term. On switching
the entire amount is switched to the new Fund opted for. Within a given policy year, 2
switches will be allowed free of charge. Subsequent switches shall be subject to a switching
charge of Rs.100 per switch.

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 On receipt of the policyholder’s valid application for a switch from one fund type to
another, Policyholder’s Fund Value after deducting switching charge, if any, shall be
transferred to the New Fund type opted for by the policyholder and shall be utilized to
allocate Fund Units at the NAV under the new Fund type on the said date of switch. If a
valid application is received up to 3 p.m. by the servicing branch, the closing NAV of the
same day shall be applicable and in respect of the applications received after 3 p.m. by the
servicing branch, the closing NAV of the next business day shall be applicable.

Switching shall not be allowed if due premiums have not been paid.

b. Top-Up (Additional Premium)

The policyholder can pay Top-up in multiples of Rs.1,000/- without any limit at anytime
during the term of the policy. However Top-up shall not be allowed during the last 5 years
of the contract. In case of yearly, half-yearly, quarterly or monthly(ECS) mode of premium
payment such Top-up can be paid only if all due premiums have been paid under the
policy.

12. MODES OF PREMIUM PAYMENT

The policyholder has the choice either to pay Single Premium (in one lump sum) or Regular
premium (yearly, half-yearly, quarterly or monthly (through ECS only)). There will be no
mode specific charges/ rebates.

13. COMMISSION PAYABLE TO AGENTS/ CORPORATE AGENTS/ BROKERS &

DEVELOPMENT OFFICER’S CREDIT:

Commission to Agents, Corporate Agents and Brokers:

• For regular premium policies – 7.5% of the premium in the first year and 2% of the
premium for subsequent years
• For Single premium policies – 2% of the premium
• 1% of the amount deposited as Top-up any time during the Policy term
• There will be no bonus commission.

Development Officer’s credit will be as under:

• 20% of first year premium in case of Regular Premium policies
• 5% in case of Single Premium Policies.

14. CEIS REBATE:

No rebate on premium is allowed to Corporation Employees.

However, for direct business in respect of Corporation Employees, there will not be any
allocation charge as well discontinuance charge.

All other charges shall be as mentioned in Para 3(ii).

15. LOANS
No loan shall be granted under this plan.

16. UNDERWRITING
Instructions will be issued separately by Underwriting and Reinsurance Department.

17. DAYS OF GRACE:

A grace period of 30 days will be allowed for payment of yearly or half-yearly or quarterly
premiums and 15 days for monthly (through ECS) premiums. If the death of Life Assured

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 occurs within the grace period but before the payment of premium then due, the policy will
still be valid and the death benefits shall be paid after deduction of all the relevant charges,
if not recovered.
If the premium is not paid before the expiry of the days of grace, the benefits shall be paid as
per details given in para 7 under Discontinuance of premiums.

18. REVIVALS
If due premium is not paid within the days of grace, a notice shall be sent to the
policyholder within a period of fifteen days from the date of expiry of grace period to
exercise the option for revival within a period of thirty days of receipt of such notice. If the
policyholder exercises the option to revive the policy, the arrears of premium without
interest shall be required to be paid.

The Corporation reserves the right to accept the revival at its own terms or decline the
revival of a policy. The revival of a policy shall take effect only after the same is approved
by the Corporation and is specifically communicated in writing to the Policyholder.

Reinstatement of surrendered policy shall not be allowed.

19. COOLING-OFF PERIOD:

If a policyholder is not satisfied with the “Terms and Conditions” of the policy, he/she may
return the policy to the Corporation within 15 days from the date of receipt of the policy.
The amount to be refunded in case the policy is returned within the cooling-off period shall
be determined as under:

Fund Value of units in the Policyholder’s Fund value

Plus unallocated premium.
Plus Policy Administration charge deducted
Less charges @ Rs. 0.20%o of Total Premiums payable during entire term of policy.

In case the policy is returned during the cooling-off period, Commission shall be recovered
from the concerned Agent and the Development Officer’s credit allowed shall be
withdrawn.

20. BACK DATING:

Back dating of policy will not be allowed.

21. POLICY STAMPING:

Policy Stamping will be affixed at the rate of Rs.0.20 per thousand of total premium payable
during entire term of the policy.

22. ASSIGNMENTS / NOMINATION:

Nomination/ change of Nomination should be submitted for registration to the office of the
Corporation, where this policy is serviced. In registering nomination the Corporation does
not accept any responsibility or express any opinion as to its validity or legal effect.

Assignment will not be allowed under this plan.

23. NORMAL REQUIREMENTS FOR CLAIM:

The normal documents which the claimant/s shall submit while lodging a claim in case of
death of the policyholder shall be the claim forms as prescribed by the Corporation
accompanied with the original policy document; proof of title and proof of death.

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 On vesting or on earlier Surrender, the Life Assured shall submit the discharge form,
annuity option form and the original policy document besides the proof of age, if not
admitted earlier.

24. REINSURANCE:
Not Applicable.

25. ACCOUNTING OF INCOME AND OUTGO:

Instructions regarding the accounting procedure to be followed under the plan shall be
issued separately by Finance & Accounts Department, Central office.

26. PROPOSAL FORM:

The specimen Proposal Form is enclosed as Annexure.

27. POLICY DOCUMENT:

The specimen Policy document will be sent by the Corporate Communications Department,
Central Office.

EXECUTIVE DIRECTOR (MARKETING)

Enclosures: Annexure

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