CHILD FUTURE PLAN – WITH PROFITS (PLAN No. 185)

INTRODUCTION OF LIC’s CHILD FUTURE PLAN – WITH PROFITS (PLAN No. 185)

It has been decided to introduce a new with profits plan for children, LIC’s Child Future Plan (Plan No. 185) w.e.f 8th February 2007. Its details are as under:

1. Introduction :
This plan is designed to meet the increasing educational, marriage and other needs of growing children which provides the risk cover on the life of child not only during the policy term but also during the extended term (i.e. 7 years after the expiry of policy term). On surviving to the end of the specified durations, a number of Survival benefits are also payable.

2. Premiums :
The policy is available for terms 11 to 27 years. Premiums are payable regularly during the policy term with yearly, half-yearly, quarterly or through salary deductions. Premiums may be paid either for 6 years or upto 5 years before the policy term.

The premium rates and extra premium rates are given in Annexure 1 and 2 respectively.

3. Extended Term:
The Extended term will be 7 years from the date of expiry of policy term. No premiums are payable during the Extended term of plan.

4. Benefits :
a) Survival Benefit :
On life assured surviving to the end of the specified durations an amount as specified below is payable:
5 years before the date of expiry of policy term - 25% of the Sum Assured
4 years before the date of expiry of policy term - 10% of the Sum Assured
3 years before the date of expiry of policy term - 10% of the Sum Assured
2 years before the date of expiry of policy term - 10% of the Sum Assured
1 years before the date of expiry of policy term - 10% of the Sum Assured
On the date of expiry of policy term - 50% of the Sum Assured along with vested Simple Reversionary Bonuses and Final (Additional) Bonus, if any.

b) Death Benefit :
On death after the Date of Commencement of Risk but before the date of expiry of policy term -Sum Assured along with Vested Simple Reversionary Bonuses and Final (Additional) bonus (if any) is payable.

On death during the Extended Term - Sum Assured is payable.

On death before the Date of Commencement of Risk - All the premiums paid (excluding premium for extra and premium waiver benefit, if any,) along with interest of 3% p.a compounding yearly shall be payable.

5.Participation in profits of the Corporation :
Provided the policy is in full force, then depending upon the Corporation's experience with regard to policies issued under this plan, this policy will be eligible for a Simple Reversionary Bonus at such rate and on such terms as may be declared by the Corporation.

Simple Reversionary Bonuses shall be declared per thousand Sum Assured annually at the end of each financial year provided the policy is in full force. Once declared, they form part of the guaranteed benefits of the plan. Simple Reversionary Bonuses will be added from the date of commencement of policy until the selected policy term or till death, if it occurs earlier, provided the policy is in full force. In case of a paid up policy vested bonuses shall be payable only if at least 3 full years’ premiums have been paid.

Not withstanding what is stated above, no bonus shall vest under the policy when the risk is not covered. However, the Simple Reversionary Bonuses for the period before the Commencement of Risk will vest on the policy anniversary from which the risk is covered provided the policy is in full force and 3 full years premiums have been paid under the policy.

In the event of policy being surrendered, the discounted value of vested bonuses, if any, as applicable on the date of surrender, will be payable.

Final (Additional) Bonus may also be declared under the policy which shall be payable on expiry of the policy term, or on earlier death.

Once the bonus or their cash value is paid, no further bonus shall accrue under the policy.

6.Auto Cover :
If after at least two full year’s premiums have been paid, and any subsequent premium be not duly paid, full death cover shall continue for a period of two years from the due date of the First Unpaid Premium (FUP). This period of 2 years from FUP shall be called Auto Cover Period. During this Auto Cover Period, the Proposer/ Life Assured can pay one or more instalments premiums with interest without submission of evidence of health. On payment of one or more of the arrears of instalment premiums with interest, the Auto Cover Period of 2 years shall be extended from the due date of new FUP.

If death of Life Assured occurs during the Auto Cover period, then death benefit after deducting unpaid premiums, with interest, as also premiums falling due before the next anniversary of the policy, is payable alongwith the vested bonus, if any.

Premium Waiver Benefit, if any, shall remain inforce during the Auto Cover period.

7.Premium Waiver Benefit :
The proposer can avail the premium waiver benefit, on the payment of an additional premium during the premium paying term or till death of the proposer, whichever occurs earlier.
On availing this benefit:
(a) The payment of the premiums falling due after the date of death of the proposer shall be waived;
(b) The Premium Waiver Benefit shall remain in force during the Auto cover period. Any premiums that have fallen due and not paid during the Auto Cover period shall also be waived.
(c) The Premium Waiver Benefit as stated in (a) shall be granted on the basis of the proposer's age, personal declaration of health and other requirements. In case it is found that any untrue or incorrect statement is contained therein or any material information is withheld, all claim to the benefit shall cease and determine;
(d) The Premium Waiver Benefit described in (a) and (b) shall not operate in the event of the death of the proposer by his own hands, whether sane or insane within one year from the date of issuance of First Premium Receipt;

The premium rates and extra premium rates for Premium waiver Benefit are given in Annexure 3 & 4 respectively.

8. Proposer :
The proposer can be child’s father or mother who has income of her own i.e. female category I and II. If both parents are not alive, then legal guardian can propose under the plan.
The grand parents can propose even if the parents are alive provided the consent of parent is obtained. Existing rules of parent’s income eligibility and total insurance in force on their lives for deciding maximum sum assured allowable are to be adhered to strictly.

9. Eligibility Conditions and Restrictions :
For Life Assured
(a) Minimum Entry Age : 0 years (last birthday)
(b) Maximum Entry Age : 12 years (last birthday)
(c) Minimum Maturity Age : 23 years (last birthday)
(d) Maximum Maturity Age : 27 years (last birthday)
(e) Minimum Sum Assured : Rs. 1,00,000
(f) Maximum Sum Assured : Rs. 100 ,00,000
(g) Policy term : 11 to 27 years
(h) Premium Paying term : 6 years and Policy term less 5 years

Sum Assured shall be in multiples of Rs. 5000.

For Proposer (if PWB is opted for)
(a) Minimum Entry Age : 18 years (completed)
(b) Maximum Entry Age : 55 years (Nearer birthday)
(c) Maximum Age at the end of premium paying term: 70 years (Nearer birthday)



10. Special Features :
a) Date of commencement of risk : In case the age of Life Assured at entry is less than or equal to 10 years, risk under this plan shall commence either after 2 years from the date commencement of the policy or from the policy anniversary coinciding with or immediately following the completion of 5 years of age of Life assured, whichever is later. Where the age at entry is more than 10 years but less than 12 years, the risk shall commence from the policy anniversary coinciding with or next following 12th birthday of the Life Assured. For those aged 12 years or more risk will commence immediately.

b) Date of Vesting: The policy shall automatically vest in the Life Assured on the policy anniversary coinciding with or immediately following the completion of 18 years of age and shall, on such vesting, be deemed to be a contract between the Corporation and the Life Assured.

11. Rebates :
Mode Rebate:
Yearly mode - 2% of Tabular Premium
Half-yearly mode - 1% of the tabular premium
Quarterly - NIL

Sum Assured Rebate:
Sum Assured Rebate (Rs.)
1,00,000 to 2,99,999 Nil
3,00,000 to 4,99,999 1.5 %o S.A.
5,00,000 and above 2 %o S.A.

12. Commission rates and credit for Development Officers :
a) Commission rates (as percentage of premium) payable to Agents and Corporate Agents during the premium paying term (ppt) are as under :

Commission Scales :


>=15 yrs
10-14 yrs
6-9 yrs
first yr
25%
20%
10%
2nd & 3rd year
7.5%
7.5%
5%
subsequent
5%
5%
5%

Bonus Commission 40% of first year commission .

b) Commission rates (as percentage of premium) payable to Brokers :

Commission Scales :


>=15 yrs
10-14 yrs
6-9 yrs
first yr
30%
25%
10%
2nd & 3rd year
5%
5%
5%
subsequent
5%
5%
5%

No bonus commission is payable to brokers.



c) Development Officer’s Credit:
Premium paying term Credit as % of First Year’s Premium
6 - 9 years 30%
10 - 14 years 60%
15 years & above 100%

13. Underwriting, Age proof and Medical Requirements :
For sum assured under basic plan:

SUC will be calculated as per the existing rules. The actual SA for this plan will be the sum assured under the basic plan.

Special reports will be called for as per the chart given in circular Ref: Actuarial/2090/4 dated 1st November 2006.

Plan will be allowed to standard children and sub-standard children attracting EMR up to Class III for overweight only.

Age proof:
For children aged 5 years and above - a certified extract from the school records. For children aged less than 5 years - a certified extract from Municipal / local village panchyat records made at the time of birth.

Financial underwriting:
Based on parent’s income eligibility (their income should be adequate for both insurance on their own lives and on the lives of their children).

Matching insurance:
Insurance on the lives of parents will not be insisted
- up to Rs. 2 lacs if PWB is not opted for
- up to Rs. 5 lacs if PWB is opted for and allowed

For PWB:
SUC will be calculated as per the existing rules on the life of the proposer. The actual SA for PWB will be the future outstanding premiums (future instalment premiums excluding first premium) under the basic plan.

Special repots will be called for as per the existing chart of special reports. PWB on the lives of parents (males and females falling under Female Category I & II ) is allowed under non-medical (special) scheme and non-medical (general) scheme to professionals
In case of pregnant ladies PWB cover will not be allowed.
PWB will be allowed to standard and sub-standard (including physically handicapped ) proposers.
Only standard age proof will be accepted.

14. Paid-up value :
If at least three full years’ premiums have been paid, any subsequent premiums be not duly paid, this policy shall not be wholly void but shall become paid-up.

If policy becomes paid-up before the Commencement of Risk, then the policy shall be entitled to receive the Guaranteed Surrender Value. If the policy is not surrendered, this Guaranteed Surrender Value shall be payable on the expiry of policy term or on death of Life Assured, if earlier.


If policy becomes paid-up after Commencement of Risk, then the sum assured of policy shall be reduced to such a sum, called paid-up value, as shall bear the same proportion to the full Sum Assured as the number of premiums actually paid bears to the total number of premiums stipulated for in the policy.

The Policy so reduced shall thereafter be free from all liabilities from payment of the within mentioned premiums, but shall not be entitled to participate in future profits from the date of discontinuance of premiums. The existing vested bonuses, if any, shall remain attached to the reduced paid- up policy.

In the case of a reduced paid-up policy, no survival benefits shall be payable and the paid-up value along with the vested bonuses, if any, shall be payable only in lump-sum on the expiry of policy term or death of Life Assured, if earlier.

If the policy is in lapsed/ paid-up condition, Premium Waiver Benefit shall cease to apply after the Auto cover period, if any, is over.

Also, Extended Term Cover shall cease to apply if the policy is in lapsed/ paid-up condition.

15. Lapse:
If less than 2 years premiums have been paid and the policy lapses then on death or at expiry of policy term nothing shall be payable.
If more than 2 but less than 3 years premiums have been paid and the policy lapses then
- If death occurs during the Auto Cover period, then death benefit as described in Auto Cover shall be payable.
- If death occurs after the auto Cover period, then nothing shall be payable.
- On expiry of policy term nothing shall be payable.

16. Guaranteed Surrender Value :
The policy can be surrendered for cash provided at least three full years' premiums have been paid.

The Guaranteed Surrender Value allowed under this Policy is as under:

i. Before the Date of Commencement of Risk: 90 percent of the total amount of the premiums paid excluding the premiums paid for the first year.

ii. After the Date of Commencement of Risk: 90 percent of the total amount of the premiums paid before the Date of Commencement of Risk, together with 30 percent of total amount of premiums as have been paid on and after Date of Commencement of Risk excluding the premiums for the first year.

The Guaranteed Surrender Value calculated above shall be subject to following deduction of the total amount of survival benefits that might have become due on or before the date of surrender. Further all extra premiums and/or any other premium including premium for Premium Waiver Benefit, if any shall not be considered in the premiums refunded.

Cash Value of any existing vested bonuses, if any, shall also be allowed if not paid earlier.

If less than three full years premiums have been paid under the policy, then nothing shall be payable.

17. Special Surrender Values :
The special surrender value will be the discounted value of the Paid-up value (as defined in para 14) and the existing vested bonuses. The discounted factor shall be the surrender factors used for our Endowment Assurance plan, which will depend on the policy term and the duration elapsed since commencement of the policy.

The Special Surrender value calculated above will be subject to the deduction of the survival benefits which have become due on or before the date of surrender.

The special Surrender value will be payable, if it is more favourable to the policyholder.

18. Grace period for payment of premium :
A grace period of one calendar month but not less than 30 days shall be allowed for payment of yearly or half yearly or quarterly premium. If after the date of commencement of risk, death occurs within this period but before the payment of premium then due, the policy shall still be valid and the Sum Assured shall be paid after deduction of the said premium as also the unpaid premium/s falling due before the next anniversary of the policy. If the premium is not paid before the expiry of the days of grace, the policy lapses.

If the policy has not lapsed and the claim is admitted in case of death under a Policy where the mode of payment of premium is other than yearly, unpaid premiums, if any, falling due before the next Policy anniversary shall be deducted from the claim amount.

19. Revivals or Reinstatements of lapsed policy :
If the Policy has lapsed, and the period of Auto Cover, if applicable is over, it may be revived during the lifetime of the life assured, but within a period of 5 years from the due date of first unpaid premium or before the date of expiry of policy term, whichever is earlier, on submission of proof of continued insurability of the life assured and/or proposer (if Premium Waiver Benefit is opted for), to the satisfaction of the Corporation and the payment of all the arrears of premium together with interest (compounding half-yearly) at such rate as may be fixed by the Corporation from time to time. The Corporation, however, reserves the right to accept, accept with modified terms or decline the revival of discontinued policy. The revival of a discontinued Policy shall take effect only after the same is approved by the Corporation and is specifically communicated in writing to the Proposer / Life Assured.

20. Loans :
No loans will be available to the policyholders under this plan.

21. Suicide Clause :
Not applicable for the basic plan but applicable for optional Premium waiver Benefit

22. Normal requirements for claim :
The normal documents which the claimant shall submit while lodging the claim in case of death of the Life Assured / Policyholder shall be the claim forms accompanied with original policy document, proof of title, proof of death, proof of accident/disability, medical treatment prior to death, school / college / employer’s certificate, whichever is applicable, to the satisfaction of the Corporation. If the age is not admitted under the policy, the proof of age of the Life Assured shall also be submitted.

Where the policy results into a survival benefit claim or in case of surrender of the policy, the Life Assured shall submit the discharge form along with the original policy document besides proof of age, if the age is not admitted earlier.

23. Cooling-off period :
If a policy holder 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.

24. Back-dating interest :
The Policy can be dated back within the financial year as usual. Back-dating interest will be charged at the rate of 8% p.a. for dating back in excess of one month. This rate is subject to revision from time to time. The interest shall be charged even where the policy is back dated to a lean month.

25. Policy stamping :
Policy stamping charges will be 20 paise per thousand Sum Assured under this Plan.

26. Reinsurance :
Normal procedure for reinsurance will apply.

27. Assignments / Nominations:
This policy is in no event assignable by the Proposer, but after the Policy has vested in the Life Assured he may appoint a nominee or nominees or create an Assignment thereof. In such case notice of assignment or nomination should be submitted for registration to the office of the Corporation, where this policy is serviced. In registering an assignment or nomination the Corporation does not accept any responsibility or express any opinion as to its validity or legal effect.

28. Proposal Form :
Proposal Form No. 340 and 360 may be used for this plan.