Understanding LIC Plan 935 (New Endowment Plus): The ULIP Investment Architecture
The LIC New Endowment Plus Plan (Plan 935) stands as a landmark unit-linked insurance product (ULIP) designed by the Life Insurance Corporation (LIC) of India. Unlike traditional endowment plans that invest in conservative government bonds and distribute profits through fixed annual bonuses, Plan 935 provides direct, high-value exposure to equity and debt market instruments. It is a non-participating, unit-linked, regular premium life assurance plan. It is specifically structured to offer a solid backup of life insurance cover while simultaneously building a large, tax-exempt capital wealth fund to meet long-term goals like children's higher education, marriage, or retirement wealth.
Although the plan has been withdrawn by LIC for new policy business effective January 1, 2025, it remains highly active in the retail insurance domain. Thousands of existing policyholders continue to pay their scheduled regular premiums, switch between funds, track administrative fee deductions, and monitor their market NAV growth. This LIC Plan 935 Calculator is a premium-grade tool built specifically to help active investors track their ongoing unit values, compare online vs offline charge schedules, and simulate future maturity yields based on expected market trends.
The Four Actuarial Unit Investment Funds
Under Plan 935, policyholders do not invest blindly. You have absolute, direct control over where your hard-earned savings accumulate by choosing from four distinct unit funds, each carrying a unique risk-to-reward ratio:
- 1. Growth Fund (High Risk): Focuses heavily on high-yield equity shares (up to 80% allocation) to generate maximum capital appreciation over multi-decade policy terms. Highly favored by young proposers with a 15 to 28-year policy horizon.
- 2. Balanced Fund (Medium-High Risk): Maintains a balanced exposure between volatile equity stocks (30% to 70%) and fixed-income government bonds, providing a cushioned growth path with moderate risk.
- 3. Secured Fund (Medium Risk): Limits equity investment to a maximum of 45%, directing the majority of funds into secure corporate bonds and government debt instruments. Favored by conservative savers seeking steady compounding.
- 4. Bond Fund (Low Risk): Invests strictly (100%) in government bonds, cash assets, and high-security fixed-income papers. Provides maximum safety of initial principal capital, albeit with lower market-linked returns.
Actuarial Eligibility Guidelines for Plan 935
To maintain a robust wealth-building baseline, LIC has established strict boundary rules regarding entry age, PT limits, and maturity targets:
| Parameter | Minimum Limit | Maximum Limit |
|---|---|---|
| Child/Insured Entry Age | 90 Days Completed | 50 Years (Last Birthday) |
| Policy Term (PT) | 10 Years | 28 Years |
| Maturity Age | 18 Years (Completed) | 60 Years Completed |
| Basic Sum Assured | Strictly 10 times the annualized regular premium | |
The Complex Underwriting Charge Structure
What makes ULIP products mathematically unique—and sometimes complex—is their dynamic charge structure. Before your saved capital is converted into investment units, specific administrative and insurance fees are deducted from your regular premium:
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Premium Allocation Charges (PAC): This is a front-loaded charge deducted from your regular premium before buying units. Direct online buyers enjoy significantly lower charges:
- Direct Online Mode: Year 1 (3.0%), Years 2 to 5 (2.0%), Year 6 onwards (1.5%).
- Offline Agent Mode: Year 1 (7.5%), Years 2 to 5 (5.0%), Year 6 onwards (3.0%).
- Fund Management Charges (FMC): This represents the fee for professional fund managers who actively monitor the asset portfolios. For Plan 935, FMC is fixed strictly at 0.70% per annum of the total asset value, deducted daily in the Net Asset Value (NAV) calculation.
- Policy Administration Charge: A fixed fee of ₹100 per month (₹1,200 per year) is charged by LIC. This fee is recovered monthly by redeeming the equivalent number of units from your fund.
- Mortality Charges: Deducted monthly by redeeming units. This charge represents the actual actuarial cost of providing life insurance coverage (Sum Assured). The mortality fee is calculated based on the child's/insured's current age and the Sum at Risk (Basic Sum Assured minus closing Fund Value). As the fund value grows over the years, the Sum at Risk decreases, which lowers the monthly mortality charge deduction.
Survival Maturity & Death Benefit Mathematical Formulas
LIC New Endowment Plus Plan 935 pays out secure benefits based on the following actuarial formulas:
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Maturity Benefit (Survival Payout): Payable upon surviving the complete policy term, provided all premiums are fully paid.
Maturity proceeds = Net Closing Fund Value (Units × Closing NAV) -
Death Benefit (Demise during Term): In the unfortunate event of the insured's demise:
- Before Commencement of Risk (Age 8 or 2 years from policy date, whichever is earlier): Refund of the Closing Fund Value is paid to the nominee.
- After Commencement of Risk: The nominee receives the higher of the Basic Sum Assured or the closing Fund Value on the date of death. This is guaranteed to be at least 105% of the total premiums paid up to the date of death.
Tax Exemptions: Section 80C & Section 10(10D) Security
LIC Plan 935 incorporates premium-grade fiscal benefits under the Income Tax Act, 1961:
- Section 80C Premium Deductions: Regular premiums paid towards the policy are fully deductible from taxable income up to a maximum limit of ₹1,50,000 per financial year.
- Section 10(10D) Exemption on Payouts: The complete final maturity proceeds (Fund Value) and death claim payouts are 100% tax-free in the hands of the recipient, provided the total annualized premium is less than 10% of the basic Sum Assured.
LIC Jeevan Endowment Plus Plan 935 - Frequently Asked Questions
Q1: Can I make partial withdrawals from my Plan 935 policy?
Yes. Policyholders are permitted to make partial withdrawals after successfully completing the 5-year lock-in period, provided the policy is active and the child has completed 18 years of age. Withdrawals can be a fixed percentage of the fund value to cover higher education or marriage milestones.
Q2: What is fund switching, and how many switches are free?
Fund switching allows you to transfer your accumulated fund value between the Growth, Balanced, Secured, and Bond funds to maximize gains or protect capital. LIC provides 4 free fund switches in every policy year, after which a fee of ₹100 per switch is charged.
Q3: What happens if I stop paying premiums before 5 years?
If you stop paying premiums during the 5-year lock-in period, your fund value (less discontinuance charges) is transferred to the Discontinued Policy Fund. It earns a guaranteed minimum interest rate of 4% p.a. less 0.50% FMC, and the accumulated corpus is paid to you strictly upon completing the 5-year lock-in period.
Q4: Can I take a loan against my New Endowment Plus policy?
No. Unlike traditional endowment plans, unit-linked policies (ULIPs) like LIC Plan 935 do not offer any loan facilities, as the funds are invested directly in volatile market assets.
Q5: When does risk commencement start for child policies?
For children entered under 8 years of age, the risk cover starts either upon the child completing 8 years of age or 2 years from the date of policy commencement, whichever is earlier. For children aged 8 or above, risk commencement starts immediately from the policy date.
Q6: How does the premium waiver benefit work?
If you have attached the Premium Waiver Benefit (PWB) Rider and the proposer (parent) demises during the policy term, all future premiums are waived by LIC. The policy remains in-force and continues to grow in the chosen funds, and the closing fund value is paid at maturity, securing the child's financial milestones without burden.