LIC New Endowment Plan 714: Complete Guide

LIC New Endowment Plan 714 is one of the most straightforward savings-cum-insurance policies LIC offers. I have recommended it to hundreds of families in Gorakhpur over the years, particularly to those who want guaranteed returns without any market risk.

**What is LIC New Endowment Plan 714**

Plan 714 is a participating, non-linked endowment policy. You pay premiums for the full policy term, and at maturity you receive the Sum Assured plus accumulated bonuses. If you die during the policy term, your nominee receives the death benefit immediately.

The plan participates in LIC's surplus, which means you earn Simple Reversionary Bonus every year. LIC also declares a Final Additional Bonus when applicable, which adds to the maturity payout.

**Who should take this plan**

I recommend Plan 714 to people who want to build a corpus over 15 to 25 years with the discipline of forced savings. It works well for salaried individuals whose companies do not have a provident fund and for self-employed professionals who want a guaranteed lump sum at a specific life milestone.

The minimum entry age is 8 years and the maximum is 55 years. The minimum Sum Assured is Rs 1 lakh. The policy term ranges from 12 to 35 years.

**How the maturity benefit works**

When I explain Plan 714 to a client, I always run the numbers. Suppose a 30-year-old takes a Sum Assured of Rs 10 lakh for 20 years. The annual premium is approximately Rs 54,000. At maturity, he receives the Sum Assured of Rs 10 lakh plus bonuses accumulated over 20 years. Based on LIC's current bonus rates, total maturity proceeds are typically in the range of Rs 18 to 20 lakh — roughly 1.8 to 2 times the Sum Assured.

**Bonus structure**

LIC declares Simple Reversionary Bonus on this plan annually. The current rate is around Rs 50 per Rs 1,000 Sum Assured per year, though this changes with LIC's valuation results. A Final Additional Bonus is also payable if the policy has been in force for at least 15 years.

**Death benefit**

If the policyholder dies during the policy term, the nominee receives: - The higher of 10 times the annualised premium or 125% of the Sum Assured - All bonuses accumulated up to the date of death

This makes the death benefit substantially higher than just the Sum Assured in the early years of the policy.

**Loan facility**

After 3 years of premium payment, you can avail a loan against Plan 714. This has helped several of my clients meet sudden expenses without surrendering their policy. The loan amount is typically up to 90% of the policy's surrender value.

**Tax benefits**

Premiums paid qualify for deduction under Section 80C up to Rs 1.5 lakh per year. The maturity amount is tax-free under Section 10(10D) provided the Sum Assured is at least 10 times the annual premium, which is the case for most standard terms.

**Should you buy Plan 714 today**

If you are looking for market-linked returns, Plan 714 is not for you. The IRR on this plan is approximately 5.5 to 6% per annum, which is lower than equity mutual funds over the long term. However, this plan gives you two things mutual funds cannot: guaranteed life cover and the certainty of a fixed maturity payout.

For a person in the 30% tax bracket, the post-tax return improves significantly because the maturity is tax-free. For pure insurance coverage, a term plan is more efficient. But Plan 714 serves a different purpose — it is a disciplined savings vehicle with a life cover component.

Call me at 9415313434 if you want me to run the exact numbers for your age and desired corpus. I will show you the exact maturity amount and compare it with other options suited to your situation.