Summary: LIC’s New Endowment Plan 714 (UIN 512N277V03) is a participating, non-linked individual savings-linked life-insurance policy. Its official sales brochure applicable from 22 September 2025 specifies entry ages, policy terms, death and maturity formulas, optional riders, grace periods, revival, paid-up treatment, surrender values and loans. In-force maturity proceeds consist of Basic Sum Assured plus vested bonuses and any Final Additional Bonus, if payable; future bonuses are not fixed investment returns. Death benefit is subject to the higher-of formula and a 105%-of-premiums floor. Early discontinuance may sharply reduce benefits, and surrender value is not a refund of every premium. For Tax Year 2026-27, section 123 and Schedule XV of the Income-tax Act, 2025 govern eligible premium deductions, while section 11 and Schedule II govern life-insurance receipt exemption subject to premium and policy conditions. Qualifying individual life-insurance premiums have been exempt from GST since 22 September 2025. This article separates contractual benefits from projected bonuses and examines tax consequences without recommending purchase.

Eligibility, Sum Assured and Policy Term

The brochure specifies minimum entry age of eight completed years, maximum entry age of 50 years on the nearer-birthday basis, minimum maturity age of 20 completed years and maximum maturity age of 75 years. Available policy terms run from 12 to 35 years. Basic sum assured begins at ₹2 lakh, with no stated product-level upper limit, but the accepted amount remains subject to underwriting and the prescribed sum-assured multiples. The age and term restrictions must be satisfied together; a 50-year-old cannot automatically select the maximum 35-year term because the maturity-age ceiling also applies.

The brochure allows the plan to be sold through LIC’s licensed offline distribution channels. The insured’s health, occupation and other risk facts may affect acceptance and the final premium. Where a minor is insured, the contract vests in the life assured at the prescribed anniversary around attainment of 18 years. It is important to distinguish the proposer, policyholder, life assured and nominee in the policy records.

Plan Identity and the Contract to Check

LIC’s New Endowment Plan is Plan 714, UIN 512N277V03. LIC describes it as a participating (with-profits), non-linked, individual life savings policy. The current sales brochure on the insurer’s website applies from 22 September 2025. The policy combines a contractual basic sum assured with potential declared bonuses; it does not invest premiums in a policyholder-selected market-linked fund. Accordingly, NAV, market-unit allocation and daily portfolio valuation are not appropriate descriptions of its benefits.

A participating policy’s financial result depends on the premium schedule, duration, bonus declarations and whether the policy remains in force. The basic sum assured and a bonus already vested under the policy are not the same as a projection of future bonuses. An illustration should separate guaranteed elements, non-guaranteed illustrations and possible deductions from proceeds. The issued policy schedule, benefit illustration, customer information sheet and applicable riders take precedence over an informal quotation or old product comparison.

Death Benefit: Formula and Practical Example

For an in-force policy, the stated death benefit is the Sum Assured on Death plus vested Simple Reversionary Bonuses and any Final Additional Bonus declared and payable. LIC defines Sum Assured on Death as the higher of the Basic Sum Assured and seven times annualised premium. A further floor applies: the death benefit cannot be below 105% of total base-policy premiums paid up to death, calculated according to the brochure’s definitions. The formula is not seven times every payment including taxes, riders or modal loadings.

Illustration, not a quotation: suppose Basic Sum Assured is ₹5,00,000 and annualised base premium is ₹60,000. Seven times the annualised premium is ₹4,20,000, so the Sum Assured on Death component is ₹5,00,000 before applicable bonuses and the 105%-of-premiums floor are checked. The actual payout cannot be calculated without the death date, premium history and bonus record. A policyholder should also test whether the premium-to-cover ratio affects tax exemption of a future non-death receipt; the insurer’s contractual death formula does not determine income-tax eligibility.

Maturity Benefit and Participating Bonuses

If the life assured survives to maturity and all premiums have been paid as required, the maturity amount consists of Basic Sum Assured, vested Simple Reversionary Bonuses and any Final Additional Bonus payable under LIC’s terms. The brochure states that annual Simple Reversionary Bonuses depend on LIC’s participating-fund experience. Once a bonus is declared and vests, its treatment follows the contract; future bonus rates are not guaranteed merely because historic rates are available.

A meaningful comparison requires cash-flow timing, not simply adding nominal bonuses to the basic sum assured. An annual premium paid for 25 years is economically different from a single investment, and a long-term maturity amount should be assessed using the actual policy cash flows and an appropriate internal-rate-of-return calculation. No return or maturity figure should be presented as certain unless the insurer has contractually guaranteed it.

Premium Payment, Grace Period and Revival

The plan permits regular premiums on yearly, half-yearly, quarterly or monthly basis, with monthly payment through NACH, and certain salary-deduction arrangements. LIC specifies a 30-day grace period for yearly, half-yearly and quarterly instalments and 15 days for monthly instalments. The cover continues during the grace period on the policy terms. Non-payment beyond that window may result in lapse and changes to the benefit payable.

A lapsed policy may be considered for revival within five consecutive complete years from the first unpaid premium and before maturity, subject to payment of arrears, applicable interest, continued-insurability evidence and LIC’s acceptance. Revival is not automatic merely because an online payment is made. The insurer can impose revised terms or refuse revival under the conditions. Historic sample premium and revival-interest figures in a brochure should not be presented as October 2026 rates.

Paid-Up Status, Surrender Value and Loans

If at least one full year’s premium has been paid and the first policy year is completed, a subsequently discontinued policy can become paid-up under the brochure. The death and maturity paid-up sums assured are proportionately reduced according to premiums paid relative to the original premium-paying period, while vested bonuses, if any, remain attached. Future bonus participation ceases. Where fewer than one full year’s premiums have been paid, the brochure provides that benefits cease after the grace period; this is a materially different outcome.

Surrender may be available after completion of the first policy year with one full year’s premiums paid. LIC distinguishes Guaranteed Surrender Value, generally after two full years’ premiums, from Special Surrender Value, potentially available earlier. The payout is the higher of the applicable values under the contract; it is not necessarily the sum of premiums contributed. The plan also provides a policy-loan facility subject to acquisition of surrender value, loan limits, interest and conditions. Any outstanding loan and interest can reduce death or maturity proceeds.

Optional Riders and Instalment Settlement

The current brochure lists optional accidental-death/disability, accident-benefit, new-term-assurance, premium-waiver and critical-illness riders, each subject to eligibility and additional premium. The two accident-related riders are alternatives, not automatically cumulative. Critical-illness rider options and covered conditions require separate review of definitions, exclusions, waiting periods and the rider’s own terms. A rider should not be described as included in the base premium unless it appears on the accepted schedule.

LIC permits a settlement option for eligible maturity and death benefits over five, ten or fifteen years, subject to minimum instalments and timely exercise. Instalments are not the same as a guaranteed investment return; the insurer’s declared settlement interest and the selected payout mode determine payments. For maturity settlement, the brochure calls for exercising the option at least three months before the due date. Nominees should know in advance whether a death benefit is to be paid in one amount or in instalments.

Income-Tax Deduction in Tax Year 2026-27

The Income-tax Act, 2025 took effect on 1 April 2026. For Tax Year 2026-27, the deduction formerly associated with section 80C of the Income-tax Act, 1961 is governed by section 123 read with Schedule XV. The aggregate ceiling is ₹1,50,000 across qualifying payments; it is not a separate ₹1.5 lakh allowance for each insurance policy. The deduction is ordinarily relevant to a taxpayer using the old tax regime, not the default new regime.

Premium eligibility also depends on whose life is insured, the applicable percentage of actual capital sum assured, payment evidence and other statutory conditions. For a policy issued after 1 April 2012, the ordinary 10%-of-actual-capital-sum-assured restriction should be tested. A policyholder who already exhausts the section 123 ceiling through provident fund or other eligible items receives no incremental deduction merely by buying this policy. TaxGuru’s discussion of section 123 provides additional background.

Maturity Exemption, High Premiums and TDS

Under section 11 read with Schedule II of the 2025 Act (corresponding to former section 10(10D)), life-insurance receipts may be exempt only when the statutory conditions are met. For non-ULIP policies issued on or after 1 April 2023, the ₹5 lakh annual-premium test and relevant aggregation rules are especially important. The 10%-of-sum-assured condition also requires a separate check. Thus an endowment policy should not be advertised as automatically tax-free at maturity; the result depends on policy issue date, premium pattern, cover and other relevant policies.

Where a resident receives a taxable life-insurance payout, the TDS mechanism is section 393(1), Table serial 8(i), of the 2025 Act (earlier section 194DA). The statutory rate is 2% of the income component, with the ₹1 lakh gross-payment threshold, subject to the precise provision and recipient facts. TDS is a collection mechanism, not the final tax rate. Death receipts have a distinct exemption treatment, subject to exclusions such as Keyman insurance. TaxGuru’s explanation of insurance receipt taxation discusses the relevant distinctions.

GST Exemption and Premium Receipts

The Department of Financial Services confirms that individual life-insurance policies are exempt from GST from 22 September 2025 under Notification No. 16/2025-Central Tax (Rate), dated 17 September 2025. The exemption is not an assurance that every charge in every insurance-related arrangement is exempt. Group and employer-sponsored life policies are treated differently. Premiums paid in instalments are generally tested by the payment date, while historic advances and transition transactions can require section 14 of the CGST Act analysis.

For a New Endowment Plan 714 premium paid in October 2026, the invoice should reflect the notified individual-policy treatment if the transaction qualifies. Review the premium receipt, rider classification and any separate fees instead of applying an old 18% rate mechanically. GST exemption is different from income-tax deduction or maturity exemption. TaxGuru’s report on the insurance GST exemption summarises the Government’s confirmation.

Accounting, Disclosure and Policyholder Controls

For an individual, premium payments and policy proceeds should be tracked using receipts, annual statements and the policy schedule, with separate records for rider premiums and loan transactions. For a business that is the policyholder or beneficiary, accounting depends on the contractual rights, purpose of insurance, applicable financial-reporting framework and whether the policy is an employee-benefit or Keyman arrangement. It is unsafe to apply a retail-policy tax illustration to an employer-owned contract without checking the beneficiary and accounting substance.

Before signing, obtain a personalised benefit illustration showing guaranteed and non-guaranteed outcomes, a schedule of premiums, exclusions, surrender factors, the current customer information sheet and a nomination record. After issue, check that all material declarations and the free-look and grievance processes are understood. Retain a copy of every renewal receipt and any revival or loan communication.

Frequently Asked Questions

1. Is LIC New Endowment Plan 714 a ULIP?

No. The current LIC brochure classifies it as participating and non-linked. The policyholder does not hold units whose value fluctuates with a disclosed NAV; bonuses depend on LIC declarations under the policy.

2. Is the maturity amount guaranteed?

Basic Sum Assured is the contractual maturity component for an in-force policy. Vested bonuses and any Final Additional Bonus depend on the policy and declarations; future bonus rates should not be treated as guaranteed.

3. What happens if one premium is missed?

The grace period is 30 days for yearly, half-yearly and quarterly modes and 15 days for monthly mode. After grace, lapse, paid-up status and revival rules depend on the premium history and policy conditions.

4. Can the policy be surrendered after one year?

The brochure permits surrender after the first policy year when one full year’s premium has been paid. Guaranteed and Special Surrender Value rules differ; the actual amount may be substantially below total premiums paid.

5. Does the policy qualify for a deduction under section 80C?

For Tax Year 2026-27 the corresponding provision is section 123 and Schedule XV of the Income-tax Act, 2025. It is subject to the old regime, shared ₹1.5 lakh ceiling, sum-assured restrictions and other conditions.

6. Is the maturity receipt automatically exempt from income tax?

No. Section 11 and Schedule II require checks including premium relative to actual capital sum assured and, for relevant non-ULIP policies issued from April 2023, the ₹5 lakh annual-premium aggregation test.

7. Is GST charged on premiums paid in October 2026?

The notified exemption generally covers qualifying individual life-insurance premium supplies from 22 September 2025. Review the actual premium receipt and any separately classified charges or riders.

8. Can a policyholder borrow against the policy?

The brochure permits loans subject to surrender-value acquisition and LIC conditions. Loan interest and outstanding principal may be deducted from benefits; the loan should not be mistaken for additional income.

Key Takeaways

• Plan 714 / UIN 512N277V03 is participating and non-linked; it combines life cover with a maturity benefit.
• Eligibility, premium term and maximum maturity age must be satisfied together.
• Death cover follows the higher-of formula plus eligible bonuses and the prescribed minimum floor.
• Future bonus declarations, surrender proceeds and policy-loan terms require separate scrutiny.
• Tax Year 2026-27 uses section 123 and section 11/Schedule II of the Income-tax Act, 2025.
• The ₹5 lakh non-ULIP high-premium condition and 10% cover test can affect maturity exemption.
• Qualifying individual life-insurance premiums are GST-exempt from 22 September 2025.

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Disclaimer: This article is for general educational and editorial purposes as of 10 October 2026 and is not insurance, investment, tax or legal advice. Policy acceptance, premiums, bonuses, surrender values, rider benefits and claims depend on the insurer’s current policy wording, underwriting, individual facts and applicable statutory provisions. Income-tax and GST outcomes may differ according to the tax year, policy issue date, aggregate premiums, tax regime and type of receipt. Readers must examine the latest LIC brochure, policy schedule, Customer Information Sheet, official statutory text and professional advice before acting. Neither TaxGuru nor its authors accept responsibility or liability for omissions, errors, changes in law, financial losses or decisions based on this article.