One of the most common LIC single premium policy is that of the LIC Single Premium Endowment Plan. This LIC Endowment plan comes with insurance coverage and guaranteed returns at the end of the policy term.
When you have an excess amount of money, you might be thinking of making an investment. Why not consider a single time contribution towards a life insurance policy? You can finish your payment with a single premium and get done with it. Single premium policies are very handy and offer a lot of benefits.
LIC Single Premium Endowment Plan
LIC single premium endowment plan is the single premium plan wherein an insured has to make only one premium at the starting of the plan term. This plan is a participating endowment plan wherein the bonus is paid through the plan term. In this way, the bonus is accumulated and sum assured + accrued bonus is given to the insured when plan term’s end.
How does the LIC Single Premium Endowment Plan Work?
While purchasing LIC Single Premium Endowment Plan, an insurance seeker has to keep the following factors in mind:
- Policy Term: This is the period for which one wishes to have the insurance policy cover. An individual can choose a policy term from 10 years to 25 years.
- Sum Assured: It is the amount of insurance cover chosen by the policyholder. There is no upper limit of the sum assured, but the minimum sum assured that an individual has to choose is Rs.50, 000.
Based on these two factors and the current age of the policyholder, the annual premium is decided. Since this plan is a participating insurance plan, thus an insured gets the following benefits at different points throughout the term of the policy.
- Simple revisionary bonus and
- Final additional bonus, in case of its availability
Benefits of LIC Single Premium Endowment Plan
The key benefits offered in this plan are:
When the insured dies anytime during the plan term: In this situation, the nominee receives the following benefits:
- Sum Assured
- Simple Revisionary Bonus and
- Final Additional Bonus
When the insured dies before the commencement of the risk: In this situation, the nominee receives the following benefits:
- Only the single premium that is paid by the policyholder excluding the service tax, as well as the extra premium paid without any interest, is given to the policyholder.
When the insured is less than eight year:
- The death coverage starts either two years from the commencement date or from the anniversary of policy coinciding with or soon after the attainment of eight years of age, whichever is earlier.
- For the ones who are eight years of age or more while taking the policy, the cover starts immediately.
- In case of the death of the policyholder before the start of the death coverage, the single premium subtracting the taxes is given to the plan’s nominee.
Maturity is the time when the plan term gets over. Therefore, at the time of the plan’s maturity, the insured receives the sum of the below-mentioned benefits:
- Sum Assured
- Final Additional Bonus, if it is declared in that year and
- Simple Revisionary Bonus, which is declared at the end of every year.
Income Tax Benefits
The policyholder gets the income tax benefits for the paid premium and received claims.
An insured can get the loan against this policy, however, he/she has to complete at least one year of the policy term.
The Benefit of Free Look Period
A free look period of 15 days is offered to every policyholder form the start of the policy date. An insured can return the policy during this period only, however, he/she has to clearly mention the reason of objection.
Surrender Value Benefit
The surrender value is accumulated by the plan according to the following terms:
- If the insured surrenders the policy during the first year of the term of the policy, then the surrender value equal to 70% of the single premium paid excluding the taxes and other extra premiums paid is given to the insured.
- If the insured surrenders the plan after completion of the first year, then the surrender value equal to the 90% of the single premium that is paid by the insured excluding the extra premiums paid and the taxes are paid.
Rebates on Large Sum Assured
The insurance policy offers a discount on the premiums that are paid for higher sum assured. The percentage of the rebate is specified in the following table:
|Rebate on High Sum Assured|
|Sum Assured (S.A)||Rebate|
|Rs.50, 000 to Rs.95, 000||Nil|
|Rs.1, 00, 000 to Rs.1, 95, 000||Sum assured’s 18 percent|
|Rs.2, 00, 000 to Rs.2, 95, 000||Sum assured’s 25 percent|
|Rs.3, 00, 000 and above||Sum assured’s 30 percent|
Other Benefits of LIC Single Premium Endowment Plan
The other benefits of this plan are:
- The endowment plans like LIC single premium endowment plan provide secure returns and hence ensure an insured to plan his/her future in a better way.
- The plans like this provide the benefit of insurance cover as well. This says that in the situation of any unfortunate or unexpected event the legal heirs or nominees will get the lump sum amount.
- If a policyholder opts for a bigger sum assured, then the plans like this offer significant rebate on the paid premiums.
- An insured also gets the tax rebate under Section 80C and Section 10D of the Income Tax Act.
- A policyholder can also ask for a loan against the plan.
Features of LIC Single Premium Endowment Plan
The features of this plan are:
- The premium of the plan has to be paid before the policy starts as it is a one premium payment plan.
- It is non-linked and participating endowment insurance policy.
- The plan provides double benefits of both savings and protection.
- The policy ceases after paying out the maturity benefits or death benefits, whichever comes first.
- The minimum sum assured that is to be paid in this plan is Rs.50, 000 and it does not have any upper limit.
- For the policyholders who are under the age of eight years, risk cover starts after two years and for a policy of eight years, the cover against risk of this plan starts immediately.
- The Simple Revisionary Bonuses are given by this plan and an additional bonus as per the Corporation’s experience is declared, provided the insurance policy one has taken is in full force.
Eligibility Criteria to Buy LIC Single Premium Endowment Plan
The basic sum assured to purchase this policy must be the multiple of Rs.5, 000 only
|Minimum Entry Age||90 days|
|Maximum Entry Age||65 years|
|Minimum Sum Assured||Rs.50, 000|
|Maximum Sum Assured||No Limit|
|Maximum Maturity Age||75 years|
|Premium Payable Mode||Only single premium payment mode|
|Minimum Term||10 years|
|Maximum Term||25 years|
Premium Details of LIC Single Premium Endowment Plan
Anyone who is looking to purchase LIC Single Premium Endowment Plan must know different aspects of premium calculation. For example, the policy seekers should know the premium calculation and how it changes with the age and sum assured taken. The following tables show the factors mentioned:
Example of Premium Paid for Different Sum Assured for LIC Single Premium Policy:
For a policy of 20 years, the basic premium paid as per the sum assured and the age of the insured is mentioned in the below table:
|Age||Basic Annual Premium (Excluding the Tax)|
|Sum Assured = Rs.50, 000||Sum Assured = Rs.1 Lakh||Sum Assured = Rs.2 Lakh|
LIC Single Premium Endowment Plan – Exclusions
This plan has the following exclusions:
- Suicide: The plan does not give any death benefit if an insured commits suicide within one year from the start date of the policy. However, LIC returns 90% of the one premium that is being paid excluding the extra premium (if paid) and the tax.
Required Documents to Buying LIC Single Premium Endowment Plan
To get LIC Single Premium Endowment Plan, an insured has to provide the following documents:
- Application or proposal form duly filled and with an accurate medical history
- Identity proof
- Address proof
- And KYC documents
For some cases, the medical examination can be required; however, it depends upon the age of the insured and the sum assured taken by him/her.
LIC Single Premium Endowment Plan – FAQs
The Frequently asked questions in this policy are:
Question 1: Explain LIC Single Premium Endowment policy?
Answer: The single premium endowment policy of LIC is an endowment plan wherein the investor gets both assured returns and life cover by paying only one premium.
Question 2: Specify the advantages of LIC Single Premium Endowment plan?
Answer: This policy offers various benefits and some of which are:
- This is a double benefit plan wherein an insured gets the benefits of both insurance and investment. An individual has not to think much about providing protection to their loved ones in case of their demise in future.
- The single premium payment feature keeps away the hassle of premium payment on a regular basis. An insured should not worry about the premium payment as once an individual pays the premium, he/she becomes secure.
- The facility of loan against this plan is another useful feature.
- The insured can also take the additional benefits with this plan by paying only a small additional amount. The additional benefits covered in this policy are rider for critical illness and additional benefit rider.
- The plan also offers tax rebate under section 80C of the Income Tax Act on the premiums paid. Moreover, the tax benefits are also given on the claims under section 10D of the Income Tax Act.
- Facility of surrender bonus is another advantage that one gets with this insurance plan. If one surrenders his/her LIC single premium endowment plan within one year of the policy term, then he/she gets 70% of the premium paid. However, if one surrenders this plan after one year and before maturity, then he/she gets 90% of the premium paid.
- An insured is eligible to get the vested reversionary bonus even after the surrender of the policy.
Question 3: Why should one take this policy?
Answer: The single premium endowment plan is recommended for people who a decent amount of money in hand and want to invest that for future and get additional returns on it. Since it allows an insured to pay premium only once without worrying about regular premium payments. The conservative investors are advised to opt for this policy as it provides better returns than keeping money in the bank or in fixed deposits.
In this way, the LIC Single Premium Endowment Plan offers great convenience for those who want to invest a lump sum amount for the long term to fulfill their future goals, such as higher education of children.