LIC's Single Premium Endowment Plan

LIC, the state-owned insurance group, with over 2000 branches in the country, is India’s largest insurance company. Incorporated in the year 1956, LIC has touched the lives of millions and millions of people in India. With a network of over 2000 branches all around the country, LIC offers a variety of insurance policies to the customers.

LIC also offers a number of endowment plans and one of their very effective life insurance plans has been LIC’s Single Premium Endowment Plan. This plan is a participating, non-linked endowment plan. As there is only one premium that is paid at the beginning of the plan, the policyholder is the policyholder is free from the cycle of premium payment. He also need not worry about a policy lapse or non-payment of returns.

What are Endowment Plans?

An endowment plan is basically a life insurance policy with an element of savings. Thus, in Endowment Plans, the policyholder needs to pay a premium for a specific tenure and he would get a maturity benefit at the end.

There are multiple types of Endowment Plans with several modes of premium payment. LIC’s Single Premium Endowment Plan is an endowment plan wherein premium needs to be paid in a lumpsum at the beginning and maturity benefit is paid at the end of the policy tenure.

Key Features of LIC’s Single Premium Endowment Plan

LIC’s Single Premium Endowment Plan gives a dual advantage of protection along with regular savings.

Mentioned below are the key features of the plan :

  • As the name indicates, under the Single Premium Endowment Plan, there is only one premium that is paid at the beginning of the plan, as a lump sum amount.
  • This policy can be taken in the name of anyone who is between the age group of 90 days to 65 years.
  • If the insured individual is below 8 years of age, the risk cover commences from either after 2 years of purchasing the plan or the anniversary of the plan immediately after the 8th birthday, whichever is earlier.
  • The plan offers a death benefit If the policyholder dies during the policy term. If in case he outlives it, he would receive a maturity benefit. The sum assured and the accused benefits are included in both the benefits.
  • The Single Premium Endowment Plan participates in the profits of LIC, and depending on LIC”s experience, Reversionary Bonus and Final Additional Bonus if at all, are added.
  • The minimum sum assured is INR 50,000, however, there is no such maximum limit.

LIC’s Single Premium Endowment Plan Eligibility Criteria

As the policy is a single premium policy, there is no other payable mode. The other criteria for the eligibility of the plan are :

Minimum Maximum
Age of Entry 90 days 65 Years
Sum Assured INR 50,000 No Limit
Policy Term 10 Years 25 Years
Maturity Age 18 years 75 Years

Sample Premium

Given below is a sample premium and the corresponding Sum Assured for a 30-year-old male. The premium amount is mentioned in INR, for a policy term of 25 years.

Age at Entry 30 years
Policy Term 25 years
Basic Sum Assured INR 50,000
Amount of Single Premium INR 23,545
Single Premium Endowment Plan premium per Rs 1,000 Sum Assured
Age (Nearest birthday) Term
10 years 15 years 25 years
10 years 756.90/ Rs 1,000 Sum Assured 640.30/ Rs 1,000 Sum Assured 463.10/ Rs 1,000 Sum Assured
20 years 757.60/ Rs 1,000 Sum Assured 641.55/ Rs 1,000 Sum Assured 465.85/ Rs 1,000 Sum Assured
30 years 757.95/ Rs 1,000 Sum Assured 642.60/ Rs 1,000 Sum Assured 470.90/ Rs 1,000 Sum Assured
40 years 759.75/ Rs 1,000 Sum Assured 647.65/ Rs 1,000 Sum Assured 488.35/ Rs 1,000 Sum Assured
50 years 766.05/ Rs 1,000 Sum Assured 662.25/ Rs 1,000 Sum Assured 527.35/ Rs 1,000 Sum Assured
60 years 777.50/ Rs 1,000 Sum Assured 688.60/ Rs 1,000 Sum Assured -

Benefits of LIC’s Single Premium Endowment Plan

  • Death Benefit
    • Before Commencement of Risk
      In the unfortunate event of the death of the insured individual before the period of commencement of risk, the payout of the death benefit would be the return of the single premium amount that was paid by the policyholder, excluding the service tax.
    • What is the Commencement of Risk?
      If the age of the insured individual is below 8 years, the risk under the policy will begin from either after 2 years of purchasing the policy or the anniversary of the plan immediately after the 8th birthday, whichever event occurs earlier.
    • Death during the Term of the Policy
      If the insured individual passes away during the term of the policy with full cover, then the death benefit is equal to Sum Assured + simple Reversionary Benefits + Final Additional Bonus, if there is any.
  • Maturity Benefit
    Under the LIC’s Single Premium Endowment Plan, if the insured individual outlives the term of the policy, he receives the sum assured, simple reversionary bonus and a final additional bonus if there is any.
  • Participation in Profit
    On the basis of the experience of LIC’s Single Premium Endowment Plan, there may be a participation in profits. This makes the plan eligible for a simple reversionary bonus as well as a final additional bonus at a rate declared by LIC from time to time.

Rebates offered for LIC’s Single Premium Endowment Plan

If the policyholder opts for a higher sum assured, he gets a discount in the premium amount. He can, therefore, get a bigger life cover from the same premium amount.

Sum Assured in INR Percentage of Rebate (Of the Sum Assured)
50,000-95,000 NIL
1,00,000 to 1,95,000 18%
2,00,000 to 2,95,000 25%
Above 3,00,000 30%
  • Other features of LIC’s Single Premium Endowment Plan
    Some of the other benefits that the policyholder can enjoy with the plan are as follows :
    • Cooling-Off Period
      If the policyholder feels that he is not content with the terms and conditions of the LIC’s Single Premium Endowment Plan and he wishes to call-of the plan, he has the provision to do so within a period of 15 days from the receipt of purchase. When he makes a request mentioning the reasons for the same, the money to be returned is transferred to his bank account and the policy is terminated.
    • Provision of Loan
      After one year from the beginning of LIC’s Single Premium Endowment Plan, the policyholder can apply for a loan against his plan
    • Tax Benefits
      Though subject to some stipulations, LIC’s Single Premium Endowment Plan gives the option of saving-taxes under Section 80 C as well as Section 10 (10D).
    • Surrender Value
      Surrender Value is the amount that is received by the policyholder when the policy is surrendered. If for some reasons the premiums of the plan cannot be paid, the policyholder can surrender it and avail the Surrender Value. In LIC’s Single Premium Endowment Plan the policyholder can surrender his policy for cash any time he finds convenient.
      • If the policy is surrendered during the first year then the guaranteed surrender value is equal to 70% of the premium+taxes and extra premium, if there is any.
      • If the policy is surrender after the first year then the guaranteed surrender value is equal to 90% of the premium+taxes and extra premium, if there is any.

Claim requirement

Death Claim

To make the death claim the nominee needs to lodge the claim at LIC of India’s office. The following documents are to be submitted:

  • Claim forms that are prescribed by LIC of India
  • Primary Policy Papers
  • NEFT Mandate
  • Proof of death
  • Medical Treatment prior to death
Maturity Claim and Surrender Claim

In case the policyholder survives the policy, he will receive the maturity benefit. He has to make a maturity claim for which he needs to submit the following :

  • Original Policy Papers
  • Discharged Form
  • NEFT Mandate from the Claimant

Exclusions in LIC’s Single Premium Endowment Plan

LIC’s Single Premium Endowment Plan would be invalidated if the insured, whether sane or insane, commits suicide within 12 months of buying the plan. LIC will not present any claim other than 90% of the amount paid through the single premium, not including the extra premium paid and taxes.


FAQs

LIC’s Single Premium Endowment Plan is a participating, non-linked endowment plan. As there is only one premium that is paid at the beginning of the plan, the policyholder is the policyholder is free from the cycle of premium payment. It helps the policyholder to get a life cover along with assured returns.


As LIC’s Single Premium Endowment Plan is, after all, a life insurance policy, they also are eligible for tax benefits under Section 80C as well as Section 10 (10 D). But the policyholder needs to be careful when purchasing the policy else, the benefits might not be availed.


If the policy is surrendered during the first year then the guaranteed surrender value is equal to 70% of the premium+taxes and extra premium, if there is any. After the first year then the guaranteed surrender value is equal to 90% of the premium+taxes and extra premium if there is any.


By opting for a higher sum assured, the policyholder can get a discount in the premium amount. He, therefore, gets a bigger life cover from the same premium amount.


The grace period is not applicable in LIC’s Single Premium Endowment Plan as after paying a single premium amount, there is no further premium amount due.


After the completion of one year of buying the policy, the policyholder can ask for a loan. The loan amount has to be within the surrender value of the plan. The interest rate on the loan is compounded half-yearly at a rate that is defined by LIC at the time of sanctioning the loan.