LIC Single Premium Endowment Plan
As the name suggests, this is Single Premium Plan – you just make a single premium payment at the beginning of the policy term. It is a participating endowment plan, which means that bonus will be paid through the term of the policy. The bonus is a accumulated and at the end of the policy term, the sum assured + the accrued bonus is paid to the policyholder.
You should keep in mind that such plans are not helpful for tax savings purposes. Read more about it under the tax benefits section below.
| Launch Date | 10th Oct,2013 |
| Plan Details | Table No. 817 |
| Policy Type | Traditional Endowment Plan |
Benefits
In case of death of the policyholder at anytime during the policy term, the nominee will receive the sum of the following:
- Sum Assured
- Simple Reversionary Bonus which has been declared will date
- Final Addition Bonus if declared in that year
In case the policyholder is less than 8 years of age, the death coverage will start either 2 years from the date of commencement or from the policy anniversary coinciding with or immediately following the attainment of 8 years of age, whichever is earlier. For those aged 8 years or more at the time of taking the policy, death cover will start immediately. In case of death of the policyholder before the death coverage has started, the single premium minus the taxes would be paid to the nominee.
At the time of maturity of the plan, that is when the policy term gets over, the policyholder will receive the sum of the following:
- Sum Assured
- Simple Reversionary Bonus which has been declared will date
- Final Addition Bonus if declared in that year
If the policyholder is not happy with the plan, he can cancel the policy within 15 days of the plan issuance. This period is called the free-look period. Upon cancellation, the premium paid net of any applicable expenses would be returned.
You can avail a long against this policy after completion of one policy year.
You get back part of the single premium paid in case you surrender the plan. The guaranteed surrender value is on the premium amount without tax.
- Surrender in the 1st year - You get back 70% of the single premium
- Anytime after that - You get back 90% of the single premium
- Bonus values - The bonus which has been declared for the plan also has a surrender value. This can be better understood here - Surrender Value Calculations in LIC Single Premium Endowment Plan.
How it works
When buying the LIC Single Premium Endowment Plan, the customer has to decide on the following:
- Sum Assured - this is the amount of cover that you want. You have to choose a minimum of Rs. 50,000. There is no upper limit.
- Policy Term - this is the period for which you wish to have the cover. You can choose a policy term between 10 to 25 years.
Based on the above 2 factors and the age at which you are taking the policy, your annual premium will be decided.
Since it is a Participating plan, you will be eligible for the following at various points through the policy term. These are not guaranteed and you will only know the values as and when they are declared by LIC.
- Simple Reversionary Bonus
- Final Addition Bonus, if any
Let us understand the LIC Single Premium Endowment Plan better with the help of an example:
We have Divyesh Divecha, age 35 who wishes to buy this plan. He goes in for the plan with the following:
Sum Assured - Rs. 2,00,000
Term - 20 years
Based on these parameters, his annual premium is Rs. 1,05,200 + Taxes = Rs. 1,09,934. Here we have assumed the current tax rate of 4.5%.
Death Benefit
Scenario 1 : If Divyesh dies after 3 policy years - The nominee would get the Sum Assured + Simple Reversionary Bonus + Final Addition Bonus.
Total Premiums Paid = Rs. 1,09,934
Sum Assured = Rs. 2,00,000
Simple Reversionary Bonus = Rs. 40 per 1,000 Sum Assured for 3 years i.e. (Rs. 45 x 200 x 3) = Rs. 27,000. Here we have assumed that every year a bonus of Rs. 45 per 1,000 Sum Assured is being declared every year. This is just an assumption and it may be higher or lower than this.
Final Addition Bonus - Nil. Usually Final addition bonus is declared after a much longer premium payment term.
So nominee will get Rs. 2,00,000 + Rs. 27,000 = Rs. 2,27,000
Scenario 2 : If Divyesh dies after 15 policy years - The nominee would get the Sum Assured + Simple Reversionary Bonus + Final Addition Bonus
Total Premiums Paid = Rs 1,09,934
Sum Assured = Rs. 2,00,000
Simple Reversionary Bonus = Rs. 45 per 1,000 Sum Assured for 15 years i.e. (Rs. 45 x 200 x 15) = Rs. 1,35,000. Here we have assumed that every year a bonus of Rs. 45 per 1,000 Sum Assured is being declared every year. This is just an assumption and it may be higher or lower than this.
Final Addition Bonus - Rs. 20 per 1,000 Sum Assured i.e. (Rs. 20 x 200) = Rs. 4,000. Here we have assumed a one time Final Addition Bonus of Rs. 20 per 1,000 Sum Assured. This is just an assumption and it may be higher or lower than this.
So his nominee will get Rs. 2,00,000 + Rs. 1,35,000 + Rs. 4,000 = Rs. 3,39,000
Maturity Benefit
Scenario 3 : If Divyesh survives till the end of the policy term of 25 years - Arvind will get the Sum Assured + Simple Reversionary Bonus + Final Addition Bonus
Total Premiums Paid = Rs. 1,09,934
Sum Assured = Rs. 2,00,000
Simple Reversionary Bonus = Rs. 45 per 1,000 Sum Assured for 20 years i.e. (Rs. 45 x 200 x 20) = Rs. 1,80,000. Here we have assumed that every year a bonus of Rs. 45 per 1,000 Sum Assured is being declared every year. This is just an assumption and it may be higher or lower than this.
Final Addition Bonus - Rs. 20 per 1,000 Sum Assured i.e. (Rs. 20 x 200) = Rs. 4,000. Here we have assumed a one time Final Addition Bonus of Rs. 20 per 1,000 Sum Assured. This is just an assumption and it may be higher or lower than this.
So Sumit will get Rs. 2,00,000 + Rs. 1,80,000 + Rs. 4,000 = Rs. 3,84,000
Tax Benefit
- Premiums – Only a part of the premiums will be exempt from taxation under Section 80C of the Income Tax Act.
- Maturity Claim – The maturity amount will be taxable as per current income tax laws
- Death Claim – Death claims received under the plan are free from taxation under Section 10(10D) of the Income Tax Act
Eligibility
| Minimum | Maximum | |
| Sum Assured | Rs. 50,000 | No limit |
| Policy Term | 10 years | 25 years |
| Entry Age | 90 days (completed) | 65 years(nearest birthday) |
| Maturity Age | 18 years (completed) | 75 years (nearest birthday) |
| Maximum Maturity Age | 75 years | |
| Premium paying frequency | Single | |
