Single Premium Endowment
Life Insurance Corporation of India, more popularly known as LIC, is the largest insurance company in India. The company was set up in 1956 through the Life Insurance of India Act by merging 154 Indian insurance companies, 16 non-Indian companies and 75 provident societies. The objective was to spread the reach of insurance products across the country and in the rural sector. The company currently provides various life insurance products including term assurance plans, money back plans, endowment plans such as the LIC single premium policy we will discuss in detail on this page below, retirement solutions, unit linked insurance covers, group plans and rural plans, among others. LIC has over 8 zonal offices, 113 divisional offices and 2048 branch offices, besides numerous satellite offices spread across India. It has also tied up with banks and other service providers for collection of premium and provision of other services in the country. LIC is headquartered in Mumbai.
Single Premium Policy
As the name suggests, Single Premium Endowment Plan is a Single Premium Participating Endowment Plan. Thus, it is a traditional endowment with death and maturity benefits along with bonus facility. Key Features of the Single Premium Policy The single premium policy is a Single Premium Endowment Plan. The premium under this single premium policy is paid at start of the plan as a lump sum The single premium policy provides investment returns and protection against untimely demise This single premium policy can be taken for anyone between 90 days to 65 years On survival till end of a policy tenure or on earlier death, the entire Sum Assured along with accrued Bonuses would be paid and the policy terminates This policy participates in the profits of and offers simple Reversionary Bonus and Final Additional Bonus, if any Sum Assured under this LIC single premium policy starts from Rs. 50,000 and there is no upper limit on the amount. Any Sum Assured over and above the minimal amount will be in multiples of Rs. 5,000 Minimum entry age is 90 days and the maximum is 65 years under this LIC single premium policy. If the insured is less than 8 years of age, then the risk cover under this plan will commence from earlier of 2 years after the start of a policy, or from the anniversary of the single premium policy coinciding with or immediately following the date the person turns 8 years of age Benefits of the Single Premium Policy Maturity Benefit: On survival of the Life Insured till the end of policy tenure, the Sum Assured along with simple Reversionary Bonus and Final Addition Bonus, if any, would be paid to the policyholder as Maturity Benefit and the policy terminates Simple Reversionary Bonus is generally declared each year as a percentage of Sum Assured under this single premium policy. The bonus amounts in this plan do not increase the sum assured (being simple reversionary bonus and not compound reversionary bonus) Final Addition Bonus may be declared at end of the LIC single premium policy tenure if a policyholder has paid all his or her premiums on time. It is a form of reward given by the company to holders of an LIC single premium policy Death Benefit: If the Life Insured dies within the LIC single premium policy tenure: Only the Single Premium paid would be paid to the nominee if the Life Insured dies before the commencement of risk After risk commencement, the Sum Assured along accrued bonuses, if any would be paid as the Death Benefit There is high sum assured discount available in this single premium policy Loan is available in this plan after the first policy year Income tax benefit on premium paid as per Section 80C and on claims received as per Section 10(10D) of the Income Tax Act The single premium policy has a guaranteed surrender value. Policyholders will receive 70% of premium paid if the single premium policy is surrendered within the first year, and 90% of single premium paid from the second year onwards. The insured are also eligible to receive a certain amount of the vested reversionary bonus Single Premium Policy Product Specification: Details about Premium of Single Premium Policy An individual looking to buy a single premium policy should know various aspects of its premium calculation. For instance, they must know how premium changes based on different sum assured and according to age of the insured individual holding a single premium policy, and what is sample premium for every increase of say Rs. 1000 in Sum Assured for different single premium policy periods, and so on. Sample Premium for Different Sum Assured for the Single Premium Policy The annual premium is mentioned in Rupees for a Sum Assured of 1 Lakh and LIC single premium Policy Tenure of 20 years. Basic Premium is mentioned below (Tax not included) Sample Premium Rates per Rs. 1000 Assured for the Single Premium Policy The below table shows the sample premium rates for the single premium policy for different tenures for every Rs. 1,000 of Sum Assured. The rates under the single premium policy decrease for longer terms and show a slight increase for entry at higher ages. Rebates for Single Premium Policy The single premium policy offers discounts for higher sum assured. This helps the individual to get a higher cover for the payment of a smaller premium. Single Premium Policy Details for Single Premium Policy Grace Period: Not applicable as there is no need for further premium payment under an single premium policy Policy Termination or Surrender Benefit under the single premium policy: The Surrender Benefit is available under this plan: Within the first year: 70% of the Single premium paid excluding taxes and extra premium, if any From the 2nd year onwards, 90% of the Single premium paid excluding taxes, extra premium, if any and all survival benefits paid earlier. Surrender benefit of bonuses under the single premium policy: Policyholders will also receive a surrender value of any vested simple reversionary bonuses under an single premium policy. The surrender value of these bonuses will be value arrived at by multiplying these bonuses with the surrender value factor for vested bonuses. These factors depend on term of the single premium policy and the year in which the plan is surrendered by an insured. Free Look Period: If you would not be pleased with the coverage, and terms and conditions of the single premium policy, you have the option of cancelling the policy within 15 days of receipt of the policy documents, provided there has been no claim. Inclusions under Single Premium Policy Loan is available in this plan after the first policy year Exclusions under Single Premium Policy In case of suicide committed within 12 months of policy inception only 90% of the single premium paid are returned to the nominee. Documents Required Policyholder has to fill up an `Application form/ proposal form with accurate medical history along with the address proof, Identity proof (Aadhar Card, Passport & PAN Card) and other KYC documents. Medical examination may be required in some cases, based on the sum assured and the age of the person taking up the single premium policy.
About Endowment Plans
Endowment insurance plans provide a cover against risk and offer guaranteed returns that generally include return of sum assured and bonus amounts that may be declared every year (called reversionary bonus) and at of the policy term (called terminal bonus). A policyholder can select the amount of cover they want, depending on a policys particulars, and for a period that suits them. Most endowment policies are available for longer terms as they help increase the overall returns that a person will get back at the end of the policy tenure. Additionally, plans such as the LIC single premium policy offer considerable rebates on premium if an investor decides on a higher sum assured. Endowment plans are a popular investment tool as they provide assured returns to an investor and an insurance cover at the same time. Endowment policies provide tax benefits under the Indian Income Tax Act. An endowment plan may also have riders that increase the amount of cover that a policyholder has by protecting him or her from risks that are not covered under the main policy. Advantages of Endowment Policy Endowment plans such as Single premium policy offer secure returns which ensure you can plan your future finances better These plans including the Single premium policy provide an insurance cover at the same time, which means that in case of any unexpected and unfortunate event happening to an insured, the nominees or legal heirs will receive a lump sum payment that will ensure they are not financially burdened due to the breadwinner not earning any more Plans like the Single premium policy give significant rebates on the premium if an insured goes for a higher sum assured Endowment plans such as Single premium policy allow an insured to avail tax benefits under section 80C of the Income Tax Act and even section 10(10D), subject to certain stipulations The Single premium policy and other endowment covers enable the policyholder to take a loan against their plans
Single Premium Policy – FAQs
Q. What is an Single premium policy? The Single Premium Endowment Plan from is an endowment plan that allows the investor to get both life cover and assured returns by paying a single premium. The insured does not have to worry about the policy lapsing or them being not eligible for reversionary and terminal bonuses due to non-payment of returns under this Single premium policy as they have already paid the same at the start of the plan. Q. Do I need this policy? The Single Premium Endowment Plan is ideal for people who have some amount and hand and are looking for options to safeguard the money and also get additional secured returns. Moreover, since this Single premium policy requires you to pay the premium only once, you do not have to worry about subsequent payment of premiums. Experts suggest conservative investors to go for endowment plans like the Single premium policy as it offers better returns than the money staying in a bank or a fixed deposit. Q. What are the benefits of an Single premium policy? The Single premium policy offers various practical benefits, viz., You get an investment vehicle and an insurance cover through a single instrument. You do not have to worry about protecting your loved ones if you are not there to take care of them in the future. The Single premium policy has a maximum entry age of 65 years and a maximum maturity age of 75 years. This implies that your family will remain financially secure even you are not there with them Single premium of the Single premium policy takes away the hassles of regular premium payment. You do not have to worry about paying the premium in later months or years. Once paid, you are secure You can take a loan against your Single premium policy after only one year of taking the plan An Single premium policy lets you opt for additional riders such as the Accident Benefit Rider and Critical Illness Rider by paying small additional premiums. This increases your risk cover quite significantly You benefit from tax deductions under Section 80C of the Indian Income Tax Act. You are also eligible to tax benefits from claims received vide an LIC single premium policy under section 10(10D), subject to certain terms and conditions of the IT Act An Single premium policy offers guaranteed surrender value. As a policyholder, you will receive 70% of premium paid if your LIC single premium policy is surrendered within 1 year and 90% of your single premium paid if surrendered any time after 1 year and before maturity You are also eligible to receive vested reversionary bonus even on surrender