Understanding LIC's Single Premium Endowment Plan (Plan No. 917)

LIC’s Single Premium Endowment Plan (Plan No. 917) is a popular investment-cum-insurance policy in India. It combines the benefits of life insurance and savings under a single premium payment structure, making it an attractive choice for those seeking financial security and growth. An endowment plan like this is designed to provide financial protection to the policyholder’s family in the event of untimely demise and offer a lump sum amount upon maturity for meeting future financial goals.

The key purpose of the LIC Single Premium Endowment Plan is to ensure a balance between risk coverage and wealth creation. Its unique single premium structure means that the policyholder pays the entire premium upfront, avoiding the hassle of periodic payments. With a straightforward process and benefits tied to both insurance coverage and savings, it’s a plan suited for individuals looking to secure their family’s financial future while also saving for long-term goals like education, retirement, or major life events.

Key Features and Benefits of LIC's Single Premium Endowment Plan

Key Features:

1. Single Premium Payment: The policyholder pays a one-time premium at the beginning of the policy term.

2. Policy Term Options: The plan offers flexible policy terms ranging from 10 to 25 years.

3. Sum Assured: The minimum sum assured under this plan is calculated based on the age and premium amount.

4. Bonus Components: The plan participates in LIC’s profit-sharing scheme and is eligible for reversionary bonuses declared annually.

5. Loan Facility: Policyholders can avail of loans against the policy after completing a specified term, subject to terms and conditions.

Eligibility Conditions and Other Restrictions

Minimum Entry Age: 30 days (completed)

Maximum Entry Age: 65 years (nearer birthday)

Maximum Maturity Age: 75 years (nearer birthday)

Minimum Policy Term: 10 years

Minimum Age at Maturity: 18 years (completed)

Maximum Policy Term: 25 years

Minimum Sum Assured: INR 1,00,000

Maximum Sum Assured: No limit

Single Premium Plan
•  This plan requires a one-time premium payment at the outset, providing both protection and savings.

Protection and Savings
•  The plan offers a combination of life insurance coverage and savings, ensuring financial security for the policyholder's family and a lump sum payout at maturity.

Date of Commencement of Risk
•  For insured individuals under 8 years old, the risk cover starts either 2 years from the policy commencement date or on the policy anniversary following the insured's 8th birthday, whichever is earlier.

•  For those aged 8 years or more, the risk cover starts immediately from the date of policy issuance.

Date of Vesting
•  If the policy is issued on the life of a minor, it automatically vests in the life assured on the policy anniversary coinciding with or immediately following the completion of 18 years of age. Upon vesting, the policy is considered a contract between the corporation and the life assured.

Benefits:

1. Maturity Benefit: Upon maturity of the policy, the policyholder receives the sum assured along with accumulated bonuses. If the insured survives the policy term, the maturity benefit includes the sum assured, vested reversionary bonuses, and a final additional bonus.

2. Death Benefit: In case of the policyholder’s demise during the policy term, the nominee receives a death benefit, which includes the sum assured and any accrued bonuses.
   
   If the insured passes away during the policy term, a death benefit is provided. The amount depends on when the insured dies. If the risk cover hasn't started and the insured dies, the premiums paid are refunded. Once the risk cover begins, the sum assured, along with any vested reversionary bonuses and final additional bonus, is paid out. For insured individuals under 8 years old, risk cover starts either two years after policy purchase or on the policy anniversary following their 8th birthday, whichever comes first.
   

3. Tax Benefits: Premium payments and maturity/death benefits are eligible for tax exemptions under Sections 80C and 10(10D) of the Income Tax Act.

4. Surrender Value: The plan provides a guaranteed surrender value if the policyholder decides to terminate the policy prematurely.
   
   

   You can surrender the policy before its term ends. The surrender value is the higher of the guaranteed surrender value or the special surrender value. The guaranteed surrender value is:
   
   •  70% of the single premium paid plus vested bonuses multiplied by the surrender value factor for bonuses if surrendered in the first year.

   •  90% of the single premium paid plus vested bonuses multiplied by the surrender value factor for bonuses if surrendered after the first year.

   The special surrender value is determined by LIC based on the company's financial performance and is specified at the time of surrender.

5. Premium Discounts

   Choosing a sum assured of INR 1 lakh or more qualifies you for a premium discount on the single premium. The discounts are as follows:
   •  INR 100,000 to INR 195,000: 18% of the sum assured

   •  INR 200,000 to INR 295,000: 25% of the sum assured

   •  INR 300,000 and above: 30% of the sum assured

Eligibility Criteria and Policy Management for LIC's Single

Premium Endowment Plan

Eligibility Criteria:

1. Age Limits: The entry age for the policy is a minimum of 90 days and a maximum of 65 years. The maximum maturity age is capped at 75 years.

2. Sum Assured: The minimum sum assured depends on the policyholder’s age, with a minimum amount of Rs. 50,000.

3. Policy Term: Options range from 10 to 25 years, offering flexibility to align with individual financial goals.

Policy Management:

1. Premium Payment Deadlines: With the single premium structure, there are no recurring payment deadlines. The policyholder’s responsibility ends after the initial premium payment.

2. Loan Facilities: The policy allows for loans against the policy after completing a stipulated period. Loan amounts and interest rates are subject to LIC’s terms.

3. Nominee Management: Policyholders can nominate or update beneficiaries during the policy tenure.

Comparing LIC's Single Premium Endowment Plan with Other

Investment Options

When compared to other LIC plans or traditional savings methods, the Single Premium Endowment Plan stands out for its simplicity and dual benefits of insurance and savings.

Comparison with Other LIC Plans:

• Traditional Endowment Plans: While other endowment plans involve periodic premium payments, Plan No. 917’s single premium structure is more convenient for those with immediate liquidity.

• Term Insurance: Term plans provide higher life cover but lack the savings or maturity benefits offered by this endowment plan.

Comparison with Savings Accounts or Fixed Deposits:

• Higher Returns: The plan’s bonus components can result in higher returns compared to fixed deposits.

• Tax Efficiency: The tax benefits under Sections 80C and 10(10D) make it more efficient than taxable savings accounts.

• Insurance Coverage: Unlike traditional savings accounts, this plan provides a financial safety net for the policyholder’s family.

Exploring Optional Riders and Additional Coverage with LIC's

Single Premium Endowment Plan

The plan offers optional riders to enhance the scope of coverage, providing additional protection tailored to individual needs.

Optional Riders:

1. Accidental Death and Disability Benefit Rider: Provides an additional sum assured in case of accidental death or disability.

2. Critical Illness Rider: Offers financial assistance if the policyholder is diagnosed with specific critical illnesses.

Benefits of Riders:

• Enhanced financial protection for unforeseen events.

• Customizable coverage to meet unique needs and situations.

• Additional peace of mind for policyholders and their families.

Conclusion: Is LIC's Single Premium Endowment Plan the

Right Choice for You?

LIC’s Single Premium Endowment Plan (Plan No. 917) is an excellent choice for individuals seeking a blend of savings and life insurance coverage. Its single premium payment structure, along with tax benefits, makes it convenient and cost-effective for investors with immediate liquidity. Moreover, the maturity and death benefits ensure financial security for policyholders and their families.

However, it is essential to assess your financial goals and risk appetite before investing. For those looking for high insurance coverage alone, term insurance might be more suitable. Conversely, if you value the combination of savings and protection, this plan is a compelling option. By evaluating the plan’s features, benefits, and optional riders, you can make an informed decision tailored to your financial future.