Should You Invest in LIC Single Premium Policy?

When it comes to making investments in Life Insurance Corporation of India, investors can put their faith blindly on the security and return benefits of their invested sums. LIC has earned its great reputation and high range of customer satisfaction through its constant great services over several decades.

Along with the grand variety of life insurance plans, LIC of India also offers single premium investment plans for its customers. LIC single premium insurance policy is, basically, a profit returning, non-linked plan which appears with all waiver benefits.

Why Choose This Plan?

Precisely, LIC single premium policy is targeted for those investors who are more willing to make one-time big amount payment than making long-time regular premium payment. This single payment insurance policy is also beneficial for those investors who find difficult to keep track of their premiums. The LIC single premium plan also set you free from the constant fear of policy lapses. Just make onetime payment and enjoy better life cover than conventional plans with no premium payment liabilities and worries.

Chief Features of LIC Single Premium Policy

The basic features of this plan are:

  • The entry age in this policy is minimum 6 years and maximum 47 years.
  • The base assured sum is minimum 75 thousand but maximum sum has no upper limit.
  • The term period of the policy is 12 years.
  • Mode of premium payments is single.
  • Death benefits received on the demise of the policyholder will be ten times the onetime premium paid plus the additional amounts for loyalty (if applicable).
  • The benefits received on the maturity of the policy will be assured sum plus loyalty value.

Major Benefits Offered by the Policy

LIC single premium insurance plan comes with a lot of benefits to their customers. Apart from providing comprehensive life coverage opportunity, death and waiver rider facilities to the investors, this onetime payment insurance policy offers other major benefits to the policyholder.

  • Loyalty Addition Value – this policy gives a certain amount of additional money to the policyholder as a loyalty addition. This loyalty amount can only be received after the close of 5 years of the policy. This suggests that the insurance plan will be qualified to receive the loyalty addition only if the policy is surrendered or claimed at the demise of the policyholder after the provided loyalty period of 5years. However, unlike bonuses, the loyalty sum is single time addition which will either be received at the maturity of the plan or on surrender or death claim of the plan.
  • Return Benefits – this not being a market associated investment plan, the return benefits of the plan mainly depend upon the loyalty benefit decided by LIC. Three factors decide the yearly return benefit percentage:
  • The age of the policyholder at the entry of the policy,
  • The base assured sum of the policy and
  • The loyalty addition amount decided by LIC.
  • Tax Saving Benefits – LIC single premium policy is absolutely tax beneficial. The invested sum of money receives tax deduction according to Sec 80C. This means the tax is deductible from the income only for the payment of the single premium of the plan which should not exceed 10 per cent of the base assured sum.
  • Maturity Benefits – the lump sum amount received on the completion of the entire term of the policy is also subjected to tax exemption according to Sec 10D. This amount on maturity remains free from tax and does not include within the overall income of the policyholder provided the premium of the plan should not surpass 10 per cent of the assured sum throughout the term of the plan.
  • Plan Surrender Benefits – this single pay insurance plan of LIC also allows the surrendering of policy at any desired time. This assures a definite surrender amount of the policy. Besides, the policyholder can take loan up to 90% of the total surrendered value of the policy.
  • Settlement choices – the single pay policy of LIC provides another great choice to its customers called the settlement choice. By availing this settlement feature the insured person can choose if he wants to get the entire maturity sum of the insurance right at the completion of the plan or in instalments for next 5,10 and 15 years of time. On death claims, this feature can be availed by the beneficiary of the insured.

Final Overview of the Single Pay Policy

This latest LIC policy is, thus, clearly aimed at the conservative and safe investors. Especially, for those:

  • Investors who are ready to make a generous amount of investment, protected for a long time from the risk of declining interest rates,
  • Investors who have already exceeded their tax deduction limits and,

Investors who are more concerned about their wealth protection rather than a capital enhancement.


What do you think?

Written by Shyam