LIC's Single Premium Endowment Plan (SP Plan) is a type of life insurance policy offered by the Life Insurance Corporation of India (LIC). As the name suggests, this plan requires the policyholder to make a one-time payment of premium, which provides insurance coverage for a specified period. The plan is a non-linked, non-participating endowment plan that offers both life insurance coverage and a savings component.
In this article, we will explain the features, benefits, and eligibility criteria of LIC's Single Premium Endowment Plan in detail.
Features of LIC's Single Premium Endowment Plan
The key features of LIC's Single Premium Endowment Plan are as follows:
- Payment of premium: The policyholder is required to make a one-time payment of premium at the time of policy purchase.
- Policy term: The policy term is fixed at 10 years.
- Maturity benefit: The policyholder receives a lump sum amount at the end of the policy term, which is equal to the sum assured plus any accrued bonuses.
- Death benefit: In case of the policyholder's death during the policy term, the nominee receives the sum assured plus any accrued bonuses.
- Surrender value: The policyholder can surrender the policy after the completion of one policy year, and a surrender value is paid, which is equal to the single premium paid minus surrender charges.
- Loan facility: The policyholder can avail of a loan against the policy after the completion of one policy year.
- Bonuses: This plan does not participate in the profits of LIC and hence, there are no bonuses under this plan.
Benefits of LIC's Single Premium Endowment Plan
The benefits of LIC's Single Premium Endowment Plan are as follows:
- Life insurance coverage: The policy provides life insurance coverage for the policy term.
- Savings component: The policy provides a savings component as the policyholder receives a lump sum amount at the end of the policy term.
- Tax benefits: The premium paid towards the policy is eligible for tax deductions under Section 80C of the Income Tax Act. The maturity amount is also tax-free under Section 10(10D) of the Income Tax Act.
- Liquidity: The policyholder can surrender the policy after the completion of one policy year and receive a surrender value, which provides liquidity to the policyholder.
- Loan facility: The policyholder can avail of a loan against the policy after the completion of one policy year, which provides financial flexibility.
Eligibility criteria for LIC's Single Premium Endowment Plan
The eligibility criteria for LIC's Single Premium Endowment Plan are as follows:
- Minimum age: The policyholder should be at least 90 days old.
- Maximum age: The policyholder should not exceed 65 years of age.
- Policy term: The policy term is fixed at 10 years.
- Sum assured: The minimum sum assured is Rs. 50,000, and there is no maximum limit.
- Premium payment: The premium payment is a one-time payment.
- Mode of payment: The premium payment can be made through cash, cheque, or demand draft.
- Surrender value: The policy can be surrendered after the completion of one policy year.
How to buy LIC's Single Premium Endowment Plan?
The process of buying LIC's Single Premium Endowment Plan is as follows:
- Visit the nearest LIC branch or visit the official website of LIC.
- Fill up the proposal form and submit it along with the required documents.
- Pay the premium amount through cash, cheque, or demand draft.
- The policy will be issued after the premium payment is realized.
Documents required for buying LIC's Single Premium Endowment Plan
The documents required for buying LIC's Single Premium Endowment Plan are as follows:
- Identity proof: Any government-issued identity proof such as an Aadhaar card, PAN card, driving license, or passport.
- Address proof: Any government-issued address proof such as an Aadhaar card, voter ID card, or utility bills.
- Age proof: Any government-issued age proof such as birth certificate, school certificate, or passport.
- Passport-size photograph.
- In the case of NRIs, additional documents such as a passport copy, work permit, and proof of address in India may be required.
Explain With a Simple Example
Suppose Mr. X decides to take the LIC's Single Premium Endowment Plan for a sum assured of Rs. 5 lakhs for a policy term of 10 years. He pays a lump sum premium of Rs. 2,50,000 at the beginning of the policy term.
In case of the unfortunate demise of Mr. X during the policy term, his nominee will receive the sum assured of Rs. 5 lakhs as a death benefit.
If Mr. X survives the policy term, he will receive a maturity benefit which includes the sum assured and accrued bonuses (if any). The maturity benefit will be paid at the end of the policy term.
In case of any emergencies during the policy term, Mr. X can avail of a loan facility against the policy, subject to certain terms and conditions.
SO, LIC's Single Premium Endowment Plan provides financial protection to the policyholder's family in case of an unforeseen event and also helps the policyholder save for the future.
Conclusion
LIC's Single Premium Endowment Plan is a non-linked, non-participating endowment plan that offers life insurance coverage and a savings component. The plan requires a one-time payment of premium and offers a fixed policy term of 10 years. The policyholder receives a lump sum amount at the end of the policy term, which is equal to the sum assured plus any accrued bonuses. In case of the policyholder's death during the policy term, the nominee receives the sum assured plus any accrued bonuses. The plan offers tax benefits, liquidity, and a loan facility. The eligibility criteria for the plan include a minimum age of 90 days, a maximum age of 65 years, and a minimum sum assured of Rs. 50,000. The policy can be purchased by visiting the nearest LIC branch or through the official website of LIC by submitting the required documents and paying the premium amount.
FAQ
Q. What is LIC's Single Premium Endowment Plan?
LIC's Single Premium Endowment Plan is a non-participating, non-linked life insurance plan that provides life coverage and guaranteed returns in the form of maturity benefits.
Q. What is the minimum age requirement to apply for the plan?
The minimum age requirement to apply for the plan is 90 days (completed).
Q. What is the maximum age requirement to apply for the plan?
The maximum age requirement to apply for the plan is 65 years (nearest birthday).
Q. What is the minimum sum assured under the plan?
The minimum sum assured under the plan is Rs. 50,000.
Q. What is the maximum sum assured under the plan?
The maximum sum assured under the plan is unlimited, subject to underwriting.
Q. What is the policy term of the plan?
The policy term of the plan ranges from 10 to 25 years.
Q. Is there any loan facility available under the plan?
Yes, a loan facility is available under the plan after completion of one policy year.
Q. Is there any surrender value available under the plan?
Yes, surrender value is available under the plan after completion of one policy year.
Q. Is there any tax benefit available under the plan?
Yes, tax benefits are available under the plan as per prevailing tax laws.
Q. What is the mode of premium payment?
The premium can be paid in a single lump sum at the time of policy purchase.
