LIC Single Premium Endowment Plan-Review


LIC Single Premium Endowment Plan-PolicyLIC Single Premium Endowment Plan-Review

Recently you might be seeing LIC advertisement about one of its policy launched a year back, which is LIC single premium Endowment plan. This is catching everyone's attention as we need to pay a single premium at one time and gain from this insurance policy. In this article, I would provide analysis about LIC single premium endowment plan, its features, benefits of this policy and whether one can invest in such Single premium endowment plan of LIC or not.

Also Read: Best Term Insurance Plans in India

LIC Single Premium Endowment Plan

LIC single premium endowment plan is non linked savings cum protection plan. The premium is paid in a lump sum at one time. This plan benefits as it is “With profits”.

Features of Single Premium Endowment Plan of LIC

  • Min age of entry: 90 days
  • Max age of entry – 65 years. Max age of maturity – 75 years
  • Minimum sum assured : Rs 50,000
  • Plan available in 10 to 25 year period
  • Loan facility available after 1 year
  • Rebate on permium available for a high sum assured
  • Policy can be surrendered at any time

Benefits of LIC single premium endowment plan

a) Death Benefit:

Before commencement of risk: Return of single premium excluding service tax without any interest or profits

After commencement of risk: Sum assured along with vested simple reversionary bonus and final additional bonus (if any) would be paid.

b) Maturity Benefit

Sum assured with vested simple reversionary bonus and final additional bonus

Participating in profits: Policy shall participate in the profits of the company and entitle to vested simple reversionary bonus declared as part of the experience of the company.

What is commencement of risk under this plan?

  • If the insured is < 8 years – Minimum 2 years of the policy period or minimum 8 years age whichever is earlier
  • If the insured is >8 years – Immediate
  • Means if a child is insured who is < 8 years, there is, waiting period of maximum of 2 years or till the time child attains 8 years age.

How the premium looks like?


Below are the indicative premiums for sum assured of Rs 1,000 at various ages.

Premium for LIC Single Premium Endowment Plan (Rs 1,000 sum assured)
Age 10 Yrs 15 Yrs 25 Yrs
10 756.90 640.30 463.10
20 757.60 641.55 465.85
30 757.95 642.60 470.90
40 759.75 647.65 488.35
50 766.05 662.25 527.35
60 777.50 688.60 -

Rebates for high sum assured

LIC provides rebates (discounts) in premiums for a high sum assured

Sum Assured                  Rebate

Rs 50,000 – Rs 95,000 –    0%

Rs 100,000 – Rs 195,000 – 18% of sum assured

Rs 200,000 – Rs 295,000 – 25% of the sum assured

Rs 300,000 and above –   30% of the sum assured

What are the surrender values for this plan?

In case you want to surrender this plan and come out of it before maturity, you would get 70% of premiums paid within 1 year and 90% after 1 year.

What would be maturity if one invests in such plans?

Assuming that a 30 year individual takes 25 year policy for minimum sum assured of Rs 50,000, premium works out to be Rs 23,545. Below are expected returns. Returns would depend on the company performance. Rebated is not considered while computing the returns.

  • 4% returns – Rs 62,767 (Conservative side)
  • 6% returns – Rs 101,052 (Moderate – one can expect this return)
  • 8% returns – Rs 161,247 (Aggressive – This may or may not be received)

Also Read: LIC – Bima Bachat Single Premium plan-Review

What should be your final call on this plan?

  • This is good plan for conservative investors who are looking for protection cum savings plan.
  • Since LIC is trusted company, investment in such company would be safe.
  • When you go for a high sum assured of Rs 3 Lakhs and above, you would get rebate up to 30% of premiums. This would be the best plan for individuals considering high sum assured.
  • For other individuals, like I always say, if we take term insurance plan for such sum assured and invest the balance in zero risk investments like bank FD’s, it would fetch you guaranteed post tax returns which would be higher than this. Such FD/RD’s can also be liquidated (some banks charge a small penalty). However, in case of surrendering this insurance plan you may get only 90% of what you paid. Hence personally I would not invest in such plans.

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Suresh
LIC Single Premium Endowment Plan


Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.

19 Comments

  1. mamata says:

    Dear Suresh ji
    6 months back I have taken the lic indownment plan (814 plan) with a sum assured of 10 lakhs. My half yearly primium is around 33000 for 16 year duration. After 16 years I ll get around 14 lakhs as per the agent.
    Till now I have paid only 1 installment. Do u think I should continue in this plan or stop it and invest in ppf or mutual fund. And for 10 lakhs I can take a simple term insurance plan. Will that be a good idea or shall I continue. Please reply as my 2nd installment is due in august last week.

  2. nitin says:

    Hi,

    I have taken LIC Endowment , ULIP plan befor 3 years in the month of july, with single premium of 30000 for 10 years, now i would like to surrender the policy, please advise , how much amount i would get in return?

  3. Manoj says:

    Dear Suresh,

    Read your advises and reviews found really practically. Now I need to know that as I have already gone (before reading ur article) with Religare mediclaim policy could u put some light on the same.

    Manoj

    • Suresh KP says:

      Hi Manoj, I think, Religare company has come 2-3 years back, hence I would personally feel to wait and watch before considering any policies from such new private insurance companies.

  4. ADARSH says:

    Hi sir,

    I have 10 lakhs with me right now.I want to invest a little portion in Gold and also like to put another portion in LIC-if it is in LiC which plan should i select.Or please advice me to take some actions to get  best returns .Sir what about to buy gold , this time is good for buying gold or not?

    thanks in advance

     

    • Suresh KP says:

      Hi Adarsh, Investment is different from protection. Pls take adequate term insurance plans for risk coverage. Balance try to invest in various options like mutual funds, bank FD/RD, corporate NCD’s, Gold ETF etc. Gold ETF’s can be invested for long term perspective of 8 to 10 years. Don’t just look for returns. It should be for some purpose like gold requirement for daughter marriage etc. This way you are protecting your daughter future and also making investing in gold which can protect from price increase in future. 

  5. dr.sudhakar says:

    Mr.suresh
    The rebate rates are 18% ,25%,30% or 1.8%,2.5%,3% ?
    please clarify.(for single endowment policy)

  6. Mohit says:

    I re-checked the same from ICICI Pru Life. It's still showing around 30K; Single premium, 10 years period for a 25 year old male without housing loan having 5 lakhs annual income without any rider.

    I checked for 18 years old male; the premium is around 29K. I had taken a screen shot for the same & uploaded to my skydrive account. I am attaching the link for it. Please check it & inform me about the same.
    http://sdrv.ms/1amwRrs

    • Suresh says:

      Mohit, I am paying 15K premium per annum for Rs 50L coverage at my age. Your screen shot shows for 25 years age Rs 50L coverage, you need to pay Rs 26,900 (Once). Means you have chosen single premium plan. For 10 years this premium of Rs 26,900 is applicable. 

      • Mohit says:

        I was talking about single premium & you were talking about annual premium; that's why mis-conception occured between us. I checked for lowest age but still the same was around 29K (after taxes).

        Well, analysis of data & evidences is my hobby as well as my profession. From your information regarding term insurance, I am able to conclude your exact age in years. I am not writing it here, else you will delete my post. Hahahaha!

        Anyway, thanks for your detailed information regarding term insurance, which you constantly focus in your articles.

  7. Vikas Thorave says:

    Hi Suresh Sir,
    Sir please write detail article on LIC JEEVAN ANAND plan? Thanks.

  8. Vignesh says:

    Hi Suresh,

    I will accept what you said. As far as i consider, except Term Insurance, Life Insurance Policies are really a waste of money as none of them provides a returns of lesser than 6 Percent, whereas a Completely Safer Bank FDs fetches more than this for even shorter terms, which is around 7 – 10 %. I too took some LIC Plans, but now i realize that i've been such a fool, in the past years (I wont say that they have cheated as they have clearly mentioned everything on the document).

    My real advice to my friends here that do not invest in any Life Insurance Policy only for the purpose of Tax Benefit, unless you really felt that you have some level of Life Risk and you want your family to be much safer in case of such a risk.

     

    Regards,

    Vignesh. S

  9. Mohit says:

    Truly speaking, I cannot understand, how people can be so foolish to opt for such insurance cum savings plan. ULIP, Child Plans & similar are just useless but still people opt for them. I feel that here the role of insurance agents come into the play who are able to convince people to opt for such useless plans.

    In these plans, if insurer dies, his/her family will not get any benefits in reality & if he/she survives, he/she will not get any benefit in reality.

    I too prefer the Term Insurance & to invest the remaining amount in other places. For 30K single premium, one can get a coverage for 50 lakhs for a period of 10years.

    • Suresh says:

      Mohit, People do not have time to investigate best options, depend on agents and consider such plans. Last point, I took Rs 50 Lakhs coverage for term insurance and paying Rs 15K only. You have indicated 30K, it might be for LIC.

      • Mohit says:

        Which company provides 50 lakhs coverage for 15K only?? Regarding 30K, I am talking about ICICI prudential. In which year, you took that plan as the same could be reason for such a lower premium rate as most companies offer competitive premium rates.

        • Suresh says:

          Mohit, I have personally purchased this plan just 6 weeks back and I got it including taxes. This is ICICI Pru Life Icare term insurance plan. Please inform how you are making 30K payment. Even HDFC offers at Rs 14K for my age, hence I feel the maximum for Rs 50L is Rs 15K annual premium from private insurers. Yes if you go for LIC the premium would be more.

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