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

21 comments

  • Suji

    Hi Suresh
    I have a plan of investing in this Single premium endowment policy for 25 years. So as to use the amount for my child’s future, I’m planning to invest 5lakhs and the agents advised me that this would give a returns of 27lakhs on maturity with sum assured of 10lakhs, + accumulated bonuses & FAB will account to this 27lakhs, is it good to go with it?

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