LIC’s Single Premium Endowment Plan (Table no. 917) is a single premium non-linked, participating life insurance plan. It is a so-called one-time investment plan by LIC where you need to pay just one large premium at the time of policy purchase and then there is no liability to pay future premiums.
If you want to know more about this LIC Single Premium Endowment Plan Review (2023) article, then you will get to know all the LIC Single Premium Endowment Plan Details and LIC Single Premium Endowment Policy Benefits here.
LIC had launched this non-linked, participating policy (LIC Table No. 817) for the first time in 2013 under the UIN 512N283V01. But the policy was relaunched in February 2020 for the second time after some revisions under the new product UIN 512N283V02.
LIC Website link to Policy page – Link
A lot of people who get one-time large inflow of money (in windfall gains) want to use these plans to invest and park such windfall gains with no liability to pay future premiums.
Let’s see the features now.
Let’s see the features now.
Features of Single Premium Endowment Plan (Table 917)
Now let’s have a look at the Policy Details of Single Premium Endowment Plan. The Eligibility Criteria of the LIC Single Premium Endowment Plan and its features are listed below:
- The Minimum Entry Age for the policy is 90 days
- The Maximum Entry Age for the policy is 65 years
- The Minimum Maturity Age for the policy is 18 years
- The Maximum Maturity Age for the policy is 75 years
- The Policy Term is 10 years to 25 years.
- The Premium Paying Term is Single Premium as there is just one premium to be paid in full and as lump sum at the time of purchase of LIC Single Premium Endowment policy.
- The Minimum Sum Assured is Rs 50,000
- There is no upper limit on the Maximum Sum Assured for this policy.
Maturity Benefits of LIC Single Premium Endowment Plan
Maturity benefits will be paid if the policyholder survives the policy term.
The final Maturity Benefits will be = Basic Sum Assured + Simple Reversionary Bonuses + Final Additional Bonus, if any.
Simple Reversionary Bonus is announced by the insurer (via LIC Bonus Rates) every year, and it keeps on accumulating (but without compounding). It only gets paid at the time of maturity and not before that. So for example, say you purchased the plan with a Sum Assured of Rs 10 lakh. Now if LIC declares a Simple Reversionary Bonus of Rs 45 per thousand of Sum Assured, this means that Rs 45,000 (calculated as Rs 45/1000 * Rs 10 lakh) will be the accrued bonus for that year and added to the policy corpus (to be paid at maturity). While the bonus rates can change each year, they have remained constant more or less over the last few years. So if say the average bonus rate remains Rs 45 per thousand of sum assured for 20 year policy, then the total simply revisionary bonus that will accumulate will be Rs 9 lakh (calculated as Rs 45,000 per year for 20 years).
Final Additional Bonus (FAB) is applicable only in the year of maturity. It is a one-time extra bonus paid at the maturity of policy and is paid at the time of final payment of the policy. So if for example the Final Additional Bonus declared is Rs 150 per thousand of Sum assured, then for Rs 10 lakh policy, it will be Rs 1.5 lakh (calculated as Rs 150/1000 x Rs 10 lakh).
So combining all these three in our Rs 10 lakh policy for 20 year example, we have,
Total maturity amount = Rs 10 lakh (Sum Assured) + Rs 9 lakh (Simple revisionary Bons) + Rs 1.5 lakh (Final Additional Bonus) = Rs 20.5 lakh.
So when it comes to the maturity benefits of LIC Single Premium Endowment Plan, its fairly simple. On successful completion of the policy tenure and if all the premiums are timely paid, the ‘Sum Assured + Revisionary Bonus + Final Additional Bonus will be paid to the policyholder.
Death Benefits of LIC Single Premium Endowment Plan
The calculation for this is same as for maturity benefit we discussed above.
The Death Payout for Nominee is = Sum Assured + any Vested Simple Reversionary Bonus + Final Additional Bonus.
Is LIC Single Premium Endowment Plan Maturity taxable?
Now here comes the bad news. As per the current taxation rules in Section 10(10D) of the Income Tax Act, if the policy premium is greater than 10% of Sum Assured, then the maturity amount is taxable!
Ouch. And does this rule fit on LIC Single Premium Endowment Plan?
Mostly yes. As you will see in a bit, since the premium to be paid for LIC Single Premium Endowment Plan is one-time, and therefore a large amount, it is generally more than 10% of the sum assured. And that makes the policy maturity payout taxable.
Sample Premium Illustrations of LIC Single Premium Endowment Plan (2023)
Let’s have a look at the premium calculations for LIC Single Endowment Policy now.
As per the policy brochure available on the website, here are the sample premiums for the Basic Sum Assured of Rs 1 Lakh with different ages and policy terms.
Here is the details of the premium –
- For a 10-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 73,890.
- For a 10-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 62,230.
- For a 10-year old person buying LIC Single Premium Endowment policy with 35-year Policy Term, the single one-time premium Rs 44,510.
- For a 20-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 73,960.
- For a 20-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 62,355.
- For a 20-year old person buying LIC Single Premium Endowment policy with 35-year Policy Term, the single one-time premium Rs 44,785.
- For a 30-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 73,995.
- For a 30-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 62,460.
- For a 30-year old person buying LIC Single Premium Endowment policy with 35-year Policy Term, the single one-time premium Rs 45,290.
- For a 40-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 74,175.
- For a 40-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 62,965.
- For a 40-year old person buying LIC Single Premium Endowment policy with 35-year Policy Term, the single one-time premium Rs 47,035.
- For a 50-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 74,805.
- For a 50-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 64,425.
- For a 50-year old person buying LIC Single Premium Endowment policy with 35-year Policy Term, the single one-time premium Rs 50,935.
- For a 60-year old person buying LIC Single Premium Endowment policy with 15-year Policy Term, the single one-time premium Rs 75,950.
- For a 60-year old person buying LIC Single Premium Endowment policy with 25-year Policy Term, the single one-time premium Rs 67,060.
LIC also offers some rebate for policies with higher premiums. The rebates are as follows:
- For sum assured Rs 1.00-1.95 lakh – Rebate of 18% of sum assured
- For sum assured Rs 2.00-2.95 lakh – Rebate of 25% of sum assured
- For sum assured above Rs 3.00 lakh – Rebate of 30% of sum assured
How much Returns does LIC Single Premium Endowment Plan (917) offer?
Or let’s see
How Does the LIC Single Premium Endowment Plan work (2023)?
To understand how the LIC Single Premium Endowment plan works in reality, let us take a LIC Single Premium Endowment plan example:
Suppose a person aged 30-year old buy LIC Single Premium Endowment plan with the sum assured of Rs 5 lakh and policy term 15 years. If we look at the LIC Single Premium Endowment premium calculator or the LIC Single Premium Endowment Premium Chart we saw earlier, we know that for 1 lakh sum assured for 15 year policy, the premium will be Rs 73,995 for a 30-year old.
So extrapolating, for a Rs 5 lakh policy, the gross premium will come to Rs 3.76 lakh. This will be eligible for rebate of 30% of sum assured, which comes to 30% of Rs 5 lakh, i.e. Rs 1.5 lakh. After this rebate the net premium to be paid will be Rs 3.76 lakh – Rs 1.5 lakh = Rs 2.26 lakh as the one-time premium for LIC Single Premium Endowment plan.
Now let’s look at the maturity benefits.
If the policyholder survives the policy term, he will get Sum Assured + Simple Reversionary Bonus + Final Addition Bonus:
- Sum Assured is Rs 5 lakh
- Simple Revisionary Bonus = Rs 45 (assumed) / 1000 X Rs 5 lakh x 15 years = Rs 3.37 lakh
- Final Additional Bonus = Rs 150 (assumed) / 1000 X Rs 5 lakh = Rs 0.75 lakh
So the Total Maturity Amount = Rs 5 lakh (Sum Assured) + Rs 3.37 lakh (Simple revisionary Bons) + Rs 0.75 lakh (Final Additional Bonus) = Rs 9.2 lakh.
Now we know that for this policy, the maturity proceeds will NOT be exempt from income tax under Section 10(10)(D) as the sum assured is less than 10 times the premium. The 10-times-condition is not being met by LIC Single Premium Endowment Plan. So the maturity amount we calculated will be taxable.
Also, the same violation of the 10x condition will also reduce your tax deduction under Section 80C to just 10% of the Sum assured, which is 10% of Rs 5 lakh, i.e. Rs 50,000 and not the full premium up to the limit of Rs 1.5 lakh.
So that was about the taxation of LIC Single Premium Endowment Plan and the tax benefits.
Loan Facility on LIC Single Premium Endowment Plan
A loan can be availed under this plan any time after completion of one policy year. The loan shall be equal to 90% of the surrender value as on date of sanction of loan. The interest rate to be charged for policy loan and as applicable for entire term of the loan shall be determined at periodic intervals. The applicable interest rate shall be as declared by the Corporation based on the method approved by the IRDAI. Any loan outstanding along with interest shall be recovered from the claim proceeds at the time of exit.
Optional Riders Under LIC Single Premium Endowment Plan
LIC Single Premium Endowment Plan offers several optional riders, through which the policyholder can add to their coverage by paying an additional premium:
- LIC Accidental Death & Disability Benefit Rider (UIN: 512B209V02) – In the event of an accident, the Accident Benefit Sum Assured will be paid in a lump sum to the beneficiary. Whereas in the case of disability, arising out of an accident within 180 days from the date of the accident, an amount equal to the Accident Benefit Sum Assured will be paid in equal monthly installments for 10 years. All future premiums will be waived in the event of accidental disability arising from an accident.
- LIC’s New Term Assurance Rider (UIN: 512B210V01) – This rider is available at inception of the policy only. The benefit cover under this rider shall be available during the policy term. If this rider is opted for, an amount equal to Term Assurance Rider Sum Assured shall be payable on death of the Life Assured during the policy term. The premium for LIC’s Accidental Death and Disability Benefit Rider shall not exceed 100% of premium under the base plan and the premiums under all other life insurance riders put together shall not exceed 30% of premiums under the base plan Each of above Rider Sum Assured cannot exceed the Basic Sum Assured under the Basic plan
Free Look Period – If the Policyholder is not satisfied with the Terms and Conditions of the policy, the policy may be returned within 15 days from the date of receipt of payment. If the policy was purchased through distance mode or online, then the free-look period will be extended up to 30 days.
Surrender of LIC Single Premium Endowment Plan
One can surrender the policy at any time. In case the policyholder surrenders the policy within the first year, 70% of the premium will be returned. If the policyholder surrenders the policy within 2 years or more, then 90% of the premium will be returned. The policyholders will be eligible to receive the vested reversionary bonus in latter case.
How to purchase LIC Single Premium Endowment Plan online?
Step-by-step process to buy LIC’s Single Premium Endowment Plan Online:
- Log-on to LIC website (www.licindia.in) or using this link, for buying this online product. Click on ‘Buy Policies Online’. Select plan LIC Single Premium Endowment Plan.
- Click on ‘Buy Online’. Choose your desired Purchase Price, Policy Variant, Date of Birth, Gender, Smoking status, etc.
- Enter other details such as Name, Address, Occupation, Qualification etc. displayed on the screen and complete the proposal form online.
- Pay premium online and fulfil the underwriting requirements, if any.
That’s how you can buy LIC Plan 917 online with rebates of on purchase amount.
Should you buy LIC’s Single Premium Endowment Plan (917) in 2023?
LIC Single Premium Endowment Plan is a typical traditional endowment plan by LIC where you pay are supposed to premium just once (at the time of purchase) and then at maturity, you receive a lump sum amount as the maturity benefit. You also get a small life cover during the policy term period.
Like most other traditional life insurance plans and especially endowment and moneyback plans, it is better to avoid. Most of these offer very small life cover and poor returns. And in LIC Single Premium Endowment plan’s case, the maturity proceeds are taxable as well. For your life insurance coverage needs, the best option is a simple term plan and as I have maintained earlier, avoid mixing investment and insurance.
Hopefully, you would have found this LIC Single Premium Endowment Review useful and the policy details and LIC Single Premium Endowment Policy Benefits (2023) would be clear by now. But please make sure you understand and assess the suitability of this product first.