Wednesday, April 13, 2016

Single Premium Endowment Plan (Plan No. 817)


Single Premium Endowment Plan




Single Premium Endowment Plan (Plan No. 817)


LIC's Single Premium Endowment Plan is a savings cum protection plan. The plan provides financial protection against death during the policy term with the provision of payment of lumpsum at maturity on survival. This plan also takes care of liquidity needs through its loan facility. 


Features


  • Single Premium Endowment Plan
  • Life risk cover for the life insured
  • Savings Oriented Plan
  • Loan facility available after completing one policy year
  • Moderate Premium, high bonus rate


Eligibility Conditions


Minimum age at entry
90 days
Maximum age at entry
65 years
Minimum Term  
10 years
Maximum Term 
25 years
Minimum age at maturity
18 years
Maximum age at maturity
75 years
Minimum sum assured
Rs 50,000.00
Maximum sum assured
No higher limit



Commencement of Risk


In case the age of Life Assured at entry is less than 8 years, risk under this plan will commence either 2 years from the date of commencement or from the policy anniversary coinciding with or immediately following the attainment of 8 years of age, whichever is earlier. 

For those aged 8 years or more, risk will commence immediately.



Tax Benefit


Tax benefit is available u/s 80 C and u/s 10 D.

Please note that sec 80 C tax benefit is limited up-to maximum of 10 % of the sum assured. Since it is a single premium plan, it is not a good tax saving instrument.


For example if someone opts for this plan for sum assured of Rs 1,00,000/- and he/she pays Rs 66,000 as single premium. He/she will only get maximum tax benefit for Rs 10,000/- only (10 % of Sum Assured).





Possible Events during policy duration


On Death before the commencement of risk

If the policy holder dies before the commencement of risk, the nominee will receive the single premium paid (excluding the service tax and extra premium).


On Death after the commencement of risk

If the policy holder dies after the commencement of risk, the nominee will receive following:

1. Basic Sum Assured
2. Reversionary Bonus
3. Final Additional Bonus (if any)


On Maturity

If the policy holder survives the term of the plan, he/she will receive:

1. Basic Sum Assured
2. Reversionary Bonus
3. Final Additional Bonus (if any)




Understand Single Premium Endowment Plan with an example


Mrs. Tagore aged 25 years, buys a single premium endowment plan for sum assured of Rs. 2,00,000/- for 15 years term

Single Premium : 1,27,192/-
Sum Assured     :  2,00,000/-


Tax benefit
She will only get a tax exemption of Rs 20,000/- (10% of sum assured) irrespective of the fact that she is paying premium of Rs 1,27,192/-


On Death
If Mrs. Tagore dies during the policy term, her nominee will receive the sum assured along with the accrued bonuses.


On Maturity
If Mrs. Tagore survives the policy term, she will receive the sum assured along with the accrued bonuses.

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