LIC Single Premium Endowment 717

LIC Single Premium Endowment 917

The LIC Single Premium Endowment Plan (Plan No. 717) is a unique life insurance product offered by the Life Insurance Corporation of India (LIC). This plan combines the features of both life insurance and investment, making it an attractive option for individuals seeking long-term financial security with the flexibility of a one-time premium payment. Introduced in the market several years ago, LIC’s Single Premium Endowment Plan has gained significant popularity, owing to its simple structure, flexibility, and the advantages it offers to policyholders. In this detailed analysis, we will explore the features, benefits, and how the LIC Single Premium Endowment Plan operates, along with a comprehensive example to illustrate how the plan works.


1. Overview of LIC Single Premium Endowment Plan (Plan No. 717)

LIC’s Single Premium Endowment Plan is a non-linked, non-participating, endowment policy that offers both life cover and savings. As the name suggests, the plan requires the policyholder to pay a single premium upfront, which covers the entire policy duration. This feature makes it different from traditional endowment plans, which generally involve annual premium payments.

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This plan offers financial protection against the risk of death during the policy term and provides a lump sum benefit at the end of the policy term in case of survival. The plan is designed to cater to individuals looking for an affordable and hassle-free insurance solution with a one-time premium payment.


2. Key Features of LIC Single Premium Endowment Plan (Plan 717)

Here are some of the most important features of the LIC Single Premium Endowment Plan:

a. Single Premium Payment

The most distinguishing feature of this plan is that the policyholder has to pay a one-time single premium, which is sufficient to cover the entire policy duration. This feature appeals to individuals who prefer a one-time payment and want to avoid annual premium commitments. The premium is based on factors like the age of the policyholder, the sum assured, and the policy term.

b. Life Coverage

In the event of the policyholder’s untimely death during the term of the policy, the beneficiary will receive the sum assured along with any accrued bonuses (if applicable). The plan provides a life insurance cover for the policyholder’s family or nominee, ensuring their financial security.

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c. Survival Benefit

If the policyholder survives the entire policy term, they are entitled to receive the sum assured on survival at the end of the term. This provides a savings or investment benefit, in addition to life coverage. The lump sum amount can be used for any personal financial goal, such as retirement, children’s education, marriage, or other long-term needs.

d. Bonus Facility (Optional)

LIC’s Single Premium Endowment Plan is a non-participating policy, which means it does not share in the corporation’s surplus and hence does not participate in the distribution of bonuses. However, there is a possibility that the plan may offer bonuses in certain cases, but this is not guaranteed. Therefore, policyholders must carefully evaluate the plan based on the guaranteed benefits it offers.

e. Loan Facility

A policyholder can avail of a loan against the LIC Single Premium Endowment Plan, which is typically up to 90% of the surrender value. The loan can be used in case of any financial emergencies, subject to the terms and conditions of the insurance company.

f. Maturity Benefit

At the end of the policy term, the policyholder will receive the sum assured along with any bonuses if applicable. The sum assured on maturity is the amount chosen by the policyholder at the inception of the policy.

g. Surrender Benefit

In case the policyholder decides to surrender the policy before the completion of the policy term, they will receive the surrender value, which is calculated based on the premiums paid and the policy duration.

h. Policy Term

The policy term for LIC Single Premium Endowment Plan generally ranges from 10 to 20 years. The policyholder can choose the term based on their financial goals and requirements. The term selected will also affect the premium amount.

i. Tax Benefits

The LIC Single Premium Endowment Plan offers tax benefits under Section 80C of the Income Tax Act for the premium paid. Additionally, the maturity benefits are also exempt from tax under Section 10(10D), subject to the terms of the policy.


3. Benefits of LIC Single Premium Endowment Plan

This plan provides a variety of benefits that make it an appealing choice for investors and those seeking life insurance coverage. Let’s delve deeper into these benefits:

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a. Life Insurance Coverage

The primary benefit of this policy is the life insurance coverage it offers. In the event of the policyholder’s unfortunate death during the policy term, the nominee receives the death benefit, which includes the sum assured along with any bonuses if applicable.

b. Tax Benefits

As mentioned earlier, policyholders are eligible for tax deductions under Section 80C for the single premium paid. Additionally, the maturity benefits are exempt from tax under Section 10(10D), subject to the conditions of the policy. This makes the plan an attractive option for those looking to invest and save taxes simultaneously.

c. Financial Security for the Family

In case of the policyholder’s death, the family receives a financial cushion to help cover living expenses, debts, or other commitments. This ensures that the policyholder’s family remains financially secure even in their absence.

d. Flexibility in Premium Payment

The flexibility to pay a one-time premium ensures that policyholders do not need to worry about paying premiums regularly. This is particularly beneficial for those who do not want to keep track of yearly premium payments.

e. Comprehensive Coverage

This plan offers both life cover and savings, making it a balanced policy for those looking for a blend of insurance protection and an investment component.


4. How Does LIC Single Premium Endowment Plan Work?

To better understand how the LIC Single Premium Endowment Plan works, let’s go through a simple example:

Example:

Let’s say Mr. Ramesh, aged 35, decides to invest in the LIC Single Premium Endowment Plan (Plan 717) for a sum assured of ₹5,00,000 with a policy term of 15 years.

  • Age of Policyholder: 35 years
  • Sum Assured: ₹5,00,000
  • Policy Term: 15 years
  • Premium Payment: ₹2,45,000 (single premium for the chosen sum assured and policy term)
Scenario 1: Mr. Ramesh survives the policy term (15 years)

At the end of 15 years, if Mr. Ramesh survives, he will receive the sum assured of ₹5,00,000. Additionally, if any bonuses are declared during the policy period, those will be added to the maturity amount, though bonuses are not guaranteed under this plan.

  • Maturity Benefit: ₹5,00,000 (sum assured)
  • Bonus (if applicable): Could be added (depending on the performance of LIC, but this is not guaranteed)
  • Total Amount: ₹5,00,000 (plus any bonus declared)
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Scenario 2: Mr. Ramesh dies during the policy term

If Mr. Ramesh were to pass away before completing the 15-year policy term, the death benefit would be paid to the nominee (family member). The death benefit would typically be the sum assured along with any bonuses (if applicable), regardless of whether premiums were paid in a lump sum.

  • Death Benefit: ₹5,00,000 (sum assured) (plus any bonus declared)

If Mr. Ramesh had opted for the loan facility, he could have borrowed against the policy during his lifetime, typically up to 90% of the surrender value, for any personal or emergency needs.


5. Considerations Before Purchasing LIC Single Premium Endowment Plan

While the LIC Single Premium Endowment Plan is a comprehensive and attractive product, it’s important to understand a few things before making the investment:

  • Cost of Premium: Since the premium is a one-time payment, it can be a significant amount upfront. Individuals should evaluate their financial situation before opting for this plan.
  • No Participation in Bonus: Since the plan is non-participating, policyholders won’t receive bonuses unless explicitly declared by the corporation, which may not always be the case.
  • Surrendering the Policy: Surrendering the policy prematurely may lead to a loss in returns, as the surrender value could be lower than the paid premium.

6. Conclusion

The LIC Single Premium Endowment Plan (717) is a robust option for individuals looking for both life coverage and an investment opportunity, with the convenience of a one-time premium payment. This plan is particularly beneficial for those who do not wish to commit to annual premium payments and are looking for a financial product that provides long-term protection.

The plan offers a guaranteed sum assured along with the possibility of additional bonuses, making it a good option for building a safety net for the family while also offering the opportunity to accumulate funds for future needs. However, as with all financial products, it is essential for policyholders to carefully assess their financial situation and long-term goals before making a decision.