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Limited Premium Endowment policy from LIC is a participating endowment plan which offers the dual benefit of investment and insurance coverage. Being a limited-premium payment policy, the premium payment term is less than the policy term. The policyholder has an option to choose the policy term of 12, 16 and 21 years. The premium payment term and policy term is chosen by the policyholder at the beginning of the policy
On survival of the policyholder until the end of the policy term, the maturity benefit is paid, and the policy comes to an end.
In case the policyholder dies during the policy tenure, the death benefit is paid to the beneficiary, and the policy comes to an end.
Policyholders can opt for additional coverage with additional nominal premium charges.
LIC Limited Premium Endowment policy offers a number of benefits to the policyholders. They are as mentioned below:
Maturity benefit: Upon survival till the end of the policy term, the policyholder receives the following:
Death benefit: In case of the unfortunate death of the policyholder before the end of the policy term, the nominee is eligible to receive the following benefits:
The sum assured on death is the highest of the following:
Bonus: Policyholders receive bonus i.e. simple reversionary bonus which is declared by the corporation based on its profit experience and provided the policy is still in force. The final bonus will be given in the year when this policy will be claimed. This can be either in the year of the life insured's untimely death or after maturity.
Customers need to meet the following criteria in order to buy LIC’s Limited Premium Endowment Plan.
Entry age - Minimum: 18 years (completed) Maximum
|Policy term||Premium payment term 8 years||Premium payment term 9 years|
|12 years||Maximum age 57 years||Maximum age 62 years|
|16 years||Maximum age 59 years||Maximum age 59 years|
|21 years||Maximum age 54 years||Maximum age 54 years|
|Policy term||12, 16 or 21 years|
|Premium payment term||8 or 9 years|
|Premium payment mode||Yearly, half-yearly, quarterly, monthly|
Minimum: Rs. 3,00,000
Maximum: No limit
|The minimum accident death benefit||Rs. 1,00,000|
|The maximum accident death benefit||Rs. 1 crore|
|Maximum coverage ceasing age||
69 years for a policy tenure of 12 years and 8-year premium payment term.
70 years in every other case
15 days in case of monthly premium payment mode
30 days for other modes
Following is the sample annual tabular premium rates per Rs. 1000 basic sum assured.
|Term||12 years||16 years||21 years|
|Age/PPT||8 years||9 years||8 years||9 years||8 years||9 years|
|20 years||Rs. 111.20||Rs. 101.55||Rs. 95.35||Rs. 87.10||Rs. 78.60||Rs. 71.75|
|30 years||Rs. 111.55||Rs. 101.85||Rs. 95.90||Rs. 87.60||Rs. 79.55||Rs. 72.65|
|40 years||Rs. 113.15||Rs. 103.35||Rs. 98.30||Rs. 89.85||Rs. 83.25||Rs. 76.10|
|50 years||Rs. 118.20||Rs. 108.25||Rs. 104.95||Rs. 96.15||Rs. 92.35||Rs. 84.60|
Tax benefits: Premiums paid towards LIC Limited Premium Endowment Plan are eligible to receive tax benefits under Section 80C of the Income Tax Act, 1961. Additionally, maturity benefits and death benefits received against the policy enjoys tax benefits under Section 10(10D) of the Income Tax Act, 1961.
Free-look period: In case policyholder is not satisfied with the terms and conditions of the policy, they have an option to return the same to the insurance company stating the reason for such cancellation. However, such cancellation should be made within 15 days from the date of receipt of the policy document. This period is termed as free-look period. The customer needs to return the original policy document to the insurer, and the company will refund the premium, if paid.
Grace period: Policyholders are given additional time to pay the premium after the premium due date when the insurance policy is in force. LIC Limited Premium Endowment policy offers a grace period of 30 days for policies with yearly, half-yearly and quarterly premium payment mode. 15 days of grace period is provided to the policies with monthly premium payment mode. The policy remains in force during the grace period, and the insurance company is liable to honour the policy claim, if it arises.
Policy revival: In case the life insured fails to pay the due premium within the grace period, the policy is subject to lapse. However, the policyholder has an option to restore a lapsed policy. A lapsed policy can be revived within 2 years from the date of first unpaid premium. The plan can be restored by paying all the due premiums along with interest rate fixed by the insurance company. Paid-up value: If at least two full years premiums have been paid, and the subsequent premiums are not duly paid, the policy shall not be considered void, but shall remain in force as a paid-up policy. The sum assured payable on death under a paid-up policy is reduced to the sum called death paid-up sum assured. Death paid-up sum assured = sum assured on death x (number of premiums paid till date / total number of premiums payable during the premium payment term).
The sum assured on maturity under a paid-up policy shall be reduced to a sum called maturity paid-up sum assured. Maturity paid-up sum assured = sum assured on maturity x (number of premiums paid / number of premiums payable).
Surrender value: Policyholders can surrender the LIC Limited Premium Endowment Plan provided at least two full years' premiums have been paid. The guaranteed surrender value shall be a percentage of total premiums paid excluding extra premiums and premiums paid for riders.
Policy loan: Policyholders can avail loan against LIC Limited Premium Endowment policy, provided the policy has acquired a surrender value. The interest rate charged for such a loan is determined at regular intervals. Up to 80% of the surrender value can be availed as a loan amount.
Riders: Policyholders can avail two optional riders. They include term assurance rider and accidental death and disability benefit rider.
Refer the following illustration to understand how premiums are determined for LIC’s Limited Premium Endowment Policy.
Illustration: Mr. Ajay is 25 years old and has bought LIC Limited Premium Endowment Plan for a policy term of 12 years and premium payment term of 8 years. Ajay has opted for a sum assured of Rs. 10 lakhs. Following table demonstrates the premium rates for the first year and the remaining years.
|First-year premium||Second to last year premium|
|Payment mode||Without tax||Tax||With tax||Without tax||Tax||Without tax|
|Monthly premium||Rs. 23,333||Rs. 721||Rs. 24,054||Rs. 23,333||Rs. 360||Rs. 23,693|
|Quarterly premium||Rs. 70,000||Rs. 2163||Rs. 72,163||Rs. 70,000||Rs. 1082||Rs. 71,082|
|Half-yearly premium||Rs. 1,38,608||Rs. 4283||Rs. 1,42,891||Rs. 1,38,608||Rs. 2141||Rs. 1,40,749|
|Yearly premium||Rs. 1,38,608||Rs. 8480||Rs. 2,82,912||Rs. 2,74,433||Rs. 4240||Rs. 2,78,673|
LIC Limited Premium Endowment Policy offers two types of discounts, and they are based on the sum assured and the premium payment mode.
|Sum assured rebate||Premium payment mode rebate|
|Basic sum assured||Rebate per 1000 of sum assured||Premium payment mode||Percentage|
|Rs. 3,00,000 to 4,90,000||Nil||Monthly and quarterly||Nil|
|Rs. 5,00,000 to Rs. 9,90,000||0.5% of the basic sum assured||Half-yearly||1% of tabular premium|
|Rs. 10,00,000||0.75% of the basic sum assured||Yearly||2% of tabular premium|
In order to purchase LIC’s Limited Premium Endowment Policy, the customer needs to provide a number of documents.
Age proof: Birth certificate, driving license, passport, school or college certificate and PAN card can be submitted as a valid age proof.
Identity proof: Passport, Aadhaar card, PAN card, Voter ID, or driving license can be submitted as a valid identity proof.
Address proof: Utility bill, Aadhaar card, or bank account statement, bank passbook can be submitted as an address proof. Along with the photocopies of the documents listed above, the customer has to fill up an application form and also provide self-attested photocopies of the mentioned KYC documents.
If the policyholder, whether sane or insane, commits suicide within 12 months from the date of policy commencement, the insurance company will not entertain any claim under the plan. 80% of the total premiums paid excluding any extra premiums will be paid to the nominee, provided the policy is in force.
In case the policyholder whether sane or insane commits suicide within 12 months from the date of policy revival, 80% of the premiums paid till death or the surrender value, whichever is higher is paid to the nominee. Apart from this, the insurance company is not liable to entertain any claim.
LIC is the largest company in the Indian insurance sector. It is one of the most trusted insurance providers in the country and serving over six decades. The company provides a wide array of insurance policies to meet different insurance requirements of its customers. LIC Limited Premium Endowment policy is one of the most popular insurance policies of LIC. Here’s a review of the overall feature of this policy.
LIC Limited Premium Endowment policy is a limited period plan as the name suggests. As compared to the policy term, the premium payment term is limited to a particular time period. If the policyholder opts for any policy term, the premium payment term would either be 8 years or 9 years at the most. The premium payment term is the limited period within which premiums for the entire policy term have to be made. The maturity sum assured under this policy is payable at the end of the policy term, and the death benefit is paid upon death of the life insured. Since this is a with-profit insurance policy, the company also pays a reversionary bonus to the policyholder, if applicable.
The policy offers surrender value after paying two full year’s premiums have been paid. LIC Limited Premium Endowment Policy comes with a free-look period of 15 days within which the policyholder can review the plan and return the same if not satisfied with policy terms and conditions. In case the policyholder dies followed by suicide within 12 months from the date of policy commencement or policy revival, all benefits under the policy cease to exist, and the policy will come to an end. The beneficiary is eligible to receive 80% of the total premiums paid till the date of death. Premiums paid towards the policy and benefits received against LIC Limited Premium Endowment Plan are eligible to receive income tax benefits under Section 80C and 10(10D) of the Income Tax Act, 1961.