LIC SIIP Plan

LIC’s SIIP is a unit-linked, non-participating, regular premium, individual life insurance plan that allows customers to monetise their investment options offered by the market and get a hefty life cover. You can buy the plan online and offline (through an intermediary). Launched on 2nd March 2020, the plan has helped the investors grow their hard-earned savings into a sizeable corpus to help them financially plan and secure crucial life milestones. 

• Policy Type

  Unit-Linked Plan

• Policy Term

  10 to 20 years

• Premium Paying Term

  Same as policy term

• Investment of Funds

  Bond, Secured, Balanced, Growth

• Fund Switching

  Max 4 switches in a year are free

Before going to the benefits, let’s figure out the eligibility criteria to qualify for investing in Life Insurance Corporation SIIP Plan. 

• Entry Age

  90 days - 65 years

• Basic Sum Assured

  Age below 55 years: 10 times of annualised premium
  Age 55 years and above: 7 times of annualised premium

• Minimum Age at Maturity

  18 years (Completed)

• Maximum Age at Maturity

  85 years (nearer birthday) 

Date of Commencement of Risk of Bima Ratna Policy

In case the entry age of the life assured is less than 8, the commencement of the risk will start either one day before the completion of the 2nd policy anniversary or on the policy anniversary on or immediately following the 8 years of completion, whichever is earlier. For policyholders over 8 years, the risk starts immediately from the policy issuance.

Date of Vesting

If the policy is issued for a minor, the policy should automatically vest on the policy anniversary coinciding with or immediately following the completion of 18 of the minor.

As a unit-linked and individual life insurance plan, the Life Insurance Corporation SIIP offers you guaranteed returns and life cover. Let’s figure out the benefits in detail.

Death Benefit

• If the life assured dies before the risk commencement of the policy, an amount equal to the Unit Fund Value shall be payable to the nominee/ beneficiary of the LIC SIIP policy.
• If the life assured dies after the commencement of the risk, the highest of the following is payable.
  • The basic sum assured reduced by partial withdrawals, if any; or
  • Unit Fund Value; or
  • 105% of the total premium paid up to the date of death reduced by partial withdrawals

The death benefit is paid either in a lump sum or in instalments (if the settlement option opts) as defined at the time of policy inception.

Maturity Benefit

If the life assured survives the date of maturity, and all the premiums are duly paid, an amount equal to Unit Fund Value is payable along with the refund of mortality charges.

Guaranteed Additions

Guaranteed additions as a percentage of one yearly premium are added to the Unit Fund Value on completion of the duration of policy years, as mentioned. These guaranteed additions are only provided when all the premiums are duly paid, and the policy is in force.

With the key benefits offered, let’s understand how the plan work in simple words. The policy paying term and the policy term are similar under this plan; let's say you select a policy term for 20 years, and then you need to pay the premiums for 20 years as well. Since the plan has no investment limit, you can invest as much as you want. The investment of funds can be made in the following four fund types and can be switched at any time in an annual year.

Investment of Funds

Unit Fund: The premium paid towards the policy is utilised to buy units according to the four fund types options available. Let’s have a look at the 4 investment options and their investment patterns.

Discontinued Policy Fund: For the discontinued policy fund, the investment patterns should be in the form of unit fund in the following asset categories

(i) Money market instruments: 0% to 40%

(ii) Government securities: 60% to 100%

Payment of Premium

You may select to pay premiums regularly at an annual, half-yearly, quarterly, or monthly (through NACH only) basis of intervals.

LIC SIIP Plan Premium Chart 

The premiums are payable in the following modes

Annualized premiums are payable in multiples of Rs. 1,000 for all modes other than monthly. For monthly (NACH) mode, the premiums are payable in multiples of Rs. 250.

With the expanded facilities available certain charges are applied under Life Insurance Corporation SIIP. The charges are mentioned as

Premium Allocation Charge

The premium allocation charge is a percentage value of the premium paid, which is used to buy units for the policy. The premium allocation charges are as below.

Mortality Charge

It is the cost of life insurance coverage that is age-specific. At the beginning of each policy month, it is charged by cancelling an appropriate number of units out of the Unit Value Fund. The monthly mortality charges are one-twelfth of the annual mortality charges and depend upon the sum at risk, which is higher of

• Basic sum assured (in-force policies)/ Paid up sum assured (reduced paid-up policies)
• Unit fund value
• 105% of total premium minus Unit Fund Value

The rate of mortality charge per annum per Rs. 1000 sum at risk is as follows.

Rider Charge

Suppose a life assured opts for LIC’s Accidental Death Benefit Rider. In that case, the rider charges will be applicable at the beginning of each month by cancelling a suitable number of units out of the Unit Fund (in force policy).

Fund Management Charge

This charge is levied as a percentage of the value of assets and is seized by adjusting the Net Asset Value. The FMC charges are as mentioned below.

Switching Charge

If you want to switch the monies from one fund to another, the charges will apply when effecting a switch. Remember, four switches are allowed without any charges within a given policy year and a charge of Rs. 100 will be applied on the subsequent switches in that year. 

Partial Withdrawal Charge

This charge is applied to the unit fund at the time of partial withdrawal of the fund. An Rs. 100 charge is levied by cancelling an appropriate number of units out of the unit fund value. 

Discontinuance Charge

A discontinuance charge is levied by cancelling an appropriate number of units out of the unit fund value as of the policy's discontinuation date. The charges are mentioned under

Where;

AP= Annualised premium

FP = Unit Fund Value on the date of discontinuance of the policy

Right to Revise Charges

The corporation can revise or modify the charges as per the prior approval of IRDAI and the same will be notified through the official website. The life assured will be given 3 months of notice before making any changes into effect.

In case you disagree with the changes made, you are allowed to withdraw the Unit Fund Value (only after the expiry of the 5 years lock-in period).

Besides the in-built benefits provided by the LIC SIIP, some optional benefits are offered to the life assured. These optional benefits enhance the policy coverage and flexibility of the core plan.

Rider Benefits

LIC’s Linked Accidental Death Benefit Rider is available to opt under this plan. If this rider is opted for, an accidental death benefit is payable in a lump sum in case of an accidental death. 

The following key points need to consider-

• The rider is allowed to opt at any policy anniversary when at least 5 years remain in the policy term but on or before the policy anniversary on which the life assured turns 65 (nearer birthday). 
• The rider benefit cover is payable till the date of maturity or till the policy anniversary on which the life assured turns 70 (nearer birthday), whichever is earlier. 
• The rider is not available for the policy on the minor's life or during the minority years of the life assured.
• The accidental death benefit can not exceed the basic sum assured.
• No increase/ decrease of benefits is allowed.
• Once the rider is cancelled during the policy term, the same cannot be restored.

Partial Withdrawals

If you have completed 5 years of the policy and duly paid all the premiums, then life assured is allowed to withdraw the units partially. The applicable conditions are as follows.

• If the policy is on the life of a minor, then partial withdrawal is only allowed after the completion of 18.
• Partial withdrawal is only allowed in the form of fixed amounts or a fixed number of units.
• The maximum withdrawal amount during each policy year can be made as follows.

Switching

The LIC SIIP plan allows switching between the four fund types a maximum of four times a year, and some switching charges are also applicable in such situations. 

Settlement option

This option allows you to receive the death benefit in instalments. The instalment amount is paid as per the selected option, and the nominee is not allowed to make any changes thereafter. During the settlement period, no charges, but the fund management charges are allowed to deduct.

The following additional features make LIC’s SIIP a suitable investment option offering expanded flexibility.

Grace Period

Life Insurance Corporation SIIP allows a grace period of 30 days for annual, half-yearly, and quarterly premiums while 15 days for monthly premiums. 

Surrender Value

The policy acquires a surrender value if you wish to surrender the policy anytime during the policy term. The following conditions are applicable.

1. If you surrender the policy within the 5 years lock-in period

After deducing the monetary charges from the Unit Fund Value, the monetary fund will be transferred to the Discontinued Policy Fund. The proceeds of this Discontinued Policy Fund shall be payable to the life assured after the 5 years lock-in period.

In case of the death of the life assured after the surrender but before the expiry of 5 years lock-in period, the proceeds of the Discontinued Policy Fund shall be immediately payable to the nominee.

2. If you surrender the policy after the 5 years lock-in period

The whole Unit Fund Value on the date of surrender shall be payable without deducing any discontinuation charges.

Discontinuance of Premiums

The policy shall discontinue if the life assured fails to pay the premium within the specified grace period. During the grace period, withdrawals are not allowed until all the premiums have been paid.

Compulsory Termination

Suppose you duly paid the policy premiums for at least 5 years, and the Unit Fund balance is insufficient to recover the relevant charges. The LIC SIIP shall be entitled to terminate, and the balance amount shall be refunded to the life assured.

Revival of Discontinued Policy

In case of a discontinued policy, the plan allows a revival period of three years, from the date of the first unpaid premium or upto the date of maturity, whichever is earlier. The policy shall be revived on paying all due and unpaid premiums without interest. 

The revival of LIC’s Linked Accidental Death Benefit Rider is allowed only with the base policy, not in isolation.

Free-look Period

LIC SIIP allows a freelook period of 30 days (15 days in case of offline purchase) from the policy buying date. If the policyholder is not satisfied with the policy’s terms and conditions, they can return the policy within the specified days. The policyholder needs to state the reasons for objections to receiving the policy. The corporation shall cancel the policy and return the premium amount paid, excluding any expenses.

Loan Availability

No loan facility is available under the LIC SIIP scheme.

By now, you know all the features and flexibilities of LIC SIIP, but you need to be aware of exclusions under this plan. 

Suicide Exclusion

Suppose the policyholder (sane or insane) commits suicide within 12 months of the commencement of the policy or from the date of policy revival. The nominee will receive the Unit Fund Value on the day of intimation of death along with the submission of the death certificate. The corporation will entertain no further claims under this plan. 

LIC SIIP is a unique ULIP plan that offers prime security by providing life cover and the advantage of investments. The plan provides guaranteed additions, which makes the plan expand the benefits. The policy allows to receive the death benefit in a lump sum or instalments as opted by the policyholder at the time of inception. The instalment received helps the family to earn a continuous income during the tough time. Hence by providing you with suitable life cover, withdrawal options, and other major features, the LIC SIIP Scheme may be a great decision to monetise your money and yield higher returns by the market.

Do you wish to make your buying process for LIC SIIP plan online easier, we can help. Just connect with one of our experts at RenewBuy.