Many people forget to pay LIC premium on time or face problem in paying the lump sum annual premium. As a result, they prefer to enjoy the convenience of monthly payment by sacrificing the discount on the yearly mode of payment. But there is an option to avail the annual premium discount by paying it monthly and that too with some additional gains on installments without even bothering to remember the due dates of payments. For all these, you have to use the Auto Premium Payment Service or APPS. It is just a system to pay premium, so all the benefits of your LIC policy will remain intact.
What is APPS
The Auto Premium Payment Service (APPS) is a mechanism in which you may start a monthly SIP in any one of the three given debt mutual funds of LIC Mutual Fund and link the MF folio to your existing LIC insurance policy or policies. Your premium will be paid on the due date or five days prior to the last date of grace period, whichever opted, automatically from the MF folio, provided that sufficient amount is available in the fund.
No need to remember payment date
So, you may just forget the date by which you have to make the payment as the integrated payment system eliminates any chance of your policy getting lapsed.
Discount on premium, gain on SIP
You will get the yearly-mode discount by enjoying the convenience of monthly payment and gaining again on the SIP as well. You may get the additional benefit through recurring deposits (RD) also, but you have to remember the due date to take the money out of the RD account to pay the premium.
Where to invest
The available debt funds, in which you may invest to enjoy the benefits of APPS, are LIC MF Liquid Fund, LIC MF Savings Fund and LIC MF Banking & PSU Debt Fund. All three plans don’t have any capping or loading. So, the investors have the option to withdraw money from the funds whenever they want.
How much to invest
You have to invest Rs 5,000 first time in any of the three funds to create the folio. The monthly SIPs may be Rs 500 and multiple of Rs 500. To decide the SIP amount, just divide the yearly premium by 12 to get the monthly figure. The SIP amount should be equal to the monthly figure of premium you calculated or rounded of to the next higher multiple of Rs 500.
As there are no lock-in period or exit loads, you may take out the amount just after investment. But you have to keep sufficient balance in your folio to honour the auto-payment of premium on the due date.
Which LIC policies may be linked
All existing policies having premium of Rs 500 or more may be linked except lapsed policies, policies with SSS or monthly premium mode of payment, single premium policies, ULIPs and health insurance plans.