LIC IPO for Policyholders – Eligibility, Conditions and FAQs

Stock market participants are buzzed with the upcoming LIC IPO. Obviously, few LIC policyholders who wish to apply for this IPO under LIC IPO for Policyholders category are eagerly awaiting this IPO. However, there few important aspects to consider. Hence, thought to list all of them.

LIC IPO for Policyholders Eligibility, Conditions and FAQs

Now let us understand these fifteen important FAQs with respect to LIC IPO for Policyholders.

# Is it mandatory to link PAN card to LIC policies?

Yes, it is a mandatory step to link your PAN card for all your policies to be eligible for LIC IPO under the reserved category of policyholders.

Refer my post for detailed explaination “LIC IPO for Policyholders – How to check/update PAN online?“.

# What is the last date to link PAN card to LIC policies for applying LIC IPO?

Every policyholder shall have to ensure that his / her PAN details are updated in the policy records of the Corporation on or before 28th February 2022 in order to be considered an eligible policyholder for application in the forthcoming public issue.

# Is it mandatory to have Demat account for applying LIC IPO?

Yes, as per SEBI Regulations, no equity share can be issued by any company in physical form and the equity shares can only be issued in dematerialized form. Hence, it is mandatory to have Demat Account in the policyholder’s name.

# What is the maximum amount to apply for LIC IPO under the policyholder’s reserved category?

The maximum amount to apply for LIC IPO under the policyholders reserved category is Rs.2,00,000. Applications can be made in the minimum lot size and in multiples thereof. However, as I mentioned, it should not cross more than Rs.2,00,000.

# Whether policyholders can apply beyond Rs.2 lakhs?

Yes, but not under the category reserved for policyholders. They can apply under the Non-Institutional Bidders category.

# Whether lapsed policyholders are eligible to apply?

As per the LIC DRHP wordings “To be eligible for reservation under the Policyholder Reservation Portion category, the policy should have been issued on or before the date of this Draft Red Herring Prospectus and should not have exited by way of surrender, maturity or death claim on the Bid/Offer Opening Date,”.

As the DRHP offer document is silent on lapsed policies, I think lapsed policies are also eligible as such policies are not considered as EXIT.

# What if you have a joint policy?

In the case of joint policies, any one of the joint applicants can apply for equity shares under the Policyholder Reservation Portion category. However, prior to that, the PAN number of the applicant bidding in the offer must be updated in the policy records. The applicant must also have a Demat account and in the case of joint accounts, the applicant must be the first holder.

# Whether NRI LIC policyholders can apply?

Only persons residing in India at the time of the IPO can invest in this quota.

# Whether proposer of the policy (where the policy is under minor son or daughter) can apply?

As you are considered as the owner of the policy and hence being a policyholder, you are eligible for reservation under the Policyholder Reservation Portion.

# What if the policy is not issued but submitted the proposal form?

To be eligible for reservation under the Policyholder Reservation Portion category, the policy should have been issued on or before the date of this Draft Red Herring Prospectus i.e 13th February 2022.

# Whether Pradhan Mantri Vaya Vandana Yojana or Annuity Policyholders are eligible for this IPO under reserved category of policyholders?

Yes, PMVVY and LIC’s annuity policyholders are very much eligible for this IPO reservation.

# Is there any age limit and allotment is based on number policies, premium or sum assured?

There is no age limit to apply under this category. Hence, you can apply. Also, the eligibility is based on the policy you are having but not based on the number of policies, premium and sum assured. Do remember that group policies are not eligible for this reserved category.

# Whether the nominees of LIC policy are eligible?

NO. As LIC policy nominees are not considered as policyholders, you are not eligible to apply under this category.

# Are there any tax benefits?

Sadly NO. The taxation of stock applies to your profit or loss based on the holding period of stocks.

# Is there any guarantee of allotment?

No, the allotment is not guaranteed. As 10% of the offer size is reserved for the eligible policyholder(s). The allotment will be subject to competitive bidding and will depend on the demand in the bidding process.

Note:- By sharing this information, I am not suggesting you must subscribe to LIC IPO. However, this post is to highlight the policyholders eligibility to apply for IPO. Hence, don’t consider this as an investment advice.