Many of us holding LIC policies. However, only few know that we can pay LIC Premium Payment using EPF corpus also. Let us see this feature of EPF in detail.
Paying LIC Premium Payment using EPF corpus is the feature which exists with EPFO since long. However, only few are aware of it or using it. It is an automated process where you have to just inform EPFO.
Features of paying LIC Premium Payment using EPF corpus
Let us see the features of this facility.
# You can instruct EPFO while buying the Insurance Plan
It is not mandatory that you must already holding LIC policy. You can instruct EPFO at the initial stage itself (while buying LIC policy) that to pay the LIC Premium Payment using EPF corpus.
# You can instruct EPFO to pay for your existing LIC policies
If you already an LIC policy holder, then you can instruct EPFO to pay the premium against your existing LIC policies.
# Policy turn Paid Up if there are no sufficient funds
If the funds insufficient to pay the LIC premium by EPFO corpus, then EPFO will stop paying the premium. It is then your responsibility to take care of your LIC policies. If you also not pay, then the policy will be lapsed and considered as paid up.
# Facility will be active as long as there is enough fund in your EPF
EPF will pay LIC Premium Payment using EPF corpus as long as there is a fund available. Once there is shortage of fund, then it is employee or LIC policy holder’s responsibility to pay his dues against LIC policy.
# You have to assign the policy to Central Board of Trustees, EPFO
I am not sure why they set this rule of assigning the policy to EPFO. You can check the same with EPFO or your employer for clarity. But this is the rule as appears on the form. Hence, you have to follow it.
# Your EPF account must be at least 2 years older
To avail this facility, you must be member of EPF at least 2 years. Otherwise, you are not allowed to utilize this facility.
# You have to submit the form to your employer
You have to DOWNLOAD the EPFO Form 14, fill it and submit the same to your employer.
Is it wise to pay LIC Premium Payment using EPF corpus?
In my view, there is no online set up to track the premium paid by EPFO to LIC. Hence, it is hard for an individual to track. Also, if there is any delay in premium payment by EPFO, it will directly affect your insurance holding.
The delay may be due to procedural, but the onus of late payment and losing the insurance cover may be the biggest risk which you have to face.
Hence, if you are capable of tracking the premium payment by EPFO and ready to take the risk of policy turning to be a lapse or paid up, then you can use this facility.
As I said above, EPFO stops paying the premium once there is a shortage of funds in your EPF account. Hence, the biggest risk in this set up is for an employee to track the availability of corpus. This risk is higher to the new member of EPF as their corpus is not high.
Also, EPF is the product which is meant for your retirement corpus creation. Hence, utilizing this for paying LIC Premium is not a wise decision.
However, there is a short financial hurdle, then you can utilize this facility to pay LIC Premium Payment using EPF corpus. Once, you financial health increases, then in my view stop availing this facility.
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S G Raghavendra
Sir can I buy new Lic policy Jeevan Shanthi through my PF
Basavaraj Tonagatti
Dear Raghavendra,
For buying new policy, then not allow you.
Hema
Hello sir. Can i withdraw EPS(Pension scheme) while working in an org. i completed 8 years in different orgs.
Basavaraj Tonagatti
Hema-NO.
Hema
Sir, Thanks
So i can withdraw it only afetr my retirement. Is i so?
Basavaraj Tonagatti
Hema-Yes or when you leave the job and will not do in future.
Sumit Boaz
Good to know information. Thank you 🙂
mangesh jagtap
dear sir,
can I withdraw may old pf when I counting old pf acount?
Basavaraj Tonagatti
Mangesh-Counting means?
Shreyas
Hi Basu,
I want to buy health insurance for me, my spouse & 1 kid. Can u pls suggest best option between cigna ttk and religare?
also pls let me know if anyother to go for?
Thanks,
Shreyas
Basavaraj Tonagatti
Shreyas-I prefer Religare.
Shreyas
Hi Basu,
From your earlier post on term plans, u suggested that one should buy pure term plan without any rider. So can u pls suggest best accidental & critical illness policies available in market.
Thanks
Basavaraj Tonagatti
Shreyas-Refer my post “Best Accidental Insurance Policy in India-How to choose them?” for accidental insurance. For critical illness, I suggest to buy if you have family history of such critical illness. Otherwise, avoid it. Because it is complicated product and hard to get claims.
Shreyas
thanks basu…
VIKASH JOSHI
My LIC policy is 1 year old can I eligible for online premium payment discount Or how to know that I am eligible for online premium payment.
Basavaraj Tonagatti
Vikash-Cashless transaction discounts in relation to life insurance is only NEW policies issued but not for old policies.
Sreejith
Didn’t realize it was only was new policies…Is it published anywhere as guideline ?
Basavaraj Tonagatti
Sreejith-These are the wordings of Press Release by Ministry of Finance on 8th Dec, 2016 “Public sector insurance companies will provide incentive, by way of discount or credit, upto 10% of the premium in general insurance policies and 8% in NEW LIFE POLICIES of Life Insurance Corporation sold through the customer portals, in case payment is made through digital means.”
Sanket Shirodkar
“However, there is a short financial hurdle, then you can utilize this facility to pay LIC Premium Payment using EPF corpus. Once, you financial health increases, then in my view stop availing this facility.”
Bang On……….
Anyway government is giving 8% discount on Insurance policy & 10% on Medical Policy for online premium payments.
So just go with the flow.
Basavaraj Tonagatti
Sanket-For your information, the cashless discount is only for NEW POLICIES which will be issued but not for OLD POLICIES.
Sanket Shirodkar
Thanks Basu for correction I was not aware of it.
Basavaraj Tonagatti
Sanket-Pleasure.