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How to pay LIC Premium Payment using EPF corpus?

December 9, 2016by Basavaraj Tonagatti

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.

pay LIC Premium Payment using EPF corpus

# 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.

Category: EPF and PPF, Insurance PlanningTag: LIC Premium Payment using EPF

About Basavaraj Tonagatti

Basavaraj Tonagatti is the man behind this blog. He is SEBI Registered Investment Adviser who is practicing Fee-Only Financial Planning Process and also an Independent Certified Financial Planner (CFP), engaged in blogging since 7 years. BasuNivesh blog is ranked as one among India's Top 10 Personal Finance Blog. He is not associated with any Financial product/service provider. The purpose of this blog is to "Spread personal finance awareness and make them to take informed financial decisions." Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. These should not be construed as investment advice or legal opinion."

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Reader Interactions

Comments

  1. S G Raghavendra

    October 29, 2018 at 7:51 PM

    Sir can I buy new Lic policy Jeevan Shanthi through my PF

    Reply
    • Basavaraj Tonagatti

      October 29, 2018 at 8:01 PM

      Dear Raghavendra,
      For buying new policy, then not allow you.

      Reply
  2. Hema

    August 29, 2017 at 2:37 PM

    Hello sir. Can i withdraw EPS(Pension scheme) while working in an org. i completed 8 years in different orgs.

    Reply
    • Basavaraj Tonagatti

      August 29, 2017 at 3:10 PM

      Hema-NO.

      Reply
      • Hema

        August 29, 2017 at 5:11 PM

        Sir, Thanks

        So i can withdraw it only afetr my retirement. Is i so?

        Reply
        • Basavaraj Tonagatti

          August 29, 2017 at 6:28 PM

          Hema-Yes or when you leave the job and will not do in future.

          Reply
  3. Sumit Boaz

    April 16, 2017 at 3:39 AM

    Good to know information. Thank you 🙂

    Reply
  4. mangesh jagtap

    March 22, 2017 at 7:55 PM

    dear sir,

    can I withdraw may old pf when I counting old pf acount?

    Reply
    • Basavaraj Tonagatti

      March 22, 2017 at 8:11 PM

      Mangesh-Counting means?

      Reply
  5. Shreyas

    December 21, 2016 at 2:28 PM

    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

    Reply
    • Basavaraj Tonagatti

      December 21, 2016 at 2:38 PM

      Shreyas-I prefer Religare.

      Reply
      • Shreyas

        December 23, 2016 at 4:30 PM

        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

        Reply
        • Basavaraj Tonagatti

          December 23, 2016 at 5:26 PM

          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.

          Reply
          • Shreyas

            December 24, 2016 at 12:07 PM

            thanks basu…

            Reply
  6. VIKASH JOSHI

    December 11, 2016 at 9:18 PM

    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.

    Reply
    • Basavaraj Tonagatti

      December 12, 2016 at 10:14 AM

      Vikash-Cashless transaction discounts in relation to life insurance is only NEW policies issued but not for old policies.

      Reply
  7. Sreejith

    December 9, 2016 at 6:43 PM

    Didn’t realize it was only was new policies…Is it published anywhere as guideline ?

    Reply
    • Basavaraj Tonagatti

      December 9, 2016 at 7:21 PM

      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.”

      Reply
  8. Sanket Shirodkar

    December 9, 2016 at 12:10 PM

    “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.

    Reply
    • Basavaraj Tonagatti

      December 9, 2016 at 12:13 PM

      Sanket-For your information, the cashless discount is only for NEW POLICIES which will be issued but not for OLD POLICIES.

      Reply
      • Sanket Shirodkar

        December 9, 2016 at 5:56 PM

        Thanks Basu for correction I was not aware of it.

        Reply
        • Basavaraj Tonagatti

          December 9, 2016 at 5:58 PM

          Sanket-Pleasure.

          Reply

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