Failed to link PAN to policy? Apply for LIC IPO under retail/staff quota

Compared to Rs 60 discount under policyholder quota, you will get Rs 45 discount under these

In the Life Insurance Corporation (LIC) of India initial public offering (IPO), a 10 per cent quota has been reserved for existing policyholders. The key benefit of applying under the policyholder reservation portion is that applicants will get a discount of Rs 60 on the IPO price.

Key prerequisites

Existing policyholders need to fulfill two main criteria to be eligible for this benefit.

“They should have linked their permanent account number (PAN) to their policy account. The last date for doing so was February 28. It has not been extended,” says Narendra Solanki, head-equity research (fundamental), Anand Rathi Shares & Stock Brokers.

Even if you did not link your policy with PAN by the February 28 deadline, there is a possibility you may have provided your PAN at the time of purchasing the policy. Agents say they collect the PAN in most cases, especially if the premium exceeds Rs 50,000. Use this link to check if your policy is already linked with PAN.

The second key prerequisite for applying under the policyholder quota is that you must have a demat account. You can apply now if you don’t have one. The demat account must be in the policyholder’s name. An account in the name of the spouse or child will not do.

Policyholders should make sure that their know-your-customer details have been updated in their policy before applying. Contact details can be updated here.

Who is eligible?

Both individual and joint policyholders can apply. In the case of joint policyholders, one person can apply, not both.

“Of the two, the policyholder whose PAN details are linked to the policy and who has a demat account can apply,” says Sneha Poddar, assistant vice-president and research analyst, broking and distribution, Motilal Oswal Financial Services.

The karta of a Hindu Undivided Family (HUF) can also apply in the case of an HUF policy. Those who are part of a group policy cannot apply for the IPO under the policyholder category.

“Non-resident Indian policyholders can also not apply under this category. This benefit is available to resident Indians only,” says Poddar.

If a couple holds a joint demat account, only the first or primary beneficiary can apply. All existing policyholders can apply — there’s no minimum sum insured or premium criterion.

Those who have purchased an LIC policy recently must check their date of purchase.

“Only policyholders who purchased their policy on or before February 13 — the date of LIC’s draft red herring prospectus filing — are entitled to claim this benefit,” says Solanki.

The policyholder should also not have exited the policy by the bid-offer opening date.

A person who is the proposer of the policy for his minor child can also apply under the policyholder category. Nominees of policyholders, however, cannot apply under this category.

Those who are policyholders of insurance companies, such as SBI Life Insurance, will not be eligible to apply under the policyholder category.

Holders of Pradhan Mantri Vaya Vandana Yojana from LIC, however, can apply. Annuity holders (including those whose payouts have begun) are also eligible.

A policyholder’s bid amount cannot exceed Rs 2 lakh (after discount).

What if you failed to link PAN?

If you failed to link your PAN to your policy before the deadline, or if you don’t have a policy, you can apply under the retail or employee category and still avail of discount.

“The insurer is offering a discount of Rs 45 under these categories,” says Solanki.

Finally, remember it is not necessary for long-term investors to participate in an IPO.

“They can always wait and buy the stock when a good buying opportunity presents itself later on,” says Melvyn Joseph, a Securities and Exchange Board of India-registered investment advisor and founder of Finvin Financial Planners.

Investing in an IPO for listing gains is also best avoided.