The life insurance corporation of India and its IPO are the talk of the town these days. The government is trying to sell 5% of its ownership in the insurance giant to raise a staggering Rs.63,000 crore. The IPO is believed to be an exciting opportunity for investors with the life insurance industry excepting more good days post-pandemic. 

LIC has over 250 million policyholders and has touched the lives of many households. But how will these policyholders, who had a role in the growth of the company directly, will benefit from the IPO? Let’s take a look.

Benefits to policyholders

LIC, in its draft red herring prospectus or DRHP, has said that it will reserve 10% of its stocks for its policyholders. That means that, if you are a policyholder, you will have a higher chance of getting allotted stocks if you apply for an IPO. Not only that, but policyholders are also given a discount on stock price, but the percentage of this discount is yet to be known. These benefits apply to all policyholders, new and old. With the insurance industry believed to continue its growth in recent years, the IPO could benefit its policyholder cum investors tremendously.

How to apply for LIC IPO through the policyholder category?

You have to get a few things sorted to make sure you can apply for LIC’s IPO as a policyholder when it's time. This includes-

• Linking your PAN card to the policy
  
  

  To make the process of verification easy, LIC has urged its policyholders to link their PAN card to the policy. PAN card is a necessary document for a lot of legal procedures in India and it helps in making sure the right income tax is charged from you. Plus, it is necessary for trading in stock markets in India too.
   

• Opening a demat account
  
  

  A demat is also necessary for you to apply for the IPO. It is where your stocks will be stored and ever since the physical stock trade is banned, a demat account is necessary for you to trade in a stock market.
   

• Opening a trading account
  
  

  A trading account is equally important. It gives you a platform to apply for the IPO and then later trade if you want to. Trading accounts act as a mediator between stock exchanges and retail investors here. Hence, a trading account also becomes a necessity.
   

LIC IPO effect on policyholders

As far as policyholders as concerned, LIC could garner more financial exposure. This could mean that policyholders could get advanced services as LIC might be able to better themselves with newly allocated money. Plus, as mentioned above, policyholders will be able to get their hands on their giant’s IPO at a discounted rate with a reservation.

Conclusion

As a policyholder, one thing you can do to make sure that you are ready for IPO is to open a demat account. Apply for LIC IPO using a demat account of a trusted stockbroker to make sure your process is hassle-free.

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