Different type of LIC Pension Plans
The Life Insurance Corporation (LIC) was incorporated in the year 1956 when the LIC Act was passed in the parliament of India. Since then LIC has been the most dominant player in the insurance sector. The LIC has a very broad portfolio of products including various insurance, annuity, pension, retirement & investment schemes. The LIC is well known for its high claim settlement ratio in its term insurance schemes. The corporation offers a high flexibility to individuals for choosing the plans as per their requirements.
Pension plans are one of the popular range of products offered by the LIC. These plans aim to meet the needs of the senior citizens after their retirement by offering regular & steady payouts. These plans intend to provide a solution for managing the financial needs & requirements of the senior citizens. Some of the popular pension plans offered by the LIC have been mentioned below. Let's have a look at their features to know more about their offerings:
Pradhan Mantri Vaya Vandana Yojana (Plan No. 856)
The Government of India has introduced this pension scheme to provide a savings scheme for senior citizens which offers them regular and steady income. After retirement, the individuals are likely to face financial difficulties owing to no or insufficient pension income. So, it becomes important to provide financial security to senior citizens of India through a well-planned retirement pension scheme.
The PMVVY scheme will make regular payouts to senior citizens based on the interest rate fixed at the start of the financial year by the government. For the FY2021, the interest rate has been fixed at the rate of 7.40%p.a.
|Parameters||Pradhan Mantri Vaya Vandana Yojana|
Minimum- 60 Years
Maximum- No limit
|Term of Policy||10 Years|
|Mode of payment||Monthly, Quarterly, Half-yearly or Yearly payouts|
|Mode||Minimum Pension||Maximum Pension|
Some of the main features of the Pradhan Mantri Vaya Vandana Yojana are listed below:
- Specially designed for senior citizens, the PMVVY scheme is designed to meet the financial needs of the individuals after retirement.
- The policy term of the Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme is 10 years.
- The scheme offers a premature exit facility to policyholders for meeting the requirements to treat critical or terminal illnesses.
- The scheme offers high flexibility to choose the payout option as per the needs & financial requirements of the individuals. The payment of pension is carried out by alternatives such as NEFT or the Aadhar Enabled Payment Scheme.
- The scheme also offers maturity benefits to individuals who survive the 10-year term of the policy. The maturity benefit is paid in the form of a lump sum payout which includes the purchase price & final installment of pension at the end of the policy term.
- The policy offers a free look period of 15 days during which the policyholder has an option to return the policy in case he/she is not satisfied with the terms & conditions of the policy by stating the reasons for objections.
- The scheme also provides a loan facility which can be availed after completion of three years of the policy. The policyholders may take loans of up to 75 percent of the purchase price of the policy.
- Investments in PM Vaya Vandana Yojana scheme are not eligible for claiming deductions under Section 80C of the Income Tax Act, 1961. The interest income on the policy is taxable as per the slab rate applicable to the investor. For offering benefits to senior citizens, the GST(Goods & Services Tax) has been exempted from this policy.
LIC’s Jeevan Akshay VII (Plan No.857)
The LIC Jeevan Akshay is an immediate annuity plan in which the policyholder has 10 options to choose the annuity plan by making a lumpsum investment. The annuity payments are guaranteed at the start of the policy which are payable during the lifetime of the policyholder.
|Parameters||LIC’s Jeevan Akshay VII|
Minimum- 30 Years
Maximum- 80 Years(100 years for F)
Minimum- 1 lakh
Maximum- No limit
|Mode of Annuity payouts||Monthly, Quarterly, Semi-annual or Annual payouts|
|Annuity Options||A,B,C,D,E,F,G,H,I & J|
Minimum Annuity payout amount
Some of the features of LIC’s Jeevan Akshay VII are:
- The plan offers 10 different options for an annuity which can be chosen by the individuals as per their needs & requirements.
- The plan can be purchased online on the LIC’s official website or through agents in the offline mode.
- The annuity payments start immediately after the purchase of the pension plan.
- The plan also offers death benefits in case of option F & J. Also, the annuity holder has the option to choose the mode for the payout of death benefits to their nominees i.e installment, lumpsum, or annuitization.
- The plan offers a loan facility in options F & J which can be availed after completion of 3 months or a free-look period, whichever is later.
- The plan offers incentives by the way of an increase in annuity rates in case of a higher purchase amount by individuals. The rates vary between 1.05% to 2.45% depending upon the mode and purchase price.
- The plan also offers a rebate of 2% in case of purchases made through online mode, by NPS subscribers & as QROPS.
LIC’s New Jeevan Shanti (Plan No.858)
The LIC’s New Jeevan Shanti Plan is a single premium annuity scheme which provides an option to take single or joint-life deferred annuity. The annuity payments are guaranteed at the start of policy which is payable after the chosen deferment period for the lifetime. The annuity plan can be purchased by individuals through offline as well as online mode.
|Parameters||LIC’s New Jeevan Shanti|
Minimum- 30 Years
Maximum- 79 Years
Minimum- Rs.1.5 lakhs
Maximum- No limit
Minimum- 31 Years
Maximum- 80 Years
Minimum- 1 Year
Maximum- 12 Years, subject to max. vesting age
|Mode of Annuity Payouts||Monthly, Quarterly, Semi-annual or Annual payouts|
Minimum Annuity Amount
Some of the features of LIC’s New Jeevan Shanti Plan are listed below-
- The LIC’s New Jeevan Shanti is a single premium policy and therefore to purchase the plan, only a single lumpsum payment is required.
- This plan is available through agents and online mode as well. The plan can be purchased from the LIC’s official website.
- The plan offers an option to buy a single or joint-life annuity scheme.
- The plan offers an incentive for the higher amount of purchases by individuals. The incentive is given by the way of an increase in annuity rates. The rates vary from 1.50% to 2.70% depending on the purchase amount.
- It also offers a rebate on the purchases made through online mode or as QROPS.
- The policy also offers a loan facility to individuals. The loan can be availed by annuity holders after the completion of the free look period or 3 months from the purchase of the policy, whichever is later. The loan will be available during as well as after the deferment period.
Option 1- On the survival of the annuity holder during the deferment period, nothing will be payable by the corporation. In case of the death of the annuity holder during the deferment period, the death benefit will be payable to the nominee.
After the deferment period, the annuity payments will be made to the annuity holder for the lifetime. In case of death of the annuity holder, the annuity payouts will cease and the death benefit will be payable to the nominee.
Option 2- On the survival of the primary or/and secondary annuity holder during the deferment period, nothing will be payable by the corporation. In case of the death of the last annuity holder during the deferment period, the death benefit will be payable to the nominee.
After the deferment period, the annuity payments will be made for a long as the primary and/or secondary annuity holder survives. In case of death of the last annuity holder, the annuity payouts will cease and the death benefit will be payable to the nominee.
- Death benefits under both the options will be the amount equal to purchase price plus accrued additional benefit on death (as specified in the policy) minus total annuity payable till the date of death or 105% of the purchase price, whichever is higher.
- There are ten options for an annuity that are available under the scheme. As per your revenue requirement, you can pick either alternative
- You may only opt to use single life annuities for yourself or joint-life annuities that will both fund your partner annuities.
- Guaranteed additions are applied to the purchase price under the deferred annuity option, which raises the pension sum.
- The purchase price and the accrued guaranteed additions are paid in the event of death during the deferment period. However, the death benefit will be a minimum of 110% of the selling price.
- You will get a rise in the annuity payable if a higher selling price (single premium) is charged.
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