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LIC Pension Plan

LIC Pension Plans are specifically designed to secure the financial future of the individual after retirement. LIC Pension plan provides a steady flow of income to the individual in their golden years of retirement.  There are three different pension schemes offered by LIC i.e. LIC Jeevan Shanti, LIC Jeevan Akshay-VII, Pradhan Mantri Vaya Vandana Yojana.

The Life Insurance Corporation of India(LIC), is the oldest and the most trusted life insurance provider in the insurance sector. The company enjoys a vast customer base of more than 250 million people and is striving to maintain the same service and product pricing in the ever-competitive insurance market. With an array of comprehensive insurance products offered by LIC, it is a popular choice of investment for most of the insurance buyers.

Why you Should Have a Pension Plans?

Pension plans are your answer if you want to build a secure fund for retirement. Since these plans provide regular payments as an annuity, it is ensured that the money received will be used for retirement funding and not on other expenses. You can choose the vesting date, which is the date from which you become eligible to receive the pension, to coincide with the age from which you would supposedly retire. The LIC retirement plans ensure that you have a financial back and live a stress-free life after retirement.

Benefits of LIC Pension Plans

LIC pension plans offer numerous advantages to the insured policyholders. These include apparent ones such as having a regular income to some non-apparent benefits such as not having to worry about healthcare costs or travel expenses. Let us look at them in more detail.

  • Regular income

    The primary advantage of LIC pension plans is that the insured and his family receive a regular income after the LIC pension plan term. Most of the LIC pension plans provide for the premium payment well into the person’s lifespan. While it may seem difficult for people who are more concerned with the now and present to think of the future as a reality, it is an undeniable fact that will come to pass. And the only way to live the lifestyle you prefer is to invest in a LIC pension plan now when you have the advantage of time in your hand to grow your pension income to levels that will help you live in comfort.
  • Hassle-free income

    You do not have to run from pillar to post to get your pension from the LIC pension plan. Whatever product you choose, whether it is Jeevan Akshay VI or New Jeevan Nidhi Plan, the money will be deposited in the bank account you specify like clockwork. Unless pension schemes where you have to complete a lot of paperwork just to get them to release to you your own money, these are not worries you will have in a LIC pension plan. Most of the minimal paperwork would have been done at the time of buying the policy, and you will have LIC’s employees do most of the paperwork for you at the end of the LIC pension plan term when you start getting your pension. All you have to do is provide details of any change in address or bank account and give your acquiescence to the modalities of how and where you will receive your pension under the LIC pension plan.
  • A good alternative for people in private jobs

    LIC pension plans are a good way to earn a pension for people employed in the private sector. Unlike the public sector, where the central or state allocates a certain percentage of the salary towards pension, there is no such benefit in the private sector. Also, with people changing jobs and locations ever so often, it makes sense to rely on an entity that is certain to pay the pension on time. This is where LIC pension plans have an upper hand.
  • Receive much more than the amount put in, besides the insurance

    The guaranteed additions such as the reversionary bonus and final bonus add to the overall payout at the end of the plan. Also, all details of reversionary bonus percentages are declared to the public each year, so the LIC pension plan policyholders know how much bonus they will be receiving through simple additions. This helps to receive much better returns. Moreover, LIC provides an additional bonus amount as a loyalty payment to the customer for staying with them for the whole term of the LIC pension plan.
  • Guaranteed payouts

    Unlike ULIPs where the amount of payout is not certain, the payment under LIC pension plans is guaranteed. The person will not only receive the payout promised, but they will also be able to plan their future finances well in advance. Knowing that the amount they will receive helps the person insured under the LIC pension plan to chalk out how much additional money they need to invest to receive a good pension amount.
  • Payment for life

    The LIC pension plans offer payment for life. The Jeevan Akshay VI immediate annuity plan, for instance, comes with a range of options such as life annuity that is paid at a uniform rate, lifetime annuity with return of purchase price, life annuity increasing at a simple rate of 3% p.a., etc. Policyholders taking the New Jeevan Nidhi Plan can opt to buy an immediate annuity from the proceeds available at maturity or a single premium deferred annuity plan, depending on their needs.

Types of LIC Pension Plans

Currently, there are ongoing three different pension plans offered by LIC. These plans are specifically designed to help prospective insurance buyers to plan their retirement smoothly. Further here we will give some insights on these plans in detail. 

LIC Jeevan Shanti

This is a single premium payment policy where the insurance holder can choose the option of deferred or immediate annuity payment as per their suitability. For both the option of annuity, the annuity rates are determined at the initiation of the policy and is paid to the annuitant throughout their lifetime. The insurance buyer can purchase this plan wither through an online or offline method.

Features and Benefits of LIC Jeevan Shanti

Let’s take a look at some of the salient features of the policy.

  • The insured just need to invest once and can get a guaranteed return lifelong as monthly income.
  • The plan offers 9 different annuity options to choose from as per one's requirement and suitability.
  • The plan offers the option to choose either immediate annuity or postpone it to the future date as a deferred annuity.
  • A guaranteed additional benefit is offered by the policy during the period of deferment.
  • After completion of 1 year of the policy, the policyholder can take a loan under the policy.

Eligibility Criteria of LIC Jeevan Shanti

The eligibility criteria of LIC Jeevan Shanti is as following:

Minimum Purchase Price- Rs.1, 50,000 subject to a minimum annuity as specified below.

Maximum Purchase Price- no limit

Minimum Entry Age- 30 years (completed)

Minimum Annuity:

Annuity Mode

Monthly

Quarterly

Half-Yearly

Annual

Minimum Annuity

Rs.1,000 per month

Rs.3,000 per quarter

Rs.6,000 per half-year

Rs.12,000 per annum

Joint Life: The joint-life annuity can be taken between any lineal ascendent/descendant of a family i.e. children, parents, grandparents or siblings, or spouse.

Criteria

Immediate Annuity

Deferred Annuity

Maximum Entry Age

85 years (completed)

79 years (Completed)

 

100 years ( completed)

Minimum Deferment Period

N/A

1 year

Maximum Deferment Period

20 years subject to maximum vesting age

Minimum Vesting Age

31 years (completed)

Maximum Vesting Age

80 years (completed)

Pradhan Mantri Vaya Vandana Yojana

The government of India has taken an initiative and has introduced Pradhan Mantri Vaya Vandana Yojana intending to secure the life of the individual after retirement. The scheme has been introduced with a modified pension rate under the plan and an extended period of sale from the financial year 2020-21 till 1st March 2023. As per the policy terms and conditions, the pension rate of the scheme is reviewed and decided by the Ministry of Finance on a yearly basis. The current rate of interest applicable on PMVVY up to March 31st, 2021 is 7.40% per annum. An individual can purchase this scheme through an online or offline method.

Features and Benefits of Pradhan Mantri Vaya Vandana Yojana

  • The scheme offers a current interest rate of 7.40% per annum.
  • On survival of the annuitant during the policy tenure of 10 years, pension in arrears is payable to the annuitant at the end of each period as per the chosen mode.
  • In case of an unfortunate demise of the annuitant during the policy tenure of 10 years, the purchase price is refunded to the beneficiary of the policy.
  • On survival of the annuitant at the end of the policy tenure of 10 years, the purchase price along with the final pension installment is payable to the annuitant.
  • The policyholder can choose from the different modes of pension payment i.e yearly, quarterly, and half-yearly.
  • Loan facility can be availed after completion of 3 years of the policy.
  • The scheme allows premature withdrawals during the policy tenure in specific circumstances.

Eligibility Criteria of Pradhan Mantri Vaya Vandana Yojana

Let’s take a look at the eligibility criteria of the policy.

Criteria

Minimum

Maximum

Entry Age

60 years

No limit

Policy Term

10 years

Pension

Monthly – Rs.1,000

Monthly – Rs.9,500

Quarterly- Rs.3,000

Quarterly- Rs.27,750

Half-Yearly-Rs.6,000

Half-Yearly-Rs.55,500

Yearly-Rs.12,000

Yearly-Rs.1,11000

Sample Pension Rates per Rs.1000/- Purchase Price

Below are the sample pension rates for Rs1,000/- purchase price for different modes.

Yearly

Rs.76.60 p.a

Half-yearly

Rs.75.20 p.a

Quarterly

Rs.74.50 p.a.

Monthly

Rs.74.00 p.a.

*The pension installments are rounded off to the nearest rupee. These rates are independent. 

LIC Jeevan Akshay-VII

This is an immediate annuity LIC pension plan wherein the policyholder has the option to choose from 10 different annuity options. The rate of the annuity is guaranteed at the initiation of the policy and the annuity is paid to the annuitant throughout the lifetime. The individual can purchase this policy through an online and offline method.

Features and Benefits of LIC Jeevan Akshay VII

Let’s take a look at the features and benefits of this LIC Pension Plan.

  • This is an immediate annuity LIC pension scheme that offers 10 different annuity options to choose from.
  • The policyholder can choose to receive the annuity in yearly, half-yearly, quarterly, or monthly mode.
  • The plan offers the option of joint life immediate annuity for life with a provision for 50% of the annuity to the secondary annuitant on the demise of the primary annuitant.
  • There are multiple options of annuity payouts available under this LIC pension plan which are:
    • Life Annuity paid at a uniform rate
    • Lifetime Annuity with Return of Purchase Price
    • Life Annuity guaranteed for 5/10/15 or 20 years and thereafter payable for life
    • Life Annuity increasing at a simple rate of 3% p.a.
    • Annuity for life with 50% annuity to the spouse after the annuitant’s death
    • Annuity for life with 100% annuity to the spouse after the annuitant’s death
    • Annuity for life with 100% annuity for the spouse after the annuitant’s death and also Return of Purchase Price after the death of the last survivor
    • The LIC pension plan can be bought without undergoing any medical tests

Eligibility Criteria of LIC Jeevan Akshay-VII

Let’s take a look at the eligibility criteria of this LIC pension scheme.

Minimum Purchase Price:  Rs.1,00,000/- subject to a minimum annuity as specified below

*Note- The above mentioned minimum purchase price will increase appropriately to meet minimum annuity criteria as specified below.

Maximum Purchase Price: No limit

Minimum Entry Age: 30 years ( completed)

Maximum Entry Age: 85 years (completed), 100 years

Minimum Annuity:

Annuity Mode

Monthly

Quarterly

Half-Yearly

Annually

Minimum Annuity

Rs.1,000 per month

Rs.3,000 per quarter

Rs.6000 per half-year

Rs.12,000 per annum

 Joint Life: The joint-life annuity can be taken between any lineal ascendent/descendant of a family i.e. children, parents, grandparents or siblings, or spouse.

LIC Pension Plan – Jeevan Akshay VII: Sample Annuity Payout Rates

The table shows the different rates of annuity payouts to individuals with different ages if the Purchase Price is assumed to be Rs.1 lakh. The annuity options are also mentioned which are numbered 1-7 as mentioned in the product features earlier.

Age (Years)

Annuity Options

1

2

3

4

5

6

7

30

7190

7160

6890

5250

7080

6970

6860

40

7510

7440

6930

5610

7310

7120

6890

50

8140

7950

7000

6280

7760

7420

6930

60

9350

8790

7110

7530

8640

8030

7010

70

12,080

9830

7260

10,220

10,560

9370

7130

80

17,880

10,440

7480

15,890

14,600

12,340

7290

How Does the LIC Pension Plan Calculator Work?

As mentioned above, the LIC pension plan calculator calculates the pension amount based on the inputs provided by you. The calculator can be used by anyone eligible to invest in a pension plan. Upon submission of the necessary information, the calculator provides the corpus accumulated at the time of retirement, with a compounded rate of interest applied. So, the LIC pension plan calculator shows you the amount invested till your retirement, interest earned throughout the scheme tenure, and finally the total amount of corpus generated through this scheme.

Things to Keep In Mind When Purchasing a Pension Plan

This section will talk about a few things that you need to keep in mind to ensure the LIC pension plan you buy is adequate and helps you meet your financial goals.

  • Know Your Pension Needs

    You need to make a good estimate of how much money you need in the future after you retire. Consider the fact that the real value of money decreases with time and you need to build a sizeable corpus so you can lead the lifestyle with which you are comfortable. The corpus you need will depend on your current expenses less any expenses such as loans that you would have paid off by the time you retire and any increase in healthcare and other expenses for you to take care of your health and additional costs that are likely to arise after retirement.
  • Buy a Plan Early

    The advice that all financial experts give on the power of compounding cannot be stressed enough. Starting early with a LIC pension plan will ensure you easily build up a sizeable corpus for your retirement. Starting as early as your 20s will mean that you will have to invest less like the small amounts you have invested will have grown to a large sum by the time you reach your retirement age. Alternatively, if you start investing in your 40s or 50s, you will have to pay considerably higher amounts to reach the same amount of corpus.
  • Buy a Deferred or Immediate Annuity Plan After LIC Pension Plan Matures

    Most people don’t realize it but human beings are by nature unable to comprehend and make proper use of large sums of money. You would have heard of stories of people fritter away large sums of money simply because they were not able to handle the amounts and neither realize the implications of their actions. The way to avoid this for your retirement corpus is by immediately investing any lump sum amount you receive at the time of vesting in an immediate or deferred annuity plan. This will ensure your retirement corpus remains safe and you are left not in a lurch when you retire. LIC's New Jeevan Nidhi plan provides this option.
  • Know the Types of Pension Plans

    There are different forms of pension plans. The first option plans like the EPF, PPF, and NPS where you deposit a sum of money every year and receive a pension income after you retire on reaching a certain age. The second option is pension plans from asset management companies that invest in the stock market. The third option is insurance cum savings plans that build up a retirement corpus for you and at the same time, make sure you are protected against risks. Each option has its pros and cons and you should go with the one(s) that make sense for you. Many people prefer LIC pension plans because they offer a two-way benefit – insurance cover and assured returns.
  • The Type of Payouts is Important

    There are different types of payouts that pension plans have. Some would give you a lump sum amount of the total amount on vesting, while others would pay you an annuity for life. The ones you ought to choose should be based on the total amount you get back, the overall return percentage, and the convenience factor. For instance, the New Jeevan Nidhi LIC pension plan gives you a single corpus on vesting that you can use to purchase an immediate annuity or buy a single premium deferred pension plan for yourself. Such LIC pension plans are better as otherwise, most people are unable to choose a good annuity option for themselves and waste the money they have received as a lump sum.
  • Know the Charges /Fees

    Knowing the charges/fees will help you identify the plans that provide better returns. Not many people realize the amount of money that is wasted away through hidden charges/fees. Factoring them in will provide a more clear picture of the real returns.

Applying for a LIC Pension Plan from the Company

Online

The company offers specific LIC pension plans which are available online only. The customer only needs to log into the company’s website, choose the required LIC pension plan, choose the coverage, and provide the details. The premium will be determined using the filled details. The customer then needs to pay the premium online through credit card, debit card, or net banking facilities and the policy will be issued

Intermediaries

LIC pension plans which are not available online can be purchased from agents, brokers, banks, etc. where the intermediaries help with the application process.

LIC Pension Plans FAQS

Written By: PolicyBazaar - Updated: 18 September 2020
LIC Pension Plan Reviews & Ratings
4.8 / 5 (Based on 3 Reviews)
(Showing Newest 3 reviews)
Ashish
Mumbai, July 20, 2016
LIC Insurance
The pension plan of mine is very nice. It provide good returns in future and the coming time is tension free. Premium is low, and the special thing of the plan is that it is lic pension plan, the trusted company from the ages. I'm fully satisfied with my insurance plan.
Prashant
Noida, July 20, 2016
Pension Policy
My lic pension plan is the best policy. Premium is less policy coverage is high. Claiming procedure is easy because of fast service facilitate by the executives 24X7. Updates are send regularly to my email address. The online renewals are also easy to make. Good future investment.
Gaurav
Bangalore, May 13, 2016
Trustworthy
I secure my future by buying the lic pension plan. The policy coverage is fantastic approx. 88% and the claims are even better. Service is fast and on time. Good behaviour of executives and staff members is the best part. Good job.