LIC Pension Plans

LIC Pension Plans are designed to secure the financial future of an individual after retirement. There are four different pension schemes offered by LIC that provide a steady flow of income to the individual in their golden years. Apart from these, individuals planning their retirement can also look at LIC SIIP Plan and LIC Bima Jyoti, which offer investment opportunities and increased savings. 

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The Life Insurance Corporation of India (LIC) is backed by the Government of India which makes it a trusted life insurance provider. With an array of comprehensive insurance products, LIC pension plans are a popular investment choice for many insurance buyers.

Why You Should Have Pension Plans?

Pension plans are your answer if you want to build a secure fund for retirement. These plans provide regular payments as an annuity or a monthly income, which you can use to fund your retired years and comfortably manage your spouse’s 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 at which you would supposedly retire. The LIC retirement plans ensure that you have a financial backup and live a stress-free life after retirement.

Benefits of LIC Pension Plans

LIC pension plans offer numerous advantages to the insured policyholders. The benefits range from ensuring a regular income to covering healthcare costs or travel expenses. Let us look at them in more detail.

  1. Regular Income

    The primary advantage of LIC pension plans is that the insured and his/her family receives a regular income once the annuity period starts. The only way to sustain your current standards of living would be to invest in a LIC pension plan. It is best to start as early as possible so that one has the advantage of time to grow a substantial pension fund.

  2. Hassle-Free Process

    You do not have to run from pillar to post to get your pension on time from LIC pension plans. Whichever product you choose, whether it is Jeevan Akshay VII or New Jeevan Shanti, the money gets deposited in the bank account like clockwork. With LIC’s online portals, it is now easier than ever to get the annuity payouts. All forms such as the existence certificate can be accessed at these channels. All you have to do is provide details of any change in address or bank account and surrender to the modalities of how and where you will receive your pension under the LIC pension plan.

  3. A Good Alternative for People in Private Jobs

    LIC pension plans are a good way to earn pensions 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 the upper hand.

  4. Receive Much More Than the Amount Put in, Besides The Insurance

    Apart from insurance protection, the guaranteed additions, such as the reversionary and final bonuses, add to the overall payout at the end of the plan. Also, all reversionary bonus percentages are declared to the public each year, so LIC pension plan policyholders have visibility on how much bonus they will receive. 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.

  5. Guaranteed Payouts

    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 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.

  6. Payment for Life

    LIC pension plans such as Jeevan Akshay VII offer lifetime annuity options such as life annuity paid at a uniform rate, lifetime annuity with return of purchase price, life annuity increasing at a simple rate, etc.

Types of LIC Pension Plans

Pension plans by LIC are specifically designed to help prospective insurance buyers plan their retirement smoothly. There are different types that you can explore such as immediate or deferred annuity plans, single premium annuity plans, etc. Along with these traditional LIC pension plans, you can also explore endowment and unit-linked insurance plans that offer monthly maturity payouts to serve as an income source after retirement.

Here are details on the different LIC policies that can help you secure your life after retirement.

LIC SIIP Plan

This is a unit-linked insurance plan meaning that the insurance holder gets to invest in the equity market to grow their wealth. The insurance buyer can choose a policy term that aligns with their retirement age. Once they retire and the policy matures, they can choose to receive the accumulated returns along with the fund value in monthly installments to serve as an income stream.

  1. Features and Benefits of LIC SIIP Plan

    • A part of the premium goes towards investment in market-linked funds and the remaining towards the life cover.

    • If the policyholder dies within the policy term, his/her family receives the benefit amount.

    • The policyholder gets 4 fund options to choose from depending on their risk appetite.

    • If the chosen portfolio is not performing well, they can switch to different one at no extra cost.

  2. Eligibility Criteria of LIC SIIP Plan

    Criteria Minimum Maximum
    Age at entry 90 days 65 years
    Maturity Age 18 years 85 years
    Policy Term 10 years 25 years
    Premium Paying Term Equal to policy term
    Sum assured Age less than 55 years - 10 times the annual premium
    Age 55 years & up - 7 times the annual premium
    Minimum Premium Yearly - Rs. 40,000
    Half-yearly - Rs. 22,000
    Quarterly - Rs. 12,000
    Monthly - Rs. 4,000
    No limit

LIC Bima Jyoti

This is an endowment insurance policy that offers a guaranteed payout at maturity and a death benefit for the family if the policyholder dies. LIC Bima Jyoti allows policyholders to pay a premium against their desired coverage amount at regular intervals. This amount along with bonuses can be used by the policyholder once the policy ends and they retire.

  1. Features and Benefits of LIC Bima Jyoti

    • The plan combines the benefits of savings and insurance.

    • Guaranteed additions are made to the sum assured every year till the policy matures.

    • Policyholders can choose to receive the Maturity benefit in monthly, quarterly, half-yearly, or yearly installments.

    • Policyholders can align the date of maturity of the policy to their retirement age. This way LIC Bima Jyoti can offer them a fixed income to help with their post-retirement expenses.

  2. Eligibility Criteria of LIC Bima Jyoti

    Parameters Minimum Maximum
    Sum Assured Rs. 1 lakh No limit
    Entry Age Completion of 90 days 60 years
    Maturity Age Completion of 18 years 75 years
    Policy Term (PT) 15 – 20 years
    Premium Paying Term (PPT) PT minus 5 years

    Apart from this, LIC New Jeevan Anand and LIC Jeevan Umang are endowment-based popular plans that can used to maximize your savings for the future.

LIC New Jeevan Shanti

This is a single premium payment policy where the insurance holder receives annuity payments after the deferment period. The annuity rates are determined at the policy's initiation and are paid throughout the lifetime of the annuitant.

  1. Features and Benefits of LIC New Jeevan Shanti

    • The insured just need to invest only once to get lifelong guaranteed returns in the form of monthly income.

    • Joint-life annuity can be taken for any lineal ascendant / descendant of a family i.e. children, parents, grandparents or siblings, or spouse.

    • The policy offers a guaranteed additional benefit every month during the period of deferment. The total accrued amount is paid along with the death benefit amount.

    • The policyholder can take a loan under the policy. The loan amount is limited to 80% of the surrender value.

  2. Eligibility Criteria of LIC New Jeevan Shanti

    Minimum Purchase Price* 1,50,000 subject to minimum
    Annuity as specified below
    Maximum Purchase Price No Limit
    The abovementioned minimum purchase price would be increased
    appropriately to meet the minimum annuity criterion as specified below.
    Minimum Age at Entry 30 years (Last Birthday)
    Maximum Age at Entry 79 years (Last Birthday)
    Minimum Vesting Age 31 years (Last Birthday)
    Maximum Vesting Age 80 years (Last Birthday)
    Minimum Deferment Period 1 year
    Maximum Deferment Period 12 years subject to Maximum Vesting Age

    Annuity Mode Monthly Quarterly Half-yearly Annual
    Minimum Annuity Rs.1,000 Rs.3,000 Rs.6,000 Rs.12,000

Pradhan Mantri Vaya Vandana Yojana

The government of India has introduced the Pradhan Mantri Vaya Vandana Yojana with the aim of securing the lives of individuals after retirement. As per the policy terms and conditions, the pension rate of the scheme is reviewed and decided by the Ministry of Finance every year. The current interest rate applicable on PMVVY is 7.40% per annum. An individual can purchase this scheme online or offline.

  1. Features and Benefits of Pradhan Mantri Vaya Vandana Yojana

    • On survival of the annuitant during the policy tenure of 10 years, pension in arrears is payable to the annuitant 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 policy's beneficiary.

    • On survival of the annuitant to the end of the policy tenure, the purchase price and the final pension installment are payable to the annuitant.

    • The policyholder can choose from the different modes of pension payment, i.e., yearly, quarterly, monthly, and half-yearly.

    • Loan facility can be availed after the completion of 3 years of the policy.

    • The scheme allows premature withdrawals during the policy tenure in specific circumstances.

  2. Eligibility Criteria of Pradhan Mantri Vaya Vandana Yojana

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

    Parameters Details
    Policy Tenure 10 years
    Premium Paying Term 10 years
    Premium Paying Mode Yearly, Semi-Annually, Quarterly, and Monthly.
    Entry Age 60 years
    Maturity Age 70 to 10 years after the entry age
    Grace Period 30 days
    Sum Assured A maximum pension of ₹1,11,000/ can be availed
    Liquidity The loan can be availed under this plan
    Pension (Minimum) Monthly - Rs. 1,000
    Quarterly - Rs. 3,000
    Half-Yearly - Rs. 6,000
    Yearly - Rs. 12,000
    Pension (Maximum) Monthly - Rs. 9,500
    Quarterly - Rs. 27,750
    Half-Yearly - Rs. 55,500
    Yearly - Rs. 1,11,000

LIC Jeevan Akshay-VII

This is an immediate annuity LIC pension plan wherein the policyholder can choose from 10 different annuity options. The annuity rate is guaranteed at the initiation of the policy, and is paid to the annuitant throughout his/her lifetime.

  1. Features and Benefits of LIC Jeevan Akshay VII

    • This immediate annuity LIC pension scheme requires annuitants to make a lump sum payment.

    • The policyholder can choose to receive the annuity on a yearly, half-yearly, quarterly, or monthly basis.

    • 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.

    • The annuity options available under this LIC pension plan are:

    • Lifetime immediate Annuity

    • Lifetime Annuity with Return of Purchase Price

    • Immediate Annuity guaranteed for 5/10/15/20 years (even on death) and after that payable for life.

    • Life Annuity increasing at a simple rate of 3% p.a.

    • Annuity for life with 50% or 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 Return of Purchase Price after the death of the last survivor.

  2. Eligibility Criteria of LIC Jeevan Akshay-VII

    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
  3. Minimum Annuity:

    Annuity Mode Monthly Quarterly Half-Yearly Annually
    Minimum Annuity Rs.1,000 Rs.3,000 Rs.6,000 Rs.12,000

LIC Saral Pension Plan

This plan must be purchased with a single premium. After that, the annuity will begin. Annuity rates in LIC’s Saral Pension scheme are guaranteed at inception and are payable throughout the lifetime of annuitants.

  1. Features and Benefits of LIC Saral Pension Plan

    • The minimal annuity is Rs. 12,000 yearly.

    • The annuity mode will determine the minimum buying cost, buyer's age, and the option selected.

    • No upper limit exists on the purchase price.

    • Annuity payments can be done monthly, quarterly, half-yearly, or annually.

    • This plan is available to anyone aged 40-80 years.

    • After six months, policyholders can borrow against the scheme.

How Does the LIC Pension Plan Calculator Work?

The LIC pension plan calculator calculates the pension amount based on your inputs. 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 one can accumulate by the time of retirement with the invested amount. So, the LIC pension plan calculator shows you the amount invested until your retirement, interest earned throughout the scheme tenure, and finally, the total corpus generated through this scheme.

Things to Keep in Mind When Purchasing a Pension Plan

This section will discuss 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.

  1. 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, which is why you need to build a sizeable corpus to lead the same lifestyle throughout. The corpus you need will depend on your current savings, daily expenses, remaining loans to be paid off, inflation, and other financial obligations that may arise by the time you retire.

  2. Buy a Plan Early

    Starting early with a LIC pension plan will help 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 over time. With the power of compounding, the small amounts that you would 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.

  3. Buy a Deferred or Immediate Annuity Plan After LIC Pension Plan Matures

    It is not easy to handle a large sum of money at once. To avoid this for your retirement corpus, you should immediately invest any lump sum amount you receive at the time of vesting in an immediate or deferred annuity plan. For instance, the final fund value from your LIC SIIP can be used towards purchasing a high annuity plan.

  4. Know the Types of Pension Plans

    There are different forms of pensions. The first option includes 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 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.

  5. The Type of Payout is Important

    There are different types of payouts that pension plans have. Some would give you a lump sum 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.

  6. 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 goes towards hidden charges/fees. Factoring them in will provide a clearer picture of the real returns.

Applying for a LIC Pension Plan from the Company

  1. 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.

  2. Intermediaries

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

LIC Pension Plans FAQ's

  • Q1. What are the charges to be paid for paying LIC premiums through net banking/phone banking?

    Ans: LIC doesn't charge anything, and this is free for its policyholders.
  • Q2. How is LIC's pension plan different from term insurance plans?

    Ans: Although both the pension plan and term insurance offer financial protection, there is a basic difference between them. A pension plan gives financial security to the policyholder after retirement. In case of the sudden demise of the insured, the nominee will be entitled to get benefits. However, term insurance pays only after the policyholder's death. In case the insured survives the tenure, nothing is paid.
  • Q3. What is an annuity?

    Ans: An annuity is a regular income, pension, or allowance that LIC pays to the policyholder after retirement.
  • Q4. What happens if I fail to pay the premium of the LIC pension plan on time?

    Ans: Usually, you get a grace period of 15-30 days, during which you can pay your premiums once it is overdue. However, if you do not pay the premium within this duration and as long as your policy has cash value, LIC will automatically pay your overdue premium by taking a loan against the policy.
  • Q5. What are the different options to pay the premium of my LIC pension plan?

    Ans: You can pay premiums monthly, quarterly, half-yearly, or yearly. Also, it is possible to pay in one lump sum. However, most people choose the monthly premium mode as it is relatively easy to monitor.
  • Q6. Why should I buy LIC's pension plan when I already have a provident fund (PF) account?

    Ans: You should buy LIC's pension plan even if you have a provident fund account because the rising inflation will make your PF amount relatively insufficient at some point. As you grow old, you become more vulnerable to different ailments, which means an increase in your medical expenses. It is not a great idea to rely only on a provident fund account to meet your rising lifestyle needs. Moreover, LIC pension plans offer insurance protection that you can extent to your spouse as well.
  • Q7. How should I calculate my retirement corpus before buying LIC's pension plans?

    Ans: To calculate the retirement corpus, use our retirement calculator. To get the results, you need to put the following details in the calculator: -
    • Monthly expenditure
    • Inflation rate
    • Retirement age
    • The number of years you want the income for
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