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.Read more
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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. The company's latest annuity option is the LIC New Pension Plus Plan. Read along to find out important features of all the 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.
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.
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.
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.
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.
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.
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.
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.
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.
A pension product by LIC, this unit-linked insurance plan (previously LIC Pension Plus 803) allows investors to invest their money in various market-linked funds to generate increased returns. The investor can use the total accumulated amount at the end of the policy term to buy an immediate or deferred annuity plan. This not only increases the savings corpus but secures the financial future of the pensioners and their families.
Now one can use the LIC Pension Plus maturity calculator to get an accurate idea of the benefits and the investment details.
Here are key LIC Pension Plus Plan details:
Buyers can invest a lump sum single premium amount or invest a fixed sum regularly on a monthly, quarterly, half-yearly, or yearly basis.
The invested amount can be annuitised to create a regular stream of income post retirement. Annuitisation is the conversion of a lump sum amount to periodic fixed pensions/annuities.
It comes with 4 different fund options ranging from equity and debt to a mix of both that one can choose per their risk tolerance.
The most important benefit is the Guaranteed Additions that LIC of India makes to the fund value at specific policy years. These additions are 100% assured and made irrespective of any market fluctuations.
|Entry Age||25 years||75 years|
|Policy Term||10 years||42 years|
|Age at Maturity/Vesting||35 years||85 years|
|Premium Payment Term||Single Premium: One Time Regular Premium: Same as policy term|
|Premium Amount||Single - Rs 1 Lakh
Yearly - Rs 30,000 Half-Yearly - Rs 16,000
Quarterly - Rs 9,000 Monthly - Rs 3,000
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.
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.
|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
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.
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.
|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|
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.
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.
|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|
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.
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.
Let’s take a look at the eligibility criteria of the policy.
|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
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.
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.
|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|
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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