Life Insurance Corporation or LIC was established in the year 1956. In its 60 years of existence, the company has earned a very good reputation for providing various insurance plans and is still leading the market. At the starting of its establishment, LIC was the only provider of life insurance plans and it is still leading the market.Read more
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The company caters to various needs of its customers and thus it has the largest customer base in India. With different life insurance products, annuity or pension plans are one of the highest selling products of LIC. Let us understand the concept behind annuity plans and find out various plans offered by Life Insurance Corporation of India.
An annuity plan, as its name suggests, offers you a regular income for life after you invest a lump sum. What happens with an annuity plan is that your life insurance company invests your money and pays back the returns that are generated from it as pay-out when you get to retire. There are two types of annuity plans:
Deferred Annuity Plans: The annuity plans that enable you to accumulate a corpus for your retirement over some time. You can invest in a different annuity plan while you are working. The accumulated corpus is the premium that you pay and you get it back when your annuity plan gets matured. Upon maturity, the accumulated corpus is paid as a lifelong income.
Immediate Annuity Plans: An immediate annuity plan, as its name suggests, is for those who want to get regular income as soon as they make the initial investment. Generally, an immediate annuity is for those who are approaching the age of retirement. In this way, a deferred annuity plan accumulates the amount you pay whereas an immediate annuity pays the money back.
Life Insurance Corporation of India offers the following annuity plans:
New Jeevan Nidhi Plan is LIC’s traditional deffered life insurance plan through which you become eligible to create your retirement corpus through the duration of policy by paying regular premiums. You get annuities as soon as this plan matures. The features of this plan are:
It is a participating pension policy that allows this plan to participate in bonus declarations that are made by LIC.
Upon maturity of this annuity plan, the sum assured, vested bonuses, and the sum assured is paid as a benefit of maturity.
Guaranteed additions are as well added to the corpus that enhances the advantages payable under this plan.
The maturity benefits can as well be used to purchase an immediate annuity plan or single premium deferred annuity plan.
Upon the death of the insured, the accrued sum assured is paid with guaranteed additions and vested bonuses.
You can as well commute 1/3rd part of the benefits of maturity and get it in cash.
The disability benefit and accidental death riders are provided as optional cover. You can opt for these riders by paying an extra premium and they promise to provide an additional sum assured when accidental death or disability occurs.
You get discounts on the premiums if you select to pay the premium half-yearly or annually. The discounts on these premiums are 1 percent and 2 percent respectively.
This policy allows both regular and single premium payment options.
Rebate on high sum assured is also provided if you choose the coverage of Rs. 3 lakhs and above.
|Entry Age||20 Years to 60 Years|
|Policy Term||5 Years to 35 Years|
|Sum Assured||Minimum – Rs.1 lakh
Maximum – No Limit
|Monthly Pension Amount||Minimum – Rs. 1000 Maximum - Rs. 10,000|
Mentioned below are sample premium rates that are applicable on this LIC annuity plan for a sum assured of Rs. 2lakh:
|Entry Age||Regular Premium||Single-Premium|
|Term 10 Years||Term 20 Years||Term 30 Years||Term 10 Years||Term 20 Years||Term 30 Years|
|35 years||NA||Rs. 10,720||Rs. 6,960||NA||Rs. 1,22,400||Rs. 91,230|
|45 years||Rs. 23,050||Rs. 11,430||NA||Rs. 1,70510||Rs. 1,26,560||NA|
This annuity plan was launched by the Indian government to provide regular income to senior citizens. This scheme was made available till March 31st, 2020 and now it is being sold through LIC. Some of the benefits and features of this scheme are:
You can purchase this scheme online through the website of LIC.
It is a saving for ten years in which pension is paid during the specified duration.
This scheme has no maximum entry age limit.
You can receive a pension half-yearly, yearly, monthly, or quarterly basis as per your requirement.
In case of death of the policyholder, the nominee gets the purchase price paid for this scheme.
If you require funds for critical or terminal illness, you can easily surrender this policy. Upon the surrender of this policy, 98% of the invested amount is refunded.
Upon maturity of the policy, you get the price of purchase along with the last installment of pension.
You can as well avail loan against the policy after completion of the first three years. You can avail of loans up to 75% of the price of purchase of the policy.
|Entry Age||60 Years and more|
|Policy Term||10 Years|
|Yearly Price to Purchase||Minimum – Rs.1,44,578
Maximum – Rs. 14,45,783
|Monthly Pension Amount||Minimum – Rs. 1000
Maximum - Rs. 10,000
Here are the sample rates of pension that you can avail of at various frequencies while paying a purchase price of Rs. 10lakhs:
|Monthly Pension||Quarterly Pension||Half-Yearly Pension||Yearly Pension|
|Rs. 80,000||Rs. 80,500||Rs. 81,300||Rs. 83,000|
Jeevan Shanti is a flexible pension plan that allows you to get an annuity immediately after you purchase the policy and even after some years. This plan, therefore, provides you a choice between deferred or immediate annuity pay-outs. The benefits and features of this plan are as follows:
You need to pay only a single premium to purchase this plan.
You can purchase this plan online from the website of LIC.
You are eligible to avail of a single life annuity for yourself only or can select a joint-life annuity option that can pay annuities to the spouse as well.
The plan offers ten annuity options. You can select an option according to your income requirements.
In the deferred annuity option, guaranteed additions are included in the purchase price that enhances the amount of pension.
If the policyholder dies during the deferment period, the accrued guarantee add-ons with purchase price are paid. However, the death benefits would be a minimum of 110% of the purchase price.
The death benefits can easily be taken by the nominee in installments or lump sum. The nominee can as well opt for death benefits that can be received as annuity payments.
If the purchase price is high, a single premium is paid. You can also get an increase in the annuity that is payable.
There is as well an increase of approximately 2% in the rate of an annuity when you purchase a policy online.
The facility of loan against the policy is available under some specific options of the annuity.
|Age of Entry||30 years to 100 years|
|Purchase Price||Minimum – Rs. 1.5 lakh
Maximum – No limit
|Pension Amount||Minimum Yearly – Rs. 12,000
Half-Yearly – Rs. 6,000
Quarterly – Rs. 3,000
Monthly – Rs. 1,000
|Deferment Period||One year to 20 years|
The below-mentioned options for annuity payment are provided under this plan:
The annuity is payable for a lifetime.
The annuity is paid for a guaranteed period of five years and after that, it is paid for life.
The annuity is paid for a guaranteed period of ten years and after that, it is paid for life.
The annuity is paid for a guaranteed period of fifteen years and after that, it is paid for life.
The annuity is paid for a guaranteed period of twenty years and after that, it is paid for life.
The annuity is paid for life and the purchase price is returned on death.
The annuity is paid for life that increases at a rate of 3% every year.
A joint-life annuity is payable for the life of the primary policyholder. After the primary policyholder's death, 50% of the annuity is paid to the secondary policyholder till he/she lives.
A joint-life annuity is payable for the life of the primary policyholder. After the primary policyholder's death, 100% of the annuity is paid to the secondary policyholder till he/she lives.
A joint-life annuity is payable for the life of the primary policyholder. After the primary policyholder's death, 50% of the annuity is paid to the secondary policyholder till he/she lives. Upon the death of the second policyholder, the purchase price is refunded.
Suppose, Mr. A, purchases LIC Jeevan Shanti plan by paying a purchase price of Rs. 10 lakhs. The different options for annual annuity rates that he can pay are mentioned below. For calculation purpose, the following details are assumed:
A has selected the immediate annuity option.
He has taken a joint-life annuity policy wherein the age of the second policyholder is 35 years.
|Annuity Options||Amount of Annuity|
|Option I – Lifetime Annuity||Rs. 66,200|
|Option II – Lifetime Annuity Guaranteed for Five Years||Rs. 66,100|
|Option III – Lifetime Annuity Guaranteed for 10 years||Rs. 65,900|
|Option IV – Lifetime Annuity Guaranteed for 15 years||Rs. 65,500|
|Option V – Lifetime Annuity Guaranteed for 20 years||Rs. 65,000|
|Option VI – Lifetime Annuity Guaranteed with Purchase Price Return||Rs. 56,000|
|Option VII – Increasing Lifetime Annuity||Rs. 49,100|
|Option VIII – Joint Lifetime Annuity with 50% Annuity for the Secondary Annuitant||Rs. 62,900|
|Option IX - Joint Lifetime Annuity with 100% Annuity for the Secondary Annuitant||Rs. 59,900|
|Option X - Joint Lifetime Annuity with 100% Annuity for the Secondary Annuitant and Return of the Purchase Price||Rs. 55,500|
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
As mentioned earlier, you can purchase LIC pension plans online from LIC’s website. Other than online, you can as well purchase a LIC plan from the agent of LIC or LIC's branch office. Alternatively, you can also compare various annuity plans online and thereafter can select the most suitable one.
To purchase a LIC annuity plan, you should provide the following documents:
Deferred annuity plans pay death benefits if the policyholder dies during the deferment period. For making a death claim, one has to take the following steps:
He/she should fill Form 3783, which is the death claim form. One has to fill part A of this form.
The death certificate issued by the Municipal Corporation has to be submitted.
The original documents of the policy are also required.
Some other documents such as post-mortem report, police FIR, panchnama, etc. can also be needed if the policyholder dies in an accident.
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