Saral Pension Yojana

In India, there are various individual immediate annuity products offered by life insurance companies. These products come with different features, annuity options, and terms and conditions. To have uniformity across all insurers and make a product available at all life insurance companies, which will broadly meet the needs of the average customers, the IRDAI has introduced a standard individual immediate annuity product.

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The standard immediate annuity product known as Saral Pension will have simple features and standard terms and conditions. The Saral Pension plan will be available at all life insurance from April 1st, 2021.

The Insurance Regulatory and Development Authority of India (IRDAI) has asked all life insurance companies to offer Saral Pension a standard immediate annuity product, with an objective to make it easier for customers to make an informed choice. Moreover, this standard product will also enhance the trust between the insured and the insurer and will also prevent the mis selling of policies.

What is Saral Pension Yojana?

 It is a standard individual immediate annuity product known as ‘Saral Pension’ prefixed by the insurer’s name, which offers regular annuity to the life assured after their retirement.

Why Should you Buy it?

  • Easy and simple to understand.
  • Makes it easy for customers to make an informed choice as all life insurance companies offer the same product.
  • Standardized wordings.

Features of Saral Pension Yojana

  • This will be a single premium, non-participating, non-linked immediate annuity plan.
  • The Saral Pension will offer two annuity options i.e.
  • Life annuity with 100% return of purchase price
  • Joint life annuity with a 100% annuity to the secondary annuitant in case of demise of the primary annuitant and return of 100% purchase price in case of demise of the last survivor.
  • The plan offers a single premium payment option as it will be an immediate annuity policy.
  • The mode of annuity payment will be monthly, quarterly, half-yearly, and yearly.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Eligibility Criteria

Criteria Minimum Maximum
Entry Age 40 years from last birthday 80 years from last birthday
Purchase Price Depends on the annuity amount
Policy Term This is a whole life policy
Annuity Amount Yearly- Rs.12,000 Half-yearly- Rs. 6, 000 Quarterly-Rs. 3,000 Monthly- Rs. 1,000 No limit

Pricing of Saral Pension

The insurance companies will decide the pricing. However, the annuity rates should result based on the actuarial principle and ensure that the annuity rates are reasonable and fair to all customers. The band wise annuity rates shall be derived in respect of the following bands:

Band Purchase Price Range
Band -1 Less than Rs. 2,00,000
Band-2 Rs.2,00,000 to less than Rs. 5,00,000
Band-3 Rs.5,00,000 to less than Rs. 10,00,000
Band-4 Rs. 10,00,000 to less than Rs. 25,00,000
Band-5 Rs.25,00,000 and above

Saral Pension Yojana Benefits

  1. Death Benefit

    • In the case of a single life annuity 100% of the purchase price is offers to the nominee or legal heirs on the death of the annuitant.
    • In case of a joint-life annuity, after the demise of the annuitant:
    • If the spouse is surviving then the spouse will continue receiving the annuity (same amount) till his/her demise. Subsequently, on the demise of the spouse, 100% of the purchase price will be given to the legal heir or nominee of the policy.
    • In case of demise of the spouse before the annuitant, then the annuitant will continue receiving the annuity till his/h demise. Subsequently, on the demise of the annuitant, 100% of the purchase price will be given to the beneficiary or legal heir of the policy.
  2. Survival Benefit

    An annuity is payable during the survival of the annuitant.

  3. Maturity Benefit

    There is no maturity benefit under the product.

  4. Loan

    A loan can be availed by the life assured any time after completion of 6 months from the date of policy commencement. The maximum loan amount that can be granted under the policy should be that the effective annual interest amount payable on the loan does not exceed 50% of the annual annuity amount payable under the policy.

    Under the joint-life option, the loan can be availed by the primary annuitant, and in case of demise of the primary annuitant, the secondary annuitant can avail of the loan.

    The insurer will recover the loan interest from the annuity amount payable under the policy. The interest applicable to the loan amount will accrue based on the frequency of the annuity payment under the policy and will be due on the date of the annuity.  However, the annuitant will be given the flexibility to repay the loan amount anytime during the currency of the annuity payments.

  5. Policy Surrender In case of Diagnosis of Critical Illness of the Annuitant

    In case the annuitant or the spouse or children of the annuitant is diagnosed with any type of critical illness as specified in the policy document, then the annuitant can surrender the policy anytime after 6 months from the date of policy commencement. The list of critical illnesses can be revised from time to time by the authority as needed. On surrendering the policy, 95%  of the purchase price will be paid to the annuitant, subject to deduction of outstanding loan amount and interest on the loan, if any.  Once the surrender value is paid the policy will be terminated.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

The Bottom Line

Saral Pension Immediate Annuity Plan will be introduced specifically to secure the financial future of the individuals after retirement. The plan targets the Indian population who wants to purchase the annuity, to ensure a regular flow of income after retirement. Under this standard policy, all types of life will be covered including male, female, and transgenders.

All life insurance companies permitted to transact new business should compulsorily offer the standard immediate annuity product with effect from 1st April 2021. The product may be filed by insurers latest by 28th February 2021.

Written By: PolicyBazaar - Updated: 01 October 2021
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