Saral Pension Yojana

The standard immediate annuity product, Saral Pension Yojana, has simple features and standard terms and conditions. The plan (Saral Pension Yojana) is available on all life insurance products from April 1st, 2022.

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

What is Saral Pension Yojana?

 It is a standard individual immediate annuity product known as 'Saral Pension Yojana' prefixed by the insurer's name, offering regular annuity to the life assured after retirement.

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Why Should you Buy Saral Pension Yojana?

• The Saral Pension Yojana is easy to understand.

• The Saral Pension Yojana 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

• The Saral Pension Yojana is a single premium, non-participating, non-linked immediate annuity plan.

• The Saral Pension Yojana offers two annuity options, i.e., Life annuity with a 100% return on the purchase price and 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 death of the last survivor.

• The plan (Saral Pension Yojana) offers a single premium payment option as it is considered an immediate annuity policy.

• The mode of annuity payment in the Saral Pension Yojana is monthly, quarterly, half-yearly, and yearly.

Eligibility Criteria for Saral Pension Yojana

Saral Pension Yojana Calculator

• As per the norms of the Saral Pension Yojana calculator, one may calculate the returns by having the policyholder choose a plan according to their needs. For example, the policyholder may choose a plan of receiving a monthly income of INR 1,000 per month or annually of INR 12,000. In addition, the policyholder is mandated to pay a one-time minimum premium of INR 2,50,000 to avail of this minimal pension. 

• An investment of INR 10 lakh can also be made by the policyholder in order to receive an INR 50,250 pension annually under Saral Pension Yojana.  

• Further, an investor also has an alternative to choose to pay a single premium of INR 20,00,000 to receive INR 1,00,000 annually.

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

Saral Pension Yojana Benefits

1. Death Benefit

   In the case of a single life annuity under the Saral Pension Yojana, 100% of the purchase price is offered to the nominee or legal heirs on the annuitant's death.

   In the case of a joint-life annuity under the Saral Pension Yojana, after the demise of the annuitant:

   • If the spouse survives, the spouse will continue receiving the annuity (exact amount) until their demise. Subsequently, on the spouse's demise, 100% of the purchase price will be given to the legal heir or nominee of the policy.

   • In case of the spouse's demise before the annuitant, the annuitant will continue receiving the annuity until their demise. Subsequently, on the annuitant's death, 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 Saral Pension Yojana since the pension is available till the policyholder is alive.

4. Loan

   • The policyholder can avail of a loan that can be assured any time after the completion of 6 months from the date of policy commencement. However, the maximum loan amount granted under the policy should be that the adequate 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 the demise of the primary annuitant, the secondary annuitant can help with 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 annuity payment frequency under the policy and will be due on the annuity date. However, the annuitant will be given the flexibility to repay the loan amount anytime during the timeline 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 critical illness as specified in the policy document, the annuitant can surrender the policy anytime after six months from the date of policy commencement. The authority can revise the essential conditions from time to time as needed. On surrendering the policy, 95% of the purchase price will be paid to the annuitant, subject to the deduction of the 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 Yojana is an Immediate Annuity Plan that has been explicitly introduced to secure the financial future of individuals after retirement. The plan targets the Indian population who wants to purchase an 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 transgender people.

All life insurance companies permitted to transact new business should compulsorily offer the standard immediate annuity product from April 1, 2022. The product may be filed by insurers latest by February 28, 2022.

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