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LIC Pension Plans
LIC Pension Plans are designed to secure an individual's financial future after retirement. LIC offers four different pension schemes that provide a steady flow of income to the individual in their golden years. Let us explore LIC pension plans and their features to help you make an informed decision.
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Table of ContentWhat are LIC Pension Plans?
LIC Pension Plans are insurance policies designed to provide a regular income stream to policyholders after retirement. These plans help individuals accumulate a corpus during their working years, which is then used to provide a steady income during retirement. LIC of India offers various pension plans catering to financial goals, risk profiles, and preferences.
Types of LIC Pension Plans
Pension plans by LIC are specifically designed to help prospective insurance buyers plan their retirement smoothly. You can explore different types, such as immediate or deferred annuity plans, single premium annuity plans, etc.
Here are details on the different LIC policies that can help you secure your life after retirement.
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 annuitant's lifetime.
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Features and Benefits of LIC New Jeevan Shanti
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The insured needs to invest only once to get lifelong guaranteed returns in the form of monthly income.
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Joint-life annuity can be taken for any lineal ascendant/descendant of a family i.e., children, parents, grandparents or siblings, or spouse.
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The policy offers a guaranteed additional benefit every month during the deferment period. The total accrued amount is paid along with the death benefit amount.
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Under the policy, the policyholder can take a loan. The loan amount is limited to 80% of the surrender value.
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Eligibility Criteria of LIC New Jeevan Shanti
Parameters Details Minimum Purchase Price* 1,50,000 subject to minimum Annuity as specified below Maximum Purchase Price No Limit 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
LIC Jeevan Akshay-VII
This is an immediate annuity LIC pension plan in which the policyholder can choose from 10 different annuity options. The annuity rate is guaranteed at the policy's initiation and paid to the annuitant throughout his/her lifetime.
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Features and Benefits of LIC Jeevan Akshay VII
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This immediate annuity LIC pension scheme requires annuitants to pay a lump sum.
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The policyholder can choose to receive the annuity yearly, half-yearly, quarterly, or monthly.
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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.
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The annuity options available under this LIC pension plan are:
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Lifetime Immediate Annuity
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Lifetime Annuity with Return of Purchase Price
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Immediate Annuity is guaranteed for 5/10/15/20 years (even on death); after that, it is payable for life.
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Life Annuity increasing at a simple rate of 3% p.a.
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Annuity for life with 50% or 100% to the spouse after the annuitant's death.
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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.
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Eligibility Criteria of LIC Jeevan Akshay-VII
ParametersDetailsParameters Details Minimum Purchase Price: Rs. 1,00,000 /- subject to a minimum annuity as specified below *Note- The above-mentioned minimum purchase price will appropriately increase to meet the minimum annuity criteria specified below. Maximum Purchase Price: No limit Minimum Entry Age: 30 years (completed) Maximum Entry Age: 85 years (completed), 100 years 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 LIC Pension Scheme 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 payable throughout annuitants' lifetime.
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Features and Benefits of LIC Saral Pension Plan
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The minimal annuity is Rs. 12,000 yearly.
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The annuity mode will determine the minimum buying cost, buyer's age, and the option selected.
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No upper limit exists on the purchase price.
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After six months, policyholders can borrow against the scheme.
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Eligibility Criteria of LIC Saral Pension Yojna
Parameters Details Entry Age 40-80 years Minimum Purchase Price Rs. 1 Lakh, subject to minimum annuity Maximum Purchase Price No Limit Minimum Annuity Monthly: Rs. 1,000
Quarterly: Rs. 3,000
Half-yearly: Rs. 6,000
Annually: Rs. 12,000
LIC Pension Plus Plan
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.
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Features and Benefits of LIC Pension Plus Plan
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Buyers can invest a lump sum single premium amount or invest a fixed sum regularly on a monthly, quarterly, half-yearly, or yearly basis.
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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.
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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.
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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.
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Eligibility Criteria of LIC New Pension Plus Plan (previously LIC Pension Plus Plan 803)
Parameters Details 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
LIC Jeevan Dhara II
LIC Jeevan Dhara II is a deferred annuity policy from LIC of India, ensures post-retirement financial security. With benefits ranging from enhanced annuity through Top-up options to flexibility in death benefit payouts, the plan ensures comprehensive coverage. The Liquidity Option allows lump sum withdrawals, while the Advanced Annuity Option caters to joint life annuity scenarios
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Features and Benefits of LIC Jeevan Dhara II
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Choose from 11 different annuity options catering to various financial needs.
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Policyholders can increase annuity payouts through top-up annuities during the deferment period.
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Access lump-sum amounts by opting for reduced annuity payments under the Liquidity Option.
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Surviving annuitants in joint life options, can receive an advanced lump-sum payout after the first death.
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Nominee can opt for lump-sum, annuitization, or installment payments for the death benefit.
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A unique option of the plan is Dependent Disability Support that allows policyholders to secure an annuity for dependents with disabilities.
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Eligibility Criteria of LIC Jeevan Dhara II
Parameters Details Entry Age 20 years- 80 years Vesting Age 31 years-80 years Policy Term NA Deferment Period [5 to 15] years (Option 1 to 9) [1 to 15] years (Option 10 & 11)
Why You Should Have Pension Plans?
LIC 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 Pension schemes 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.
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Guaranteed Income
LIC pension plans provide policyholders with a guaranteed source of income during their retirement years. This regular income ensures financial stability, helping retirees maintain their standard of living without worrying about market fluctuations.
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Financial Security
LIC Pension Schemes offer a layer of financial security during retirement. Knowing that you have a steady income stream can provide peace of mind and reduce financial stress.
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Flexibility in Premium Payment
LIC pension plans offer flexibility in premium payment options. Policyholders can choose between single premium payments or regular premium payments based on their financial situation and preferences.
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Tax Benefits
Contributions made towards LIC pension plans are eligible for tax deductions under Section 80CCC of the Income Tax Act. This allows individuals to reduce their taxable income and save on taxes, making them a tax-efficient investment option.
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Vesting Age
Policyholders can select their vesting age, which is the age at which they start receiving the pension income. This flexibility enables individuals to align their retirement plans with their specific needs and retirement goals.
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Death Benefits
LIC pension plans provide death benefits to the nominee or beneficiary in case the policyholder passes away during the policy term. These benefits may include the return of the purchase price or the accumulated corpus, ensuring that loved ones are financially protected.
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Variety of Plans
LIC offers a variety of LIC Pension schemes to cater to different financial goals and risk profiles. Whether you prefer an immediate annuity plan, a deferred annuity plan, or a combination of insurance and savings, LIC has options to suit your needs.
How Does the LIC Pension Plan Calculator Work?
The LIC pension plan calculator calculates the pension amount based on your input. 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 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 the total corpus generated through this scheme.
Things to Keep in Mind Before Buying Best LIC Pension Plan
This section will discuss a few things you need to remember to ensure that you buy the best LIC pension plan to help you meet your financial goals.
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Know Your Pension Needs
You need to estimate how much money you need after you retire. Consider 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 when you retire.
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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 you will have to invest less over time. With the power of compounding, the small amounts you would have invested will have grown to a large sum by the time you reach 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.
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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.
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Know the Types of LIC 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.
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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.
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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
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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.
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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.
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LIC Pension Plans FAQ's
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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 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 under LIC Pension Scheme?
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 of your LIC Pension scheme 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
Different types of Plans
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
++Returns are 10 years returns of Nifty 100 Index benchmark
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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