Why is LIC Saral Pension Plan is Suitable Pension Scheme for Senior Citizens?

A retirement plan or pension program is designed to meet your financial requirements and needs following retirement, such as emergency medical situations, household expenses as well as other living expenses. Purchasing the most suitable retirement plan is vital to protecting your golden years.

This is why LIC recently launched LIC Saral Pension 2021. Continue reading this article to know why LIC’s Saral Pension Plan is an Ideal pension scheme for Senior Citizens.

What is LIC Saral Pension Plan?

This is an individual immediate and non-linked annuity policy. A policy buyer can only buy after paying a lump sum amount to receive a set payment at specified intervals for his/her lifetime. The objective of LIC to design this policy is to offer annuity returns of a set amount throughout the annuitant's lifetime.

LIC’s Saral Pension Plan is Ideal Pension Scheme for Senior Citizens

LIC Saral Plan is ideal for seniors due to the below-mentioned reasons:

1. Flexible Annuity Payments

   Annuity payments will be paid in arrears until the time the annuitant is alive, by the method of payment. If the annuitant dies, the annuity payment will be stopped immediately, and 100 percent cent of the purchase price will be paid to the nominee(s)/legal beneficiaries.

   The maximum permissible age to enter the policy is 80 years, while the minimum being 40 years. There is no limit on the purchase price, and annuity rates are guaranteed at the beginning of your plan. The types of annuities available are annual, half-yearly, monthly, and quarterly. The annuity is payable at regular intervals, i.e. the payment for the annuity will be at the end of 1 year, 6 months, three months, and one month during the start of the policy tenure, depending on whether the payment method is annual, half-yearly, quarterly, or monthly.

   The minimum purchase amount is Rs.12,000 yearly. This means there will be a breakdown of Rs.1000 monthly, Rs.3000 quarterly, and Rs.6000 per half-year.

2. Loan Benefits

   After six months of purchasing the plan, it is possible to avail of a loan on the Saral Pension Scheme. With the joint-life annuity alternative, the loan could be taken by the annuitant. Upon the passing away of the annuitant, the loan can be taken by the spouse.

   A maximum loan amount permitted under the policy must be so that the net annual amount of interest due on loan cannot exceed 50 percent of the annual annuity payable in the policy. Interest on loans will be recouped from the annuity sum the annuitant needs to pay under the policy.

   The outstanding loan amount will be paid out of the proceeds of the claim under the policy. The annuitant, however, can pay back the principal loan anytime within the period of currency of the annuity payment.

   The interest rate for all loans, which begin during the 12-month between 1st May and 30th April, will be an annual & effective rate equal to 10 years G-Sec rate per year and 200 basis points. The interest rate calculated shall be in effect for the entire duration of the loan.

   For loans sanctioned during the 12 months beginning from 1st May 2021 until 30th April 2022, the interest rate for the loan is 8.44 percent year applicable for the duration of the loan.

3. Free Look period

   The policy can be returned within 15 days (30 days if the policy is purchased over the internet) after the date of receiving the policy receipt with the reasons for your displeasure and/or objections to the policy. After LIC receives the policy receipt, they will cancel the policy. The premium paid by you will be returned to you after deducting costs for stamp duty and annuity paid (if any).

4. Surrender

   The policy may be canceled any time after six months from the date of purchase of the policy. However, the policy will only pay 95 percent of the purchase price to the annuitant in this case. 

Final Word

Retirement years are meant to be lived peacefully, knowing that all your expenses are within your planning and you have adequate cover for any unfortunate mishaps, should they occur. LIC's Saral Pension plan is an ideal pension scheme for senior citizens as it ensures it takes good care of seniors after retirement through various features and benefits listed above.