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LIC Pension Plans

LIC (Life India Corporation), the oldest player in the insurance sector in India, has been catering to the insurance needs of people for decades. It has successfully grabbed the maximum market share with more than 250 million customers. LIC has extensive market reach with a variety of plans that meet the needs of every generation. It keeps offering different products from time to time that meet the evolving needs of people. Currently, it is offering four pension plans to help people to safeguard their post-retirement life.

Top pension plans offered by LIC

Pension plans offered by LIC are most suited for those who are planning a secure future and for senior citizens. Check the list of top pension plans provided by the LIC India.

LIC Jeevan Akshay VI

It is an immediate annuity policy which can be purchased by paying a lump sum amount. Under this plan, annuity payment of the standard amount is made throughout the lifetime of the policyholder. Various options are available to receive annuities. The pension starts immediately from the next chosen date once the premium is paid.

Following are the types of annuity under LIC Jeevan Akshay VI plan:

  • The pension is payable for life at a uniform rate.
  • The annuity is payable for 5, 10, 15 or 20 years and thereafter are payable till lifetime of the policyholder.
  • Annuity payable for lifetime is increasing at a simple rate of 3%.
  • Annuity for a lifetime with a provision of 50% payable to spouse during his/her lifetime on death of the policyholder.
  • Annuity for a lifetime with a provision of 100% payable to spouse during his/her lifetime on death of the policyholder.
  • Annuity for a lifetime with a provision of 50% payable to spouse during his/her lifetime on death of the policyholder. The purchase price will be returned to the last survivor.

Benefits of LIC Jeevan Akshay Plan

  • Maturity benefit: No maturity benefit is given under this plan.
  • Death benefit: Death benefits are based on the plan that you choose.
  • Tax benefits: The premiums paid are tax exempted under Section 80CCC of The Income Tax Act.
  • No medical test: This pension plan doesn’t mandate undergoing a medical test in case you wish to buy one Annuity payout is made as per the frequency chosen immediately after making the payment of premiums.

Eligibility criteria for LIC Jeevan Akshay Plan VI

One must fulfill the below-mentioned criteria to enter into LIC Jeevan Akshay Plan.

  • Minimum entry age: 30 years
  • Maximum entry age: 85 years
  • The minimum purchase cost of annuity: Rupees 1 lakh
  • The maximum purchase cost of pension: Rs.1.5 lakh in case of online mode and no limit in case of regular mode.
  • Payment modes: Yearly, half-yearly, quarterly, monthly

Jeevan Shanti

It is a single premium plan in which the policyholder has an option to choose an immediate or deferred annuity. Where the annuity rates are pre-decided at the time of inception of the policy. This plan enables the policyholder to make a one-time investment and earn income for the lifetime. LIC Jeevan Shanti plan offers nine different annuity options to choose from to meet different financial needs of people. This policy can be availed individually or as a joint plan with a parent, children, spouse, sibling, grandparent or grandchild. Under LIC Jeevan Shanti policy, a loan can be taken after completion of one year of the policy.

A policyholder is allowed to surrender the policy at any point of time after three months from the completion of the plan with annuity option of return of purchase price. Additionally, the corporation offers 15 days of free look period which means, if the policyholder is not satisfied with the terms of the plan, the policy may be returned to the corporation within 15 days.

Eligibility criteria for LIC Jeevan Shanti plan

  • Minimum investment: The premium needs to be paid just once in a lump sum amount. LIC Jeevan Shanti plan starts with the minimum premium of 1,50,000. There is no maximum limit on the policy amount.
  • Age criteria: The minimum age required to enter into this plan is 30 years whereas, the maximum age limit is 79 to 100 years.
  • Maturity terms: Policyholder has the freedom to choose the payment term on maturity. It can either be an immediate annuity or deferred payment.

In the case of an immediate annuity, the return starts immediately once the premium is paid. Deferred annuity starts after a certain period as decided by the policyholder. The minimum period for a deferred annuity is one year whereas the maximum period is 20 years.

LIC New Jeevan Nidhi

LIC's New Jeevan Nidhi Plan gives the dual benefit of protection and saving. This plan provides death cover during the policy period and offers annuity on survival till the death of the policyholder.

Key features

Jeevan Nidhi is a participating pension plan with the option of regular or single premium payment option. This policy gives a guaranteed accruing in each policy year for the first five years. Under New Jeevan Nidhi plan simple revisionary bonuses and additional bonuses are given from the 6th year till the end of the policy term.

Policy benefits

  • LIC Jeevan Nidhi plan gives guaranteed addition at 5% of the sum assured for each completed policy year after five years of the policy term.
  • On maturity, the sum assured + guaranteed addition + final additional bonus + vested simple revisionary bonus is payable to the policyholder.
  • The policyholder can utilize the benefits payable on vesting in any of the following ways.
    • Use the entire corpus to buy an immediate annuity.
    • Use the entire proceedings to buy a single premium deferred annuity.
  • On the death of policyholder during the first five years of the policy term, a basic sum assured + vested simple revisionary bonus + final bonus (if any) is paid either in lump sum amount or partly in lump sum and partly in an annuity.
  • The death benefit is minimum of 105% of all premiums paid till the death of the policyholder.
  • In case the policy holder opts for a sum assured of Rs.3 lakh and above, rebate is added in the premium rate
  • Riders such as LIC’s Disability Benefit Rider and the Accidental death can be added to the base policy for enhancement
  • The premium paid under this policy is exempted from income tax under Section 80CCC and death benefit under Section 10 (10D) of The Income Tax Act.

Eligibility criteria for LIC New Jeevan Nidhi Plan

  • Entry age: The minimum age criteria to enter into this policy is 20 years whereas the maximum age is 58 years in case of regular pay and 60 years in case of single pay.
  • Policy duration: The minimum tenure of policy is 5 years and maximum is 35 years
  • Premium mode: the premiums can be paid monthly, quarterly, yearly or in a single premium.
  • Sum assured: The minimum sum assured is rupees 1 lakh for regular premium and rupees 1.5 lakh for a single premium. There is no higher limit on the sum assured.

Pradhan Mantri Vaya Vandana Yojana

PMVVY is for the senior citizen who is 60 years and above. Under this policy, senior citizens will receive guaranteed returns of 8% for ten years. Additionally, this plan is exempted form goods and service tax. The last date to apply for PMVVY is 31st March 2020. The investment limit under this plan is 15 lakhs.

Benefits under Pradhan Mantri Vaya Vandana Yojana

  • Death benefit: On the death of the policyholder within the policy tenure of 10 years, the purchase price of the policy shall be refunded to the beneficiary.
  • Maturity benefit: The purchase price along with the final pension instalment shall be returned to the policyholder on survival.
  • Surrender value: The policy allows premature exit under certain critical circumstances such as medical treatment of self or spouse. The surrender value payable is 98% of the purchase price.
  • Loan facility: A loan can be taken against the PMVVY after completion of 3 years of policy term. The maximum loan that shall be granted is 75% of the policy price.
  • Free look period: If the policyholder is not happy and satisfied with the policy term, he/she can return the policy to the corporation within 15 days of the purchase date.
  • Tax benefit: The deposit made under this scheme is exempted from tax under section 80C of the Income Tax Act, 1961. However, the interest earned is not exempted from income tax.

Eligibility criteria of Pradhan Mantri Vaya Vandana Yojana

  • Entry age: The minimum age limit to enter into this scheme is 60 years. There is no maximum age limit.
  • Policy term: The policy term is ten years.
  • Mode of pension payment: The ways of pension payments are yearly, half-yearly, quarterly or monthly.

Advantages of LIC pension plans

The pension plans offered by LIC offers numerous benefits to the policyholder.

  • Payment for life: Most of the LICs pension plans offers payment for life. These plans provide an immediate annuity that is paid at a uniform rate till the survival of the policyholder. Most of the plans give options regarding pension mode and premium modes. For instance, policyholders enrolling New Jeevan Nidhi plan can opt for an immediate annuity at maturity or a single premium deferred plan as per their financial needs.
  • Regular income: The main advantage of LIC pension plans is that the policyholder and his family receive regular income after the policy term. Some of the LIC's pension plans offer maturity benefits whereas some of them also provide death benefits to the family. These pension plans from LIC are designed in such a way that it provides regular income after retirement to have a decent lifestyle that you prefer post-retirement.
  • Hassle-free income: No matter what plan you choose, the money will be deposited in your bank account on the date specified by you. Most of the plans come with minimum paperwork so that at the end you start getting your pension without any hassle.
  • Payouts: Unlike ULIPs where the payouts are uncertain, the payouts under LIC pension plans are pre-defined and guaranteed. As a policyholder, you will not only receive the amount promised but also can plan your finances well in advance.

How to apply for LIC pension plans?

You can apply for LIC pension plans online from the official website of LIC or through intermediaries.

Online

You can log in to the official website of LIC India and choose a suitable LIC pension plan. Choose the coverage and provide personal details as asked. The system will determine the premium amount as per the details that you fill in. You can make premium payment via debit card, credit card or internet banking facility. After successful payment, the policy will be issued.

Intermediaries

Some of the LIC pension plans which are not available online, can be purchased from LIC agents, brokers and banks.

FAQs of LIC pension plans

Which is the best pension plan in LIC?

LIC offers a number of pension plans such as Life Akshay, Jeevan Shanti, New Jeevan Nidhi, and Pradhan Mantri Vaya Vandana Yojana. Each of them offers unique benefits. It is advisable to choose a suitable plan as per your requirements.

What is LIC Pension Plus plan?

LIC pension plan is a unit-linked pension plan that provides a policyholder a minimum guarantee on the gross premium paid.

Which is the best pension plan in India 2019?

The following are considered the top pension plans in India at present.

  • LIC Jeevan Akshay VI plan
  • LIC Jeevan Nidhi Plan
  • SBI Life Saral Pension Plan
  • HDFC Life Click2Retire Plan
  • Reliance Smart Pension Plan

What is an employee pension plan?

In the case of employee's pension plan, the pool of money is invested on behalf of the employee, and the earnings generate income to the employees upon retirement.

Is PPF better than LIC?

The LIC maturity claim is treated as taxable income whereas PPF yields are tax-free. In the case of LIC, the premium stays constant whereas in PPF you can invest amount as low as rupees 500 a year.

Which is the best LIC policy for the long term?

LIC e-term insurance, LIC Jeevan Anand, LIC Jeevan Saral are some of the best LIC policies for long-term investment.

Why should I buy LIC’s pension plans?

The premiums paid are exempted from tax, the death benefits are also exempted from the tax, good rebates are given in the premium rates if the policyholder is choosing high sum assured.

Is there any pension plan in LIC?

Yes, LIC Jeevan Nidhi Plan, LIC Jeevan Akshay Plan, Pradhan Mantri Vaya Vandana Yojana are some of the pension plans offered by LIC.

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