LIC's New Single-Premium Pension Plan- Jeevan Shanti: Should You Invest?

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    The largest and most trusted insurance company LIC came up with a new pension plan by the name Jeevan Shanti recently. Here's a breakdown on the policy considering different aspects such as eligibility, features and benefits.

    LIC's New Single-Premium Pension Plan- Jeevan Shanti: Should You Invest?

    As per the details put on the company's website, Jeevan Shanti is a single premium plan and the subscriber has an option to choose between immediate or deferred annuity payouts. The deferment period can range from 1 to 20 years, subject to maximum vesting age of 80 years to start of annuity.Annuity is the annual payout the policyholder is eligible to get for the amount deposited or saved with the insurer as a lump-sum amount.

    Also read What is the difference between immediate and deferred annuity?

    It is worth mentioning that annuities are payable through the entire life of the pension plan subscriber and the rate of annuity in respect of both immediate and deferred annuity is guaranteed at the policy inception. So, pensioner can rest assured of a stable financial life post-retirement.

    Eligibility: Considering the minimum annuity amount of Rs. 1000 per month, the minimum investment in the new pension policy Jeevan Shanti plan is Rs. 1,50,000 with no upper limit restriction on the purchase price.

    Minimum entry age: 30 years (completed)

    Maximum entry age in case of immediate annuity- 85 years; while under deferred plan the maximum entry age is 79 years.

    In a case when the annuity is sought immediately for the entire life with the option of return return of purchase price to the nominee after demise of the annuitant, the maximum entry age is 100 years.

    Different options to choose from to get pension in Jeevan Shanti policy

    Within the immediate annuity plan: There are 10 options to secure pension amount and include:

    Option A: Immediate Annuity for life.

    Option B: Immediate Annuity with guaranteed period of 5 years and life thereafter.

    Option C: Immediate Annuity with guaranteed period of 10 years and life thereafter.

    Option D: Immediate Annuity with guaranteed period of 15 years and life thereafter.

    Option E: Immediate Annuity with guaranteed period of 20 years and life thereafter.

    Option F: Immediate Annuity for life with return of purchase price.

    Option G: Immediate Annuity for life increasing at a simple rate of 3% per annum.

    Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on death of the Primary Annuitant.

    Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives.

    Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on death of last survivor.

    Under the deferred annuity plan, there are two options:

    Option A: Deferred annuity for single life

    Option B: Deferred annuity for joint life

    Illustration (Source- LIC Website)

    Purchase Price or Single premium payment:Rs. 10 lakh (excluding applicable taxes)

    Age of Annuitant at entry :45 years

    Annuity Mode:Yearly

    Deferment Period: 20 years (applicable for Deferred Annuity only)

    Age of Secondary Annuitant at entry:35 years (applicable for Joint life annuity only)


    Annuity Option Annuity Amount (Rs.)
    Immediate Annuity:  
    Option A: Immediate Annuity for life 74,300
    Option B: Immediate Annuity with guaranteed period of 5 years and life thereafter 74,200
    Option C: Immediate Annuity with guaranteed period of 10 years and life thereafter 73,900
    Option D: Immediate Annuity with guaranteed period of 15 years and life thereafter 73,500
    Option E: Immediate Annuity with guaranteed period of 20 years and life thereafter 72,900
    Option F: Immediate Annuity for life with return of Purchase Price 65,400
    Option G: Immediate Annuity for life increasing at a simple rate of 3% p.a 56,200
    Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on death of the Primary Annuitant 71,100
    Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives 68,300
    Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on death of last survivor 64,900
    Deferred Annuity:  
    Option 1: Deferred annuity for Single life 206,600
    Option 2: Deferred annuity for Joint life 227,200

    Death Benefit: Death Benefit (applicable only in case of Deferred Annuity) shall be:Higher of

    • Purchase Price plus Accrued Guaranteed Additions (as specified below) minus Total annuity payments made till date of death, if any

    • Or 110% of Purchase Price

    Conclusion: The plan typically caters to the deferred annuity needs of the individuals. And the only negative as per experts in respect of the plan is the annuity inflating at just 3% on an annual basis which should otherwise at least increase by 5-6% to match up with the expenses. Also as the Corporation is extending 2% rebate on purchase of the policy plan via online mode, investors should avoid agents.

    Goodreturns.in

    Read more about: lic pension annuity
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