LIC Saral Pension 2021: Suitable Lifetime Pension Option For Senior Citizens

LIC's Saral Pension Plan, 2021, which has been launched recently is being noticed largely. This Annuity plan is a non-linked, individual immediate policy, that can be purchased only by paying a lump sum amount to get a fixed payment at regular intervals for the rest of the life. LIC has designed this plan to provide "for annuity payments of a stated amount throughout the lifetime of the annuitant." Earlier, the IRDAI, the apex insurance regulatory authority of India, had advised all insurance companies to introduce this scheme, hence LIC has now launched this Saral Pension Plan, 2021.

Benefits and rules under the plan

An immediate annuity policy like Saral Pension Plan means, when the policyholder will take the plan, the pension will start immediately. It is a single premium pension plan, which means, the policyholder will have to pay the total lump sum amount once at the time of policy purchase. People who are aged between 40 and 80, years can purchase the LIC Saral pension plan, However, it is an appropriate plan for the people who have a lump sum amount to invest, to secure the rest of the life.

Annuity or pension options

A major benefit of this plan is it will offer 2 annuity options after a one-time lump sum amount payment. The 1st one is the 'life annuity with return of 100% of purchase price', which is a single life option. Till the policyholder will be alive, the fixed pension amount will be paid, after his/her death the base premium will be given back to the nominee. However, the GST paid at the time of premium will not be payable, only the base payment will be given back. The second option is the 'joint life last survivor annuity with return of 100% of the purchase price on death of the last survivor', which includes 2 life partners under the plan. Any one of the partners, who will live longer, will get the fixed pension. The pension amount is given to the primary policyholder, the same fixed amount will also be given to the secondary policyholder. Like the earlier one, the base premium amount will be given back to the nominee.

Annuity or pension modes

It is quite a simple plan to understand by every citizen, who is willing to secure their sunset days as it is a whole life policy-term plan. The minimum sum assured is of this plan is Rs. 1,00,000. Like other insurance and pension plans, LIC's Saral Pension Plan also has the provision of monthly, quarterly, and half-yearly annuity or pension modes. If the policyholder chooses the monthly mode, the pension will start one month after the policy is taken, similarly to other modes.

In case of critical illness, the policyholder can surrender the plan and take the money back. In case of that, 95% of the purchased plan will be paid to the policyholder.

Loan facility

The policyholder can avail of the loan facility after 6 months of commencement of the plan. However, the maximum amount of loan that can be granted shall be such that the effective annual interest amount payable on the loan does not exceed 50% of the annual annuity amount payable. If the loan is taken within April 30, 2020, the interest rate of the loan will be 8.44% per annum.

Calculation of annuity amount (both options)

These calculations have been done by GoodReturns, through the 'All in one CALC' mobile application.

This LIC's Saral Pension Plan, 2021 is a suitable plan for senior citizens who have a lump sum amount of money to pay at once. At the time of retirement, (ex: at the age of 60), an investor can take this policy. When the person will retire and get her/his Provident Fund amount, Gratuity amount at once, it will make a lump sum amount. The amount can be placed to a Fixed Deposit option, but in the case of LIC's Saral Pension Plan, 2021, the policyholder will get a fixed regular pension from LIC, with the assurance of base premium paid to the nominee. The FD interest rates are being reduced by the banks now, and this pension will be a better alternative for those senior citizens who are interested to secure their old age.