LIC’s Jeevan Shanti Plan
Life Insurance Corporation (LIC) is not just the biggest insurance company in India, it is also the largest investment firm. There are around 28 other insurance companies in the insurance market today but LIC, even after 6 decades of existence, still enjoys the popularity and the majority. LIC provides various types of investment plans that come with a dash of life insurance.
Different people have different insurance and investment needs at different stages of life. LIC plans cater to the requirements of all its customers by having a huge variety of plans for them. LIC Jeevan Shanti Policy is one such plan that helps an individual plan a comfortable future. To confer this policy in detail, let us understand what an Annuity Plan is.
What do you mean by Annuity Plans?
Annuity plans are a great option to invest your hard-earned money and reap long-term benefits. Under an annuity plan, the individual invests a lump sum amount or fixed instalments during the accumulation period. He then receives systematic payments for a time period decided by him. This time period may be a fixed number of years or till the times he lives.
In a term insurance plan, an individual, who might be the breadwinner, pays money so that if he dies in the coming few years, his family does not end up in a financial crisis. It is the opposite in the case of an annuity plan. Here, the individual covers not ‘dying early’ but ‘surviving too long’ without enough resources to sustain a comfortable lifestyle.
An annuity plan can cover not just one but two people. A great advantage of an annuity plan is that an individual has the option of choosing the timing of the plan as per his needs. If someone wants the plan to begin immediately he can go for an “Immediate Annuity Plan” and in case he wants the plan to start at a specific time, for example, his retirement, he can select “Deferred Annuity Plan”.
Jeevan Shanti Policy
Jeevan Shanti Policy is a single premium plan that allows the freedom to select with an “Immediate Annuity Plan” or “Deferred Annuity Plan”. The rates of the annuity are guaranteed at the very beginning of the policy for both options. The policyholder is offered a number of annuity options which are :
Eligibility Criteria
The Minimum Purchase Price/Premium for Jeevan Shanti Policy is INR 1.5 lakh. However, in cases where the policy is bought for NPS(National Pension Scheme)*~ or Divyangjan~ then the purchased price can be lower. There is no upper limit for the purchase price.
~Divyangyan is an option given to any customer to take the plan for the benefit of a handicapped dependant.
*~An NPS subscriber can take Immediate Annuity from LIC Jeevan Shanti Plan and all annuity options under Immediate Annuity are available to him.
The minimum age at the time of entry is 30 years.
| Annuity Mode | Per Month | Per Quater | Per Bi-Annual | Per Year |
|---|---|---|---|---|
| Minimum Annuity | INR 1,000 | INR 3,000 | INR 6,000 | INR 12,000 |
For Joint Life plans the two members;
| Criteria | Immediate Annuity | Deferred Annuity |
|---|---|---|
| Maximum Entry Age | 85 years, Except in Option F 100 years for Option F | 89 years |
| Minimum Deferment Period | NA | 1 year |
| Maximum Deferment Period | NA | 20 years in accordance with Maximum Vesting Age |
| Minimum Vesting Age | NA | 31 years |
| Maximum Vesting Age | NA | 80 years |
Options for Immediate Annuity
| Option | Features |
|---|---|
| Option A | The policyholder can opt for an Immediate Annuity* for life |
| Option B | The policyholder can opt for an Immediate Annuity* with a guaranteed period of 5 years and thereafter |
| Option C | The policyholder can opt for an Immediate Annuity* with a guaranteed period of 10 years and thereafter |
| Option D | The policyholder can opt for an Immediate Annuity* with a guaranteed period of 15 years and thereafter |
| Option E | The policyholder can opt for an Immediate Annuity* with a guaranteed period of 20 years and thereafter |
| Option F | The policyholder can opt for an Immediate Annuity* for life with return of PP, That is Purchase Price |
| Option G | The policyholder can opt for an Immediate Annuity* for life that increases at a rate of 3% |
| Option H | The policyholder can opt for a Joint Immediate Annuity* for life with the provision for 50% of the annuity to the secondary annuitant in case the primary annuitant dies. |
| Option I | The policyholder can opt for a Joint Life Immediate Annuity* with the provision for 100% of annuity payable as long as either one survives |
| Option J | The policyholder can opt for a Joint Immediate Annuity* for life with the provision for 100% of the annuity payable as long as any of the annuitants is alive and return of PP on the death of the last survivor. |
*What is immediate annuity?
The annuity which starts immediately from the time it has been purchased without any waiting period, is called an Immediate Annuity.
Options for Deferred Annuity
| Option | Features |
|---|---|
| Option 1 | The policyholder can opt for a Deferred Annuity* for Single Life |
| Option 2 | The policyholder can opt for a Deferred Annuity* for Joint Life |
**What is deferred annuity?
The annuity which does not start immediately from the time it has been purchased and waits for a specific period, is called Deferred Annuity. It usually waits for the annuitant to attain a particular age, after which the annuity can start.
Features of Jeevan Shanti Policy
- Life-Long Income by way of pension.
- A choice of Immediate or Deferred Annuity to cater to the needs of every customer
- Easy to Purchase: Online as well as offline
- Multiple Annuity Options available to the customers to choose from
- Guaranteed Additions in Deferred Annuity
- Divyangjan Plan where the plan can be purchased for the benefit of a handicapped dependant
- Joint Life Annuity Plan with spouse, grandparent, sibling or parent.
- Tax Benefits
- Premium
The premium paid towards purchasing an annuity is tax free U/S 80CCC till INR 1.5 lakhs per annum. - Annuity
– For Immediate Annuity, there is no withdrawal benefit. However, the annuity is taxable in the hands of the annuitant.
– For Deferred Annuity, 1/3rd the entire annuity corpus can be withdrawn tax-free U/S 10(10)A and the remaining 2/3rd has to be converted to annuity according to the option chosen. Annuity is taxable in the hands of the annuitant.
- Premium
- Accrued Guaranteed Additions
Deferred Annuity: Under this option, the Guaranteed Additions are added every month till the policy is vested, i.e. the Deferment Period ends.
The Guaranteed Additions = (The Purchase Price * Rate of Annuity rate p.a. payable monthly) / 12
The rate of annuity= Monthly tabular Rate of Annuity, which depends on :- Entry Age of the annuitant
- The period of Deferment opted for
- Availability of Loan
After completion of 1 policy year, the policyholder has the option to apply for a loan facility one the following options.
– Immediate Annuity- Option F: Immediate Annuity for life with return of Purchase Price
- Option J: Joint Immediate Annuity for life with the provision for 100% of the annuity payable as long as any of the annuitant is alive and return of Purchase Price on the death of the last survivor.
- Option 1: Deferred Annuity for Single Life
- Option 2: Deferred Annuity for Joint Life
- Surrender
After three months of buying Jeevan Shanti Policy, the policyholder can surrender the policy when the option of annuity is with the return of PP, that is the purchase price. - Free Look Period
If for some reason the policyholder wants to, there is provision to terminate the policy within 15 days of purchase. This 15-day period is called the “Free-Look” period. The policyholder has to state the reasons of objection and after all the formalities are done with the money is refunded to the policyholder’s bank account. - Exclusions
Suicide committed by Policyholder can have an effect on the annuity benefits.- Immediate Annuity
If the suicide is committed within 1 year of buying the policy, the policy will be invalid and an amount that is higher of 100% of the surrender value or the PP that has been paid will be payable. No other claim will be entertained by LIC. - Deferred Annuity
If the suicide is committed within 1 year of buying the policy, the policy will be invalid and an amount that is higher of 80% of the surrender value or the PP that has been paid will be payable. No other claim will be entertained by LIC.
- Immediate Annuity
Benefits
The benefits that are paid under the Immediate Annuity are as follows :
| Annuity Option | Annuity Description | Single Life/ Joint Life | Survival Benefit | Death Benefit |
|---|---|---|---|---|
| A | Immediate Annuity for life | Single Life | Annuity will be paid to the annuitant as long as he lives and nothing would be payable thereafter and the policy would be terminated after his death. | NIL |
| B | Immediate Annuity with Annuity Certain for 5 years and then for life thereafter | Single Life | Annuity will be paid to the annuitant for a minimum period of 5 years and then as long as he lives and nothing would be payable thereafter. However, if the annuitant dies before 5 years’ of annuity payment, then the remaining guaranteed annuities would be paid to the nominee and the policy would be terminated | if the annuitant dies within the first 5 years of annuity payment, then the remaining annuity certain would be paid to the nominee. However, if the annuitant dies after the first 5 years of annuity payment, nothing would be payable as Death Benefit |
| C | Immediate Annuity with Annuity Certain for 10 years and then for life thereafter | Single Life | Annuity will be paid to the annuitant for a minimum period of 10 years and then as long as he lives and nothing would be payable thereafter. However, if the annuitant dies before 10 years’ of annuity payment, then the remaining guaranteed annuities would be paid to the nominee and the policy would be terminated | If the annuitant dies within the first 10 years of annuity payment, then the remaining annuity certain would be paid to the nominee. However, if the annuitant dies after the first 10 years of annuity payment, nothing would be payable as Death Benefit |
| D | Immediate Annuity with Annuity Certain for 15 years and then for life thereafter | Single Life | Annuity will be paid to the annuitant for a minimum period of 15 years and then as long as he lives and nothing would be payable thereafter. However, if the annuitant dies before 15 years’ of annuity payment, then the remaining guaranteed annuities would be paid to the nominee and the policy would be terminated | If the annuitant dies within the first 15 years of annuity payment, then the remaining annuity certain would be paid to the nominee. However, if the annuitant dies after the first 15 years of annuity payment, nothing would be payable as Death Benefit |
| E | Immediate Annuity with Annuity Certain for 20 years and then for life thereafter | Single Life | Annuity will be paid to the annuitant for a minimum period of 20 years and then as long as he lives and nothing would be payable thereafter. However, if the annuitant dies before 20 years’ of annuity payment, then the remaining guaranteed annuities would be paid to the nominee and the policy would be terminated | If the annuitant dies within the first 20 years of annuity payment, then the remaining annuity certain would be paid to the nominee. However, if the annuitant dies after the first 20 years of annuity payment, nothing would be payable as Death Benefit |
| F | Immediate Annuity for Life with Return of Purchase Price | Single Life | Annuity will be paid to the annuitant as long as he lives | After the death of the annuitant, the entire purchase price, i.e. the premium paid towards the annuity corpus would be returned to the nominee and the policy would be terminated. |
| G | Immediate Annuity for Life with an increasing rate of 3% p.a. | Single Life | Annuity will be paid to the annuitant as long as he lives at an increasing rate of 3% p.a. and the policy would be terminated after his death. | NIL |
| H | Joint Life Annuity: Immediate Annuity for life for the primary annuitant with 50% payable to the secondary annuitant on death of primary annuitant | Joint Life | Annuity will be paid to the primary annuitant as long as he lives. After his death, 50% of the annuity would be paid to the secondary annuitant till as long as he lives and after the death of both the annuitants, the policy would be terminated. | After the death of the primary annuitant, 50% of the annuity would be paid to the secondary annuitant till as long as he lives and after the death of both the annuitants, the policy would be terminated and nothing would be payable to the nominee. |
| I | Joint Life Annuity: Immediate Annuity for life for the primary annuitant with 100% payable to the secondary annuitant on death of primary annuitant | Joint Life | Annuity will be paid to the primary annuitant as long as he lives. After his death, 100% of the annuity would be paid to the secondary annuitant till as long as he lives and after the death of both the annuitants, the policy would be terminated. | After the death of the primary annuitant, 100% of the annuity would be paid to the secondary annuitant till as long as he lives and after the death of both the annuitants, the policy would be terminated and nothing would be payable to the nominee. |
| J | Joint Life Annuity: Immediate Annuity for life for the primary annuitant with 100% payable to the secondary annuitant on death of primary annuitant and then Return of Purchase Price on death of the last survivor | Joint Life | Annuity will be paid to the primary annuitant as long as he lives. After his death, 100% of the annuity would be paid to the secondary annuitant till as long as he lives. | After the death of the primary annuitant, 100% of the annuity would be paid to the secondary annuitant till as long as he lives and after the death of both the annuitants, the entire purchase price, i.e. the premium paid towards the annuity corpus would be returned to the nominee and the policy would be terminated. |
The benefits that are paid under the Deferred Annuity are as follows :
| Annuity Option | Annuity Description | Single Life/ Joint Life | Survival Benefit | Death Benefit |
|---|---|---|---|---|
| 1 | Deferred Annuity for Single Life | Single Life | Till the date of vesting: Nothing is payable. After the date of vesting: Annuity is paid to the annuitant as long as he lives, according to the annuity option chosen. | Death of the annuitant for vesting date: Death Benefit will be paid to the nominee according to the option selected and then the policy terminates. Death of the annuitant after the vesting date: Annuity payout stops immediately. Death Benefit will be paid to the nominee according to the option selected and then the policy terminates. |
| 2 | Deferred Annuity for Joint Life | Joint Life | Till the date of vesting: Nothing is payable. After the date of vesting: Annuity is paid to the primary and secondary annuitant as long as any one of them lives, according to the annuity option chosen. | Death of any of the annuitant: Nothing is payable. Death of the second annuitant: Annuity payout stops immediately. Death Benefit will be paid to the nominee according to the option selected and then the policy terminates. |
Death Benefit Of LIC Jeevan Shanti Plan
Only in the case of Deferred Annuity, the death benefit would be :
- Higher of
Purchase Price + Accrued Guaranteed Additions-Total annuity payment made till the date of death, OR - 110% of the Purchase Price
Maturity Benefit
There is no maturity benefit available in this plan.
FAQ’s
In an immediate annuity, the annuitant starts receiving the arrears/payments at once whereas, in a deferred annuity, he fixes a delayed date and starts to receive the arrears only then.
As per Section 80C of the single premium that is paid up to INR 1.5 lakh is tax exempted.
No. Jeevan Shanti Policy is a single premium policy. If you wish to invest again, you can do so by buying another Jeevan Shanti Policy.
No, as the joint plan the two members should be in direct line of ancestry or descent.
The premium paid to purchase an annuity from the annuity provider is called the Purchase Price. It is referred to as the premium for a Pension plan.
The date when the annuity payout starts after the period of waiting for a Deferred Annuity plan, is called Vesting Date
The waiting period for the annuity period to begin is called the Deferment period, during which there is no annuity payout to the annuitant.
Someone who receives annuity is called an annuitant.