LIC has been in existence for more than 60 years after having been established in September 1956. The company, which was earlier the only life insurance provider in India, has maintained its status of a market leader. It has the largest market capitalization and enjoys the largest customer base too.
LIC offers a range of life insurance plans to customers which take care of their varying insurance needs. Pension plans are also a popular product offered by LIC which helps individuals plan for their retirements. Let’s understand the concept of pension plans and find out about the plans offered by LIC.
Pension plans are retirement oriented life insurance plans. They aim to create a retirement corpus and provide you with a source of regular income even after you have stopped working. There are two types of pension plans. Let’s understand each type to know exactly what pension plans promise –
Pension plans promise the following benefits to policyholders –
LIC offers three types of pension plans which are described below –
This pension scheme was launched by the Government of India to provide senior citizens with a savings scheme which also gives them regular incomes. This scheme is available till 31st March 2020 and is currently being sold only through LIC. The features of the scheme are as follows –
Eligibility parameters of Pradhan Mantri Vaya Vandana Yojana
Entry age | 60 years onwards |
Term of the plan | 10 years |
Yearly purchase price | Minimum – INR 144,578
Maximum – INR 14,45,783 |
Monthly pension amount | Minimum – INR 1000
Maximum – INR 10,000 |
Sample pension rates
Here are the sample rates of pension which you can avail at different frequencies if you pay a purchase price of INR 10 lakhs –
Yearly pension | Half-yearly pension | Quarterly pension | Monthly pension |
INR 83,000 | INR 81,300 | INR 80,500 | INR 80,000 |
This is a traditional deferred annuity plan wherein you can create a retirement corpus over the policy duration through premium payments and then receive annuities when the plan matures. The features of the plan include the following –
Eligibility parameters of LIC’s New Jeevan Nidhi Plan
Entry age | 20 years to 60 years |
Term of the plan | 5 years to 35 years |
Sum assured | Minimum – INR 1 lakh
Maximum – no limit |
Monthly pension amount | Minimum – INR 1000
Maximum – INR 10,000 |
Sample premium rates of LIC’s New Jeevan Nidhi Plan
Given below are the sample rates of premiums payable for different combinations of age, term and premium payment term. The sum assured is considered to be INR 2 lakhs.
Entry age | Single premium | Regular premium | ||||
Term 10 years | Term 20 years | Term 30 years | Term 10 years | Term 20 years | Term 30 years | |
35 years | NA | INR 122,400 | INR 91,230 | NA | INR 10,720 | INR 6960 |
45 years | INR 170,510 | INR 126,560 | NA | INR 23,050 | INR 11,430 | NA |
Jeevan Shanti Plan is a flexible annuity plan which allows you to avail annuities immediately after buying the policy or after some years. The plan, therefore, gives you a choice between immediate or deferred annuity payments. The features of the plan are as follows –
The following annuity pay-out options are available under the plan –
Entry age | 30 years to 100 years |
Purchase price | Minimum – INR 1.5 lakhs
Maximum – no limit |
Deferment period | 1 year to 20 years |
Pension amount | Minimum:
Yearly – INR 12,000 Half-yearly – INR 6000 Quarterly – INR 3000 Monthly – INR 1000 Maximum – depends on the purchase price paid |
If a 45 years old male pays a purchase price of INR 10 lakhs, here are the sample annual annuity rates payable at different options of annuity payments. The following details have been assumed for calculation purposes –
Annuity options | Annuity amount |
Option I – Life annuity | INR 66,200 |
Option II – Life annuity guaranteed for 5 years | INR 66,100 |
Option III – Life annuity guaranteed for 10 years | INR 65,900 |
Option IV – Life annuity guaranteed for 15 years | INR 65,500 |
Option V – Life annuity guaranteed for 20 years | INR 65,000 |
Option Vi – Life annuity with return of purchase price | INR 56,000 |
Option VII – Increasing life annuity | INR 49,100 |
Option VIII – Joint life annuity with 50% annuity for the secondary annuitant | INR 62,900 |
Option IX – Joint life annuity with 100% annuity for the secondary annuitant | INR 59,900 |
Option X – Joint life annuity with 100% annuity for secondary annuitant and return of purchase price | INR 55,500 |
As stated earlier, you can buy some LIC pension plans online from the website of LIC itself. Other plans can be bought through a LIC agent or from the branch office of the company.
Alternatively, you can compare and choose the best pension plan and even purchase it online through Turtlemint. Turtlemint offers you the ease of buying pension policies through its digital platform. Here are some simple steps which you would have to take to buy the desired pension plan –
You would have to provide the following documents to apply for LIC pension plans –
Deferred annuity plans pay a death claim if the insured dies during the deferment period. To make a death claim, the nominee should take the following steps –
You can also make claims through Turtlemint. Turtlemint has a claim handling department which follows the claim process on your behalf and gets your claims settled at the earliest. To make your claims through Turtlemint, you should call their toll-free number 1800 266 0101 or send an email to claims@turtlemint.com to intimate about the claim. Someone from the company’s claim department would get in touch with you and get your claims settled in no time.
In case of a deferred annuity plan, when the plan matures, a part of the vesting benefit can be commuted. Commuting the vesting benefit means withdrawing 1/3rd part of the benefit in a lump sum. This withdrawal is called commutation of pension. Commutation of pension is tax-free under Section 10 (10A) of the Income Tax Act, 1961.
Suicides are usually excluded under LIC pension plans. If the insured commits suicide and dies within a year of policy purchase, 80% of the premium paid is refunded. In case of suicides within a year of revival of a lapsed policy, higher of 80% of the premiums paid or the available surrender value is paid. However, under immediate annuity plans, there are no exclusions. In the case of suicidal death, 100% of the purchase price is refunded back.
Vesting means the maturity of the policy that you have bought. Vesting is applicable in case of deferred annuity plans where there is a deferment period before any benefit is paid. Once the deferment period comes to an end, the policy is said to vest.