LIC’s only premium pension plan ‘LIC Jeevan Shanti’ (Plan No. 850) is currently one of the most popular pension plans. It offers the policyholder the guaranteed annuity with options like one immediate Pension or deferred pension.
However, LIC is soon planning to stop offering the “immediate pension” option under the “Jeevan Shanti” plan.
LIC now suggests, ‘LIC Jeevan Akshay VII Pension Plan (857) on August 25, 2020. It offers different versions of the “immediate pension”.
LIC Jeevan Akshay VII Retirement Plan – Main Features
The following are some of the key features of LIC’s new retirement plan: Jeevan Akshay VII;
|Minimum purchase price||Rs 1,00,000|
|Maximum purchase price||Inapplicable|
|Annuity Payable Mode||Monthly, quarterly, half-yearly and yearly|
|Minimum entry age||30 years|
|Maximum entry age||85 years|
|Joint life insurance||Available|
How does an immediate retirement plan work?
As part of an immediate pension plan, you pay a one-off lump sum and the insurance company pays you a lifelong pension. The annuity payment starts immediately when the insurance policy is taken out. The insurer pays you a life annuity.
For example : A policyholder (40 years old) pays Rs 10 lakh as an individual premium and selects a plan / option for immediate annuity. The insurer (LIC) pays you the pension immediately.
Please note that guaranteed supplements and death grants are generally not available under the Immediate Retirement Plan options.
The LIC Jeevan Akshay VII pension plan offers different types of pension options under the immediate plan. (Note that the annuity or pension amount is taxable income.)
LIC Jeevan Akshay 7 New Pension Fund | Illustration & returns calculation
As soon as the premium offers become available, this section will be updated.
Who can invest in LIC’s new pension system – Jeevan Akshay VII?
- If you want a lifelong fixed annuity and don’t want to take interest rate risk, you can consider this plan.
- In case you are not concerned about the impact of inflation on your purchasing power, this plan can be considered.
- If you’re okay with annuity rates of around 4 to 6%, this plan is for you.
- If you are an NPS Tier 1 investor, you must invest 40% of your retirement savings in an annuity product. In such a scenario, you can invest in this new LIC retirement plan.
- If you have a package deal (Can be your retirement corpus) and want to choose a pension (especially immediate pension option) Then you can consider investing part of your lump sum in the LIC Jeevan Akshay VII plan. Please do not invest the entire body in this product. There are also better alternatives like;
If you are young and / or have a substantial “earning period” left in your life, you can plan your retirement with better investment alternatives.
There is no doubt that you need to plan your retirement. However, you can do this with investment products that are more flexible, transparent, simpler and easier to understand.
Continue reading :
- LIC New Plans 2019-2020 | Functions, snapshot and review of all plans
- List of All Popular Investment Options in India – Features & Snapshot
- Retirement planning target calculator in 3 easy steps
- Importance of time value of money
- What is a negative real interest rate? | How can interest rates be negative?
- Best investment for retirees
(This article is based on the very limited information available. The information provided above will be updated / revised as necessary.)
(Article first published on: August 20, 2020)
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