LIC Saral Pension plan: Is it beneficial for you?

State-owned  Life Insurance Corporation of India (LIC) offers a number of policies. Among these Saral Pension is an immediate pension scheme. It pays out a pension at the assured rate of return. The pension will be lifelong and there is no maximum limit on the amount one can invest.  It is a standard, individual, single premium, annuity plan. This annuity plan is designed as per the guidelines of Insurance Regulatory and Development Authority of India (IRDAI). It offers the same terms and conditions across all the life insurers.

Features

Minimum age at entry: 40 years
Maximum age at entry: 80 years
Minimum annuity: Rs 1,000 per month (Rs 12,000 per annum)
Maximum annuity: No Limit
Minimum purchase price: Will depend on minimum annuity
Maximum purchase price: No Limit

Type of annuity

The plan offers an immediate annuity plan through two options. You can get a lifetime pension with the return of purchase price (amount invested initially) and joint-life (last survivor annuity) with the return of purchase price on death of the last survivor.

Rebates

Under this plan LIC announced incentives for high purchase prices. There is also a chance to get a rebate if any customer can buy it through online mode without any involvement of agent or intermediary or Point of Sales Person Life Insurance (POSP LI).

Benefits

Option 1 (single life): The purchaser will continue getting annuities as long as he or she is alive. On his or her death the nominee/legal heirs will be paid the full purchase price.

Option 2 (joint life):

Is the case of joint life, there are two types of death benefit options:

a) On the first death: 100% of the annuity payments shall continue to be paid as long as one of the annuitants is alive.

b) On the death of the last survivor: The annuity payments will be stopped and 100% of purchase price will be payable to nominee or legal heirs.

Maturity benefit

There is no maturity benefit under this scheme.

Comparison

According to the brochure shared on LIC’s website, if an individual invests Rs 10 lakh in LIC Saral Pension Plan he or she will earn Rs 51,650 yearly pension that works out to Rs 4,304 per month. In the case of joint life, the yearly pension works out to Rs 51,150.

Other similar pension plans will give the approximately same amount of pension. Generally a person needs to invest Rs 11 lakh one time to earn 5,000 pension monthly immediate pension.

Policy loan

Policy loan facility is also available after the six months from the policy commencement date.