LIC Saral Pension Plan: Here’s How To Get A Fixed Monthly Income Of Rs 1000

Benefits and annuity options

Option I: Life annuity with 100% return on the purchase price and Option II: Joint last survivor annuity with 100% return on the purchase price on the death of the last survivor are the two annuity options offered under this plan. According to LIC, once the choice of annuity is preferred, it cannot be changed. Here are the advantages offered by the two annuity options:

Benefits under option 1: According to the preferred method of annuity payment, annuity payments are made in arrears throughout the life of the annuitant. Payment of the annuity ends and the purchase price is paid in full to the agent (s) / legal heirs, in the event of the annuitant’s death.

Benefits under option 2: As long as the annuitant and / or his spouse are alive, the amount of the annuity will be paid in arrears according to the method of payment of the annuity chosen. Annuity payments will end immediately upon the death of the last survivor, and the agent (s) / legal heirs will receive 100 percent of the purchase price.

Method of payment of the pension

Method of payment of the pension

Annual, semi-annual, quarterly and monthly annuities are offered. The annuity will be paid in arrears, which means that it will be paid after 1 year, 6 months, 3 months and 1 month from the date of issue of the policy, depending on whether the annuity is paid annually, semi-annually, quarterly or monthly. The minimum purchase price is determined by the minimum annuity of the option chosen and the age of the annuitant. The maximum purchase price is unlimited. Option II, the reversible life annuity, is reserved exclusively for spouses. In the event of the choice of a reversible annuity, the age of the spouse is also subject to the minimum entry age.

Annuity method Monthly Quarterly Biannual Annual
Minimum pension Rs 1000 per month Rs 3000 per quarter Rs 6000 per semester Rs 12,000 per year
Incentives

Incentives

The following is the incentive for a higher purchase price via an increase in the annuity rate:

Annuity method For Rs 1000 / -Purchase price (in Rs)
Less than 5,000,000 5,00,000 to 9,99,999 10,00,000 to 24,99,999 25,000,000 and over
Annual NIL 0.80 1.45 1.80
Biannual NIL 0.75 1.40 1.75
Quarterly NIL 0.70 1.35 1.70
Monthly NIL 0.65 1.30 1.65

For policies purchased online, a 2% discount in the form of an increase in the annuity will be offered.

Surrender value

Surrender value

At any time after six months from the inception date, if the Annuitant, their spouse or one of the Annuitant’s children is hospitalized due to any of the specified critical illnesses, the policy may also be surrendered by submitting the required documents. If the redemption is approved, the annuitant will receive 95% of the purchase price, less the outstanding loan amount and interest on the loan. All other benefits will cease upon payment of the cash value and the policy will be terminated. Any adjustment to the procedure for calculating the surrender value can only be implemented with the prior authorization of IRDAI.

Loan facility

Loan facility

The loan is available at any time after six months from the date of creation of the policy. Under the life annuity option, the loan can be acquired by the annuitant. And on the death of the annuitant, the loan can be obtained by the spouse. The maximum loan amount that can be provided under the policy must not exceed 50% of the amount of the annual annuity payable under the plan. Interest on the loan will be deducted from the balance of the annuity payable under the policy. Interest on the loan will accumulate at the same rate as the annuity payments under the contract and will be payable when the annuity payable is due. Any unpaid loan will be recovered from the claims indemnities of the policy.

The annuitant, on the other hand, has the option of repaying the principal of the loan at any time during the term of the annuity payments. For all loans commencing between May 1 and April 30, the annual effective rate will be similar to the 10-year G-Sec rate pa + 200 basis points. The 10-year G-Sec rate will be determined on April 1 of the applicable tax year. The determined interest rate will apply throughout the term of the loan. The relevant interest rate for the loan authorized for the 12-month period beginning May 1, 2021 and ending April 30, 2022, is 8.44% per annum, valid for the entire term of the approved or sanctioned loan.


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