The Life Insurance Corporation of India is one of the oldest life insurance companies running successfully in our nation. The company was founded in 1956 with the primary objective of securing the lives of Indian citizens through insurance. Your dream of having the perfect retirement can now come true with the aid of LIC Pension Plan for India.
When an insurance policyholder finally leaves their job, the primary objective of the LIC pension plan is to make them financially independent. LIC designed these pension plans to provide people with protection from uncertainties that may arise during their post-retirement lives. These programs cater to the needs of senior citizens who seek to plan their retirement more effectively.
Why Should You Have Pension Plans?
To create a safe retirement fund, pension plans are your best option. These plans offer consistent payments in the form of an annuity or a monthly income that you can use to finance your retirement and easily cover your spouse’s expenses. You can set the vesting date, which determines when you become eligible to start receiving the pension, to coincide with your intended retirement age. The LIC retirement plans guarantee your financial security and a stress-free retirement.
Benefits of LIC Pension Plans
A reputable public sector insurance provider, LIC (Life Insurance Corporation of India), offers a number of pension plans to people looking for stability and security in their finances during retirement.
Here are some of the benefits of LIC pension plans:
Guaranteed Income: LIC pension plans provide a guaranteed income to the policyholder during their retirement years, ensuring a steady stream of income to meet their expenses.
Flexibility: LIC pension plans offer flexibility in terms of premium payment options, investment options, and retirement benefits. Policyholders can choose the premium payment frequency, investment portfolio, and annuity payout option according to their financial goals and requirements.
Tax Benefits: The premium paid towards LIC pension plans is eligible for tax deductions under Section 80CCC of the Income Tax Act, up to a maximum of Rs. 1.5 lakh per year.
Death Benefit: LIC pension plans offer a death benefit to the nominee in case of the policyholder’s untimely demise. The nominee receives the accumulated corpus or the sum assured, whichever is higher, as a lump sum payment.
Bonus and Loyalty Additions: LIC pension plans offer bonus and loyalty additions that increase the policyholder’s corpus over time, providing additional financial security in their retirement years.
Inflation-Adjusted: Some LIC pension plans are designed to provide inflation-adjusted benefits, ensuring that the policyholder’s income keeps pace with the rising cost of living.
Types of LIC Pension Plans
LIC’s pension plans are made with prospective insurance buyers’ smooth retirement planning in mind. You can look into various types, including single premium annuity plans, immediate or deferred annuity plans, etc. You can also look into endowment and unit-linked insurance plans, which offer monthly maturity payouts to act as an income source after retirement, in addition to these conventional LIC pension plans.
Here are details on the different LIC policies that can help you secure your life after retirement.
LIC Pension Plus Plan
LIC offers this unit-linked insurance plan, formerly known as LIC Pension Plus 803, as a pension product. It allows investors to place their money in various market-linked funds to achieve higher returns. At the end of the policy term, the investor can utilize the total accumulated amount to purchase an immediate or deferred annuity plan. This approach ensures the financial security of the pensioners and their families while also growing the savings fund.
Now, to get a precise idea of the benefits and investment details, one can use the LIC Pension Plus maturity calculator.
LIC SIIP Plan
Because this insurance plan is unit-linked, the insurance holder can invest in the stock market to increase their wealth. A policy term that corresponds with the insurance buyer’s anticipated retirement age is an option. They can decide to receive the accumulated returns and the fund value in monthly installments as an income stream once they retire and the policy reaches maturity.
Additionally, the LIC SIIP Plan offers the flexibility to switch between funds based on market conditions and the policyholder’s risk appetite. The plan also provides tax benefits under Section 80C and Section 10(10D) of the Income Tax Act.
LIC Bima Jyoti
This endowment insurance plan provides a guaranteed payout upon maturity as well as a death benefit for the policyholder’s family. Policyholders of LIC Bima Jyoti may periodically pay a premium in the amount of desired coverage. When the policy expires and the policyholder retires, they may use this sum as well as any bonuses.
LIC’s New Jeevan Shanti
Under this single premium payment policy, the insurance holder receives annuity payments following the deferment period. The annuity rates are established at the start of the policy and are paid over the course of the annuitant’s lifetime.
LIC’s New Jeevan Shanti is a great option for those who want to secure their retirement with a one-time payment and receive regular annuity payments. With the annuity rates determined at the beginning of the policy, the policyholder can enjoy a steady stream of income for life.
Pradhan Mantri Vaya Vandana Yojana
The Pradhan Mantri Vaya Vandana Yojana was launched by the Indian government with the intention of protecting people’s quality of life after retirement. The Ministry of Finance reviews and decides on the pension rate of the scheme each year in accordance with the terms and conditions of the policy. The annual interest rate that is currently in effect for PMVVY is 7.40%. This programme can be purchased offline or online.
The scheme is available for individuals aged 60 and above and provides a guaranteed pension for 10 years. The maximum investment limit in this scheme is Rs. 15 lakh per senior citizen.
LIC Jeevan Akshay-VII
The policyholder may select one of ten annuity options under this immediate annuity LIC pension plan. The annuity rate is promised at the start of the policy and is paid to the annuitant for the duration of that person’s life.
LIC Saral Pension Plan
To purchase this policy, you need to pay one premium, and then the annuity will commence. The LIC Saral Pension Plan provides annuitants with guaranteed annuity rates that are paid throughout their lifetimes.
Additionally, the plan offers an option to choose the frequency of annuity payments, which can be monthly, quarterly, half-yearly, or yearly. It also provides a death benefit to the nominee in case of the annuitant’s demise during the policy term.
Alternatives to the LIC Pension Plan
Exploring a range of options to invest your money and secure your financial future is possible . Below, we present a few quality alternatives to the LIC of India pension plan for you to consider.
National Pension Plan (NPP)
The Pension Fund Regulatory and Development Authority (PFRDA) governs this long-term retirement-focused plan. After that, a life insurance company will begin paying them an annuity on the 40% of the corpus that they invested in the plan. Additionally, once the NPS reaches maturity, you can withdraw the remaining balance whenever you like. These plans’ underlying asset classes include government bonds, corporate bonds, and more. On the amount you invest in NPS, there is also a tax benefit.
Public Provident Fund (PPF)
Many investors consider PPF (Public Provident Fund) as a tried-and-true long-term investment strategy. The PPF has a typical tenure of 15 years, allowing you to benefit from the compounding tax-free interest that grows significantly over time. Government officials set the interest rate for PPFs, and a sovereign guarantee backs the investment, offering a much safer investment option. As a result, both the interest earned and the principal amount you invest remain protected.
Employee Provident Fund
As an alternative, in this LIC pension plan, one must contribute a certain amount to the plan. At the same time, the employer must contribute an equal amount to the fund. As a result, when the EPF reaches its maturity, the user will receive a lump sum payment in addition to their own investment and the employer’s investment. Upon retirement, you will also become interested in both investments. In this case, the employer’s contribution, which includes the dearness allowance and retaining allowance, is equal to 12% of the basic wage.
Mutual Fund Schemes
To encourage people to save money for their retirement, there are four different kinds of mutual fund schemes. Franklin India Pension Fund, UTI Retirement Benefit Pension Fund, Reliance Retirement Fund, and HDFC Retirement Saving Fund are the names of these four mutual fund programs. Investors in all of these mutual fund plans maintain less exposure to stocks believed to have the potential to offer high long-term returns adjusted for inflation.
FAQs for LIC Pension Plans
What is the premium payment frequency for LIC pension plans?
The premium payment frequency for LIC Pension Plans can be annual, half-yearly, quarterly, or monthly, depending on the policyholder’s choice.
What are the investment options available in LIC pension plans?
LIC Pension Plans offer different investment options such as equity, debt, and mixed portfolios. Policyholders can choose the investment option according to their risk appetite and financial goals.
What is the annuity payout option in LIC pension plans?
LIC Pension Plans offer different annuity payout options, such as an immediate annuity, a deferred annuity, and a hybrid annuity. The policyholder can choose the annuity payout option at the time of policy purchase.
What is a monthly pension scheme?
It is a government-sponsored scheme that allows individuals to contribute regularly to a pension account while they are earning. Post NPS maturity, subscribers can withdraw a lump sum from the corpus and invest the remaining to buy an annuity for a fixed monthly pension.