LIC Jeevan Akshay VI Policy is a Single Premium Immediate Annuity Plan.
How it functions – You pay a Single Premium (likewise called the ‘Purchase Price’) to buy an Annuity. LIC will then pay you regular amounts for whatever remains of your life. You could get this normal payouts month to month, quarterly, half-yearly or every year. This regular payout amount is called an Annuity. You have 7 options to decide on the type and amount of annuity you want to receive.
Our take – If you have just acquired a Pension Plan (additionally called Deferred Annuity plan) from LIC you should purchase an Annuity from LIC itself. According to the current regulations, at Vesting Age you can withdraw a maximum of 1/3 of the accumulated sum and the rest must be utilized to buy an Annuity from a similar insurance agency. So it is best to choose which of the 7 choices best suits you. The details of the 7 Annuity options and the benefits are explained below.
You can obviously by an Annuity by contributing a lump sum which you have as savings. You will then be guaranteed a regular payout as long as you are alive. It functions admirably for the individuals who need a confirmed amount for whatever remains of their lives and are not necessarily looking at options which may offer them higher returns with an element of unpredictability. For instance, there might be where Fixed Deposits offer preferred returns over the Annuity, yet then the FD rates may go down also within a year or so.
Annuity Options in Jeevan Akshay VI Plan
There are 7 Annuity Options in this plan.
We will clarify every choice with the following example:
One time payment (Purchase Price) = Rs. 5,00,000 (5 lakhs) with the pension beginning in Annual mode at 60 years old years.
Annuity for Life: where the pension is paid until the policyholder is alive. The pension got routinely is uniform and does not change.
- Example: The policyholder would get a yearly benefit of Rs. 48,750 for whatever is left of his/her lifetime.
Annuity Guaranteed for Certain Periods: where the pension is unquestionably paid for 5/10/15 or 20 years as picked, regardless of whether the policyholder is alive or not amid this period. Post this period, the pension is paid as long as the annuitant is alive. Hence this option will have 4 effective options:
Annuity Guaranteed for 5 years
The policyholder or the nominee one will get Rs. 48,300 most likely for 5 years, independent of the policyholder’s survival for a long time. In case the policyholder survives for 5 years, he/she would keep on getting Rs. 48,300 for whatever is left of his/her lifetime.
Annuity Guaranteed for 10 years
The policyholder or the nominee will get Rs. 47,300 without a doubt for 10 years, regardless of the policyholder’s survival for 10 years. On the off chance that the policyholder survives for 10 years, he/she would keep on getting Rs. 47,300 for whatever is left of his/her lifetime.
Annuity Guaranteed for 15 years
The policyholder or the nominee will get Rs. 45,950 without a doubt for 15 years, regardless of the policyholder’s survival for 15 years. On the off chance that the policyholder survives for 15 years, he/she would keep on getting Rs. 45,950 for whatever is left of his/her lifetime.
Annuity Guaranteed for 20 years
The policyholder or the nominee will get Rs. 44,400 without a doubt for 20 years, regardless of the policyholder’s survival for 20 years. On the off chance that the policyholder gets by for 20 years, he/she would keep on getting Rs. 44,400 for whatever is left of his/her lifetime.
Option 3 – Annuity with Return of Purchase Price on Death: annuity is paid till the policyholder is alive and the “Purchase Price” or the amount at first contributed is paid to the nominee as the death benefit.
The policyholder would get an annual pension of Rs. 37,550 for whatever remains of his/her lifetime. Post the policyholder’s passing, the nominee one will get the Purchase Price of Rs. 5,00,000 and policy are terminated.
Option 4 – Increasing Annuity: pension is paid until the policyholder is alive at an increasing simple rate of 3% per annum.
The policyholder would get an annual pension of Rs. 39,650 for the main year. The yearly payout will increment by Rs. 1,190 (3% of Rs. 39,650) consistently for whatever is left of his/her lifetime.
Option 5 – Joint Life Last Survivor Annuity with 50% for Spouse: pension is paid until the policyholder is alive. On the passing of the policyholder, 50% of the annuity is payable to a companion for his/her lifetime. All advantages stop on the death of the companion moreover.
The policyholder would get a yearly annuity of Rs. 45,200 for whatever remains of his/her lifetime. After the passing of the policyholder, the mate will be paid Rs. 22,600 (50% of Rs. 45,200) for whatever remains of his/her life.
Option 6 – Joint Life Last Survivor Annuity with 100% for Spouse: pension is paid until the policyholder is alive. of the pension is payable to the spouse for his/her lifetime. All benefits stop on the death of the spouse also.
The policyholder would get a yearly annuity of Rs. 42,150 for whatever remains of his/her lifetime. After the demise of the policyholder, the mate will be paid Rs. 42,150 (100% of Rs. 42,150) for whatever remains of his/her life.
Option 7 – Joint Life Last Survivor with Return of Purchase Price: pension is paid until the policyholder is alive. On the passing of the policyholder, 100% of the benefits are payable to the companion for his/her lifetime. The purchase price is returned on the death of the policyholder and the life partner.
The policyholder would get a yearly benefit of Rs. 37,050 for whatever remains of his/her lifetime. After the passing of the policyholder, the companion will be paid Rs. 37,050 (100% of Rs. 37,050) for whatever remains of his/her life. On the death of the life partner, the Purchase Price of Rs. 5,00,000 will likewise be returned.
Once any of the above Options are chosen, it cannot be changed. So please be careful at the very beginning.
Our thoughts on the pension rates
If you are older, the payouts are clearly higher as the company would need to pay you for a lesser timeframe.
Presently Option 3 can be viewed as like how Fixed Deposits work in as the Invested Amount (or Purchase Price) will be come back to the nominee. Contingent upon your age, you are offered a rate of return between 6.9% to 7.5%. Presently this is lower than the rate of profit offered for FDs. Anyway, the rates on FDs are for periods frequently under 5 years. There is no assurance of continually improving rates on FDs. You may discover the rate of FDs going lower additionally over a period of time. In the event that you purchase an Annuity, these uncertainties are taken care of. So it is a decent choice for those searching for certainty and wanting to lock down the returns which they are expecting for their golden years.
Key Features of LIC Jeevan Akshay VI Plan
- Premium is paid in a lump-sum
- Minimum purchase price or premium paid is Rs 100,000 for channels other than online and Rs 150,000 for plans purchased online
- Annuity may be paid monthly, quarterly, half yearly or yearly intervals depending on how you choose initially
- Different annuity payment options may either be chosen for a single policyholder or jointly for policyholder and spouse
- Annuity will be calculated at higher rates for the plan purchased online and lump sum premium (or purchase price) of Rs 250,000 or higher
- No medical examination is required
- No upper limit for purchase price or annuity under the plan
Eligibility conditions and other restrictions in LIC Jeevan Akshay VI plan
|Annuity purchase price (in Rs)||1,50,000 (onlinesales) |
|Entry age(in years)||30|
|Annuity payment mode||Monthly,quarterly,half-yearly or yearly|
When will you start getting your pension
Depending the Payment mode selected you will receive your payments are follows:
|Monthly mode||1 month after purchase of Annuity|
|Quarterly mode||3 months after purchase of Annuity|
|Half yearly mode||6 month after purchase of Annuity|
|Yearly mode||1 year after purchase of Annuity|
To elaborate further with an example: If you take any of the 7 Options for receiving the pension in Monthly mode- you will begin getting the pension from the following month itself. On the off chance that you get the pension in Quarterly mode – you will begin accepting the benefits following 3 months. On the off chance that you get the benefits in Half Yearly mode- you will begin receiving the pension after 6 months. Also, If you get the pension in Yearly mode- you will begin receiving the pension after 1 year. This does not depend at the age on which you have taken Jeevan Akshay plan.
Tax Benefits in LIC Jeevan Akshay VI
The premiums paid by you are exempt from Income tax under Section 80 C.
The regular pension received by you is, however, taxable.
What happens if…
You want to surrender the policy – Under most options of this plan, there is no Surrender Value. Which means, there is no option to get back the lump sum amount you have invested. When this plan was launched, there was absolutely no option to surrender. However, some changes have been made and you can get a Surrender Value if you have chosen the “Return of Purchase Price” option in this plan and meet some other conditions. They are as follows:
- You have shifted permanently to another country of residence
- You have been diagnosed with some critical illness
Know more about the conditions for Surrendering the LIC Jeevan Akshay Plan – the conditions under which you can do so and the list of critical illnesses.