LIC Jeevan Shanti Plan is a single premium plan wherein the policyholder has a choice to pick an immediate or deferred annuity. An annuity is a fixed sum of money paid to somebody every year, and this is done ordinarily for whatever remains of their life. Annuities are preferred by those investors who need a fixed sum of money for life. Unlike fixed deposit products whose interest rates are fixed only for a said tenure, annuity gives you ‘shanti’ from any tension about variable returns. Let us find out more about this policy.
Basic details – Jeevan Shanti offers an immediate or deferred annuity. These annuity rates are ensured at the inception of the policy for both options. The annuities are payable all through the lifetime of annuitant(s) i.e. person(s) who get the annuity.
Benefits – The simple and straightforward of this policy is one can make a one-time investment and get ensured life-long income. There are upwards of nine distinctive annuity options to choose from. There is a facility to pick either immediate annuity or postpone it to a future date as a deferred annuity. Do recall there are ensured additions during the deferment period.
Suspension period – One year is least deferment period. Twenty years is the most maximum deferment period. Along these lines, the minimum vesting age is 31 years (completed) and maximum vesting age is 80 years (completed).
Who can take – This policy can be taken on own life or as joint life with grandchildren, spouse or siblings. There is additionally a choice to take the plan to help impaired ward (Divyangjan) life.
In case of annuity taken for joint life, one can do between any lineal relative/ascendant of a family (i.e. Grandparent, Parent, Children, Grandchildren) or spouse or siblings.
Death benefit – This is applicable only if there should be an occurrence of the deferred annuity. It is higher of the purchase price in addition to gathered ensured additions minus total annuity payments made till the date of death, or 110% of purchase price.
Options – As said previously, there are numerous choices to take your annuity. This choice is extremely important. Since once you make it, it cannot be changed.
There are nine options available under Immediate Annuity. They are Option A (Immediate Annuity for life), Option B (Immediate Annuity with guaranteed period of 5 years and life thereafter), Option C (Immediate Annuity with guaranteed period of 10 years and life thereafter), Option D (Immediate Annuity with guaranteed period of 15 years and life thereafter), Option E (Immediate Annuity with guaranteed period of 20 years and life from that point), Option F (Immediate Annuity for life with return of Purchase Price), Option G (Immediate Annuity for life increasing at a simple rate of 3% p.a.), Option H (Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on death of the Primary Annuitant), Option I (Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives), and Option J (Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price for death of the last survivor).
Loan facility – The loan facility in this policy is accessible after fulfillment of one policy year.
Surrender allowed – The policy can be surrendered at whenever following three months from the consummation of policy when the annuity option is with the return of purchase price.
Free look period: If the policyholder isn’t happy with the policy, the policy can come back to LIC within 15 days.
Policy purchase price: The minimum purchase price is Rs 1,50,000 subject to least annuity rules. There is no maximum purchase price limit. Do take note of that a lower purchase price might be allowed in particular cases, for example, NPS (National Pension System endorser) or if this plan is bought to support Divyangjan. Be that as it may, on account of NPS, annuity rates might be unique.
Minimum age at entry: It ought to be 30 years (completed).
Minimum annuity – The minimum amount would run between Rs 1,000 (every month) to Rs 12,000 (every year).
Sample illustration – LIC has given the following illustration. Imagine a 45-year old person has purchased the policy at a buy cost of Rs 10 lakh (excluding applicable taxes). He has selected yearly annuity mode. The deferment period chosen is 20 years. The deferred annuity would be Rs 2.06 lakh for single life and Rs 2.27 lakh for joint life.
In the event that the person selects the immediate annuity, they can go anyplace between Rs 56,200 to Rs 74,300 relying upon the option chosen by them.
Conslusion– Annuity products are for the individuals who might want to shield themselves interest-rate risk for their lifetime. However, there is an expense for this lifetime guarantee. Firstly, the annuity income is exhausted under the income tax rate. Furthermore, the insurance agency pays lower than bank FD rates. Thirdly, there is no liquidity for the annuity product.
Having said this, today annuity plans can be purchased less expensive on the web. LIC Jeevan Shanti offers a discount of 2% by the method for increment in the annuity rate which shall be applicable for policies sold online, NPS subscribers and QROPS (Qualifying Recognised Overseas Pension Scheme). Plus, there is an incentive for a higher purchase price by way of an increase in the annuity rate. Anybody buying this annuity plan should look at the tax adjusted income they will generate. You should also carefully choose the options, which offer annuity single life or joint life.