LIC Saral Saral pension plan ( Table Number 862) is a new immediate annuity plan to get a regular pension from a lump sum deposit.
In LIC Saral Pension plan, you deposit a lump sum amount, your pension starts from next month, next quarter, after 6 months, or after a year depending on your choice.
Table of Contents
LIC Saral Pension-Annuity/Pension Option
After payment of lump sum amount, the policy holder get two pension option to choose from
- Life Annuity with return of 100% of purchase price
- Joint life last survivor and return of 100% of the purchase price on death of last survivor
Life Annuity with return of 100% return of purchase price
Life Annuity with ROP gives lifelong pension till the time policyholder is alive. Thereafter purchase price is returned back to the nominee or legal heir.
Joint life last survivor and return of 100% of the purchase price on death of last survivor
In Joint life last survivor option policyholder and his/her spouse will get a lifelong pension. Upon the death of the last survivor the pension/annuity will stop immediately and the purchase price will be paid to the nominee or legal heirs.
| Minimum annuity | 1000 pm/3000 quarterly/6000 half-yearly/12000 yearly |
| Minimum Entry age | 40 years |
| Maximum Entry Age | 80 years |
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Surrender Value
You can surrender the policy after 6 months from the date of commencement, if the annuitant, spouse, or dependent child is diagnosed with any of specified critical illness ONLY.
On approval of the surrender, 95% of the Purchase Price shall be paid to the annuitant, subject to deduction of any outstanding loan amount and the loan interest, if any.
On surrender the policy will be closed and thereafter there will be no further annuity payments will be made.
Loan
You can take out a loan on your policy after the completion of 6 months. If the policy is in joint holding then the annuitant can take the loan. In the case of joint holding, if the annuitant is no more alive, the spouse can also take a loan.
The loan interest will be recovered from annuity payments. The loan value will be recovered from the maturity proceeds or otherwise, you can pay the loan anytime.
For the loan sanctioned during the 12 months’ period commencing from 1st May 2021 to 30th April 2022, the applicable interest rate is 8.44% p.a. effective for the entire term of the loan.
LIC Saral Pension Plan Review ?
LIC Saral pension plan single premium is an immediate annuity plan. LIC already has two other pension plans namely LIC New Jeevan Shanti Plan and LIC Jeevan Akshay VII Plan. Before shortlisting any plan, it is better to compare with other two plans also.
If we compare the pension return rate for annuity rates for LIC Jeevan Akshay, Saral Pension 862 and PMVVY ( another scheme from LIC for senior citizens) than PMVVY offers better return as compared to all three. However, PMVVY is available for senior citizens only.
If you are not a senior citizen than LIC Jeevan Akshay 7 return rates are better as compared to Saral Pension Plan.
To Compare all four LIC Pension Plans, please read
How to Choose Best LIC Pension Plan?
Read more About PMVVY
Because each individual has his/her own unique needs and all four plans are launched to cater to different needs of people.
Disadvantages of LIC Saral Pension plan
Although LIC Saral pension plan is a good immediate annuity plan but every coin has two sides. let’s flip the coin and examine.
- Once you buy the policy, you cannot get your money back except in case of serious illness in the family.
- Pension interest rate is quite low and it can’t even beat inflation.
- You may feel the heat of no access to your own money and low interest rate after a few years.
- Although the interest amount is fixed, it is still quite low as compared to other pension schemes such as SCSS and PMVVY.
- Income earned is fully taxable under the head income from other sources.
See a detailed comparison of SCSS vs PMVVY.
Conclusion
LIC offers many customer friendly plans which are long term in nature. Here, you should invest your money carefully after understanding and comparing all other similar options before jumping to invest your money. Each option has its own pros and cons.
LIC Jeevan Shanti vs Jeevan Akshay vs PMVVY vs SCSS
please consider reading Post Retirement Planning book written by Mamta Khanna, Certified Financial Planner.
