Explained: How LIC Saral pension plan will take care of you after retirement

The Life Insurance Corporation of India (LIC) has introduced the Saral pension plan from July 1. It is a non-linked, non-participating, single premium, individual immediate annuity plan for people in the age group of 40 to 80 years. They can make a one-time payment to get pension benefits.

Saral Pension plan is a simple product to help policyholders get a regular pre-determined (monthly or quarterly or half-yearly or yearly) pension for the rest of their lives and cover post-retirement expenses. The plan will especially benefit people who won’t be receiving a pension after retirement.

This is a standard immediate annuity plan as per the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI), which offers the same terms and conditions across all life insurers.

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What is a non-linked non-participative plan?

A non-linked plan is not linked to the stock market.

A non-participating plan is one where the policyholder does not receive any bonuses or add-ons in the form of dividends declared by the insurer from time to time.

The options

The plan offers two annuity options to policyholders or annuitants.

Option 1: Life annuity with the return of 100 percent of the purchase price.

Option 2: Joint life (for example husband and wife who are 40 years or above) last survivor annuity with return of 100 percent of the purchase price on death of the last survivor.

A nomination facility is available in both.

The benefits

Policyholders (or annuitant: final recipient in case of option 2) get a fixed payment at regular intervals for the rest of their life. The plan offers a guaranteed return that does not depend on markets or the insurers’ profits.

The minimum annuity that a policyholder can avail of is Rs 12,000 per annum.

The policyholder (or annuitant) can choose monthly, quarterly, and half-yearly or yearly receipt of payment.

The minimum monthly, quarterly, and half-yearly annuity available in this plan is Rs 1,000, Rs 3,000 and Rs 6,000 respectively.

Other details

The minimum purchase price will depend on the mode of annuity, option and age of the policy subscriber. There is no cap on the maximum purchase price.

For example, a 40-year male in Mumbai can purchase the Saral pension plan at a one-time premium of Rs 750,000 (plus GST of Rs 13,500) to get a pension of Rs 3,088 per month for the rest of his life.

Is there a loan facility?

Annuitant can avail of loan facility six months after the plan purchase.