LIC's New Jeevan Shanti is a non-linked, non-participating, individual single premium deferred annuity plan that provides guaranteed lifetime income after a chosen deferment period. It offers two main options: single life and joint life deferred annuities.
The plan can be purchased by paying a lump sum amount, with annuity rates guaranteed at policy inception. Policyholders can choose from various annuity payout modes, including monthly, quarterly, half-yearly, and yearly options.
The plan aims to offer financial security during retirement, with features like tax-deferred growth and flexibility in premium payments. It can be purchased both online through LIC's website and offline through agents or other intermediaries.
LIC Jeevan Shanti plan Features & Benefits
The LIC Jeevan Shanti plan offers several key features designed to provide financial security and flexibility for policyholders.
| Feature | Description |
|---|---|
| Plan Type | Non-linked, non-participating, individual single premium deferred annuity plan |
| Premium | Payment Single lump sum payment |
| Annuity Options | Two options: Single Life Deferred Annuity & Joint Life Deferred Annuity |
| Guaranteed Returns | Annuity rates are guaranteed at policy inception |
| Payout Modes | Monthly, quarterly, half-yearly, or yearly annuity payments |
| Deferment Period | 1 to 12 years, depending on maximum vesting age |
| Entry Age | Minimum: 30 years, Maximum: 79 years |
| Vesting Age | Minimum: 31 years, Maximum: 80 years |
| Minimum Purchase | Price Rs. 1,50,000 (Rs. 50,000 for plans benefiting persons with disabilities) |
| Death Benefit | Available during deferment period and after annuity payments begin |
| Loan Facility | Available after 3 months from policy issuance or expiry of free-look period |
| Surrender Value | Policy can be surrendered at any time, with specific surrender value calculations |
| Tax Benefits | Eligible for tax benefits under Section 80C (subject to prevailing tax laws) |
The plan also offers incentives for higher purchase prices, with additional benefits for amounts above Rs. 5 lakhs, Rs. 10 lakhs, and Rs. 25 lakhs. Furthermore, there's a special provision for purchasing the plan to benefit dependents with disabilities, allowing for a lower minimum purchase price and specific annuity arrangements.
What is deferred annuity & Benefits
Deferred annuity is an insurance contract that promises to pay the owner a regular income or lump sum at a future date, typically during retirement. Unlike immediate annuities that begin payments right away, deferred annuities have an accumulation phase where the invested funds grow tax-deferred before payouts begin.
There are three main types: fixed, indexed, and variable deferred annuities, each offering different ways to grow the investment. Deferred annuities provide benefits like guaranteed future income, tax-deferred growth, and flexibility in premium payments.
However, they often come with fees, surrender charges for early withdrawals, and potential tax penalties if accessed before age 59½. These products are designed as long-term investments to supplement retirement income and provide financial security in later years.
Deferred annuity plans offer several compelling reasons for individuals to consider them as part of their long-term financial strategy, particularly for retirement planning. Here are the key advantages of purchasing a deferred annuity plan.
- Retirement Income Security: The primary benefit of a deferred annuity is providing a guaranteed and reliable source of income during retirement. By contributing to the plan during working years, individuals can build a substantial fund that is later converted into regular annuity payments, supporting their lifestyle after retirement.
- Tax-Deferred Growth: Deferred annuities offer tax advantages, as the funds invested grow without being subject to annual taxes on dividends, interest, or capital gains. This tax deferral allows for more effective compounding of returns over time.
- Flexibility in Premium Payments: Many deferred annuity plans allow policyholders to contribute premiums over time rather than requiring a large lump-sum payment. This flexibility makes it easier for individuals to contribute to their retirement fund according to their financial capacity and cash flow.
- Lifetime Income Guarantee: Deferred annuity plans can be structured to provide income for the entire lifetime of the policyholder, ensuring they do not outlive their retirement savings. This protection against longevity risk offers peace of mind during retirement.
- No Contribution Limits: Unlike some retirement accounts, deferred annuity plans often have no contribution limits, allowing individuals to invest more for retirement if needed.
- Death Benefit Protection: Many deferred annuity plans include a death benefit that guarantees a payout to the beneficiary if the policyholder passes away during the accumulation phase. This feature provides financial protection for loved ones.
- Customizable Options: Deferred annuities often come with various options, such as different payout modes (monthly, quarterly, annually) and the ability to choose between single life or joint life annuities. This customization allows individuals to tailor the plan to their specific needs.
- Protection Against Market Volatility: Fixed and indexed deferred annuities offer protection against market downturns, providing a guaranteed minimum return or a return based on a specific market index, which can be appealing for risk-averse investors.
- Supplement to Other Retirement Income: Deferred annuities can serve as an excellent supplement to other sources of retirement income, such as Social Security or employer-sponsored pension plans, helping to create a more comprehensive retirement strategy.
- Long-Term Savings Discipline: By committing to a deferred annuity plan, individuals are encouraged to maintain a long-term savings discipline, which can be beneficial for overall financial health and retirement preparedness.
While deferred annuities offer these advantages, it's important to note that they also come with considerations such as potential surrender charges, fees, and limited liquidity. Additionally, withdrawals before age 59½ may be subject to a 10% tax penalty.
Therefore, it's crucial for individuals to carefully evaluate their financial situation and consult with financial advisors before purchasing a deferred annuity plan to ensure it aligns with their long-term financial goals and retirement strategy.
Eligibility Requirements
The LIC New Jeevan Shanti plan has specific eligibility criteria that determine who can purchase the policy and under what conditions.
| Criteria | Details |
|---|---|
| Minimum Entry Age | 30 years (last birthday) |
| Maximum Entry Age | 79 years (last birthday) |
| Minimum Vesting Age | 31 years (last birthday) |
| Maximum Vesting Age | 80 years (last birthday) |
| Minimum Deferment Period | 1 year |
| Maximum Deferment Period | 12 years (subject to maximum vesting age) |
| Minimum Purchase Price | Rs. 1,50,000 (subject to minimum annuity criterion) |
| Maximum Purchase Price | No limit |
The plan offers flexibility in terms of annuity payout modes, with minimum annuity amounts specified for each mode.
| Annuity Mode | Minimum Annuity |
|---|---|
| Monthly | Rs. 1,000 per month |
| Quarterly | Rs. 3,000 per quarter |
| Half-yearly | Rs. 6,000 per half-year |
| Annual | Rs. 12,000 per annum |
For joint life annuity options, the plan can be taken between any two lineal descendants/ascendants of a family (i.e., grandparent, parent, children, grandchildren), spouse, or siblings . There is an exception to the minimum purchase price and annuity criteria for plans purchased for the benefit of dependant persons with disabilities (Divyangjan).
In such cases, the minimum purchase price is reduced to Rs. 50,000, and there are no restrictions on the minimum annuity amount . The plan also offers incentives for higher purchase prices, with additional benefits available for amounts above Rs. 5 lakhs . These eligibility criteria ensure that the plan caters to a wide range of individuals planning for their retirement, while also providing special considerations for those with specific needs.
Incentive for Higher Purchase
LIC New Jeevan Shanti plan offers incentives for higher purchase prices, encouraging policyholders to invest more for potentially greater returns. Here's a breakdown of the incentive structure.
| Purchase Price Range (in Rs.) | Incentive (per Rs. 1,000 Purchase Price) |
|---|---|
| 5,00,000 to 9,99,999 | 1.50 |
| 10,00,000 to 24,99,999 | 2.10 |
| 25,00,000 to 49,99,999 | 2.45 |
| 50,00,000 to 99,99,999 | 2.60 |
| 1,00,00,000 and above | 2.70 |
These incentives are applied as an increase in the annuity rate, providing higher returns for larger investments. For example, if a policyholder invests Rs. 15,00,000, they would receive an additional 2.10 per Rs. 1,000 of the purchase price as an incentive . Additionally, there's an incentive for direct sales.
If the policy is purchased online or as a Qualifying Recognized Overseas Pension Scheme (QROPS), a rebate of 2% is applied by way of an increase in the annuity rate . It's important to note that if the policyholder opts for annuity payments other than annual (such as half-yearly, quarterly, or monthly), there's a reduction in the annuity rate.
| Mode Percentage Reduction (Yearly) | in Annuity Rate |
|---|---|
| Half-yearly | 2% |
| Quarterly | 3% |
| Monthly | 4% |
These incentives and adjustments allow policyholders to optimize their returns based on their investment amount and preferred payout frequency.
How to apply
To apply for the LIC New Jeevan Shanti plan, you have two main options - online and offline application processes:
Online Application
- Visit the official LIC website (www.licindia.in).
- Navigate to the "Buy Policy Online" section.
- Select "LIC New Jeevan Shanti" from the available options.
- Fill in required personal details like name, age, and contact information.
- Choose your preferred annuity option (Single Life or Joint Life) and deferment period.
- Enter the purchase price (premium amount) you wish to invest.
- Review the generated quote and policy details.
- If satisfied, proceed to make the online payment.
- After successful payment, you'll receive a confirmation and policy details via email.
Offline Application
- Visit your nearest LIC branch or contact an authorized LIC agent.
- Request the application form for LIC New Jeevan Shanti.
- Fill out the form with accurate personal details, annuity option choice, and purchase price.
- Submit the completed form along with necessary documents:
- Age proof (PAN card, Aadhaar, Passport, Driving License, or School Certificate)
- Address proof (Voter ID, Passport, Bank Passbook, Utility Bills)
- Identity proof (PAN card, Aadhaar, Passport, Driving License)
- Recent passport-sized photographs
- Pay the premium amount through cheque, demand draft, or cash (as per branch guidelines).
- Obtain an acknowledgment receipt for your application and payment.
Important Points
- Ensure you meet the eligibility criteria before applying (minimum entry age 30 years, maximum 79 years).
- The minimum purchase price is Rs. 1,50,000 (Rs. 50,000 for plans benefiting persons with disabilities).
- There's a free look period of 15 days for offline purchases and 30 days for online purchases to review and cancel if unsatisfied.
- For assistance during the application process, contact LIC customer support at +91-8976862090.
When applying, carefully review all terms and conditions. The application process is designed to be straightforward, whether you choose the convenience of online application or prefer the personalized assistance available through offline channels.
Final Thoughts
LIC's New Jeevan Shanti plan offers a compelling option for individuals seeking guaranteed lifetime income in retirement. With its flexible annuity options, tax benefits, and no medical examination requirement, it provides an accessible way to secure financial stability in later years.
The plan's incentives for higher purchase amounts and direct sales can enhance returns for policyholders. However, like all annuity products, it comes with considerations such as limited liquidity and fixed payouts that may not keep pace with inflation.
Potential buyers should carefully evaluate their financial goals, compare the plan with other retirement savings options, and consider consulting a financial advisor before making a decision. Overall, for those prioritizing a guaranteed income stream in retirement, LIC's New Jeevan Shanti can be a valuable addition to a comprehensive retirement strategy.
