Life Insurance Corporation of India (LIC) provides for a lucrative Smart Pension Plan to provide investors with an efficient tool to plan and invest for their retirement. This is a non participation, individual, non linked and group immediate annuity plan.
This has been designed to facilitate efficient retirement planning for investors, this scheme provides a choice of annuity options thus catering to both members of group superannuation schemes and individuals as well. Here are five must know facts you should know before you consider investing:
1. Basic eligibility and entry criteria
According to LIC’s official documentation, the minimum entry age is 18 years. The maximum age varies from 65 to 100 years, primarily depending on the annuity option selected by the applicant. Furthermore, the minimum purchase price is ₹1,00,000. The plan is available for individual applicants including National Pension System (NPS) subscribers and ‘Divyangjan’ (dependents with disabilities).
Note: The basic eligibility criteria discussed above is illustrative in nature. Refer to the official website of LIC for the update eligibility criteria, terms and conditions.
2. Annuity options offered
The Smart Pension Plan offers for several different annuity options:
| Annuity type | Key features |
|---|---|
| Lifetime Annuity (Single/ Joint Life) | Annuity continues for life; in joint life, 100% payable to survivor |
| Annuity certain with life | Fixed annuity for 5, 10, 15, or 20 years, then for life |
| Increasing annuity | Annuity increases at a simple rate of 3% or 6% per annum |
| Return of Purchase Price | Purchase price returned after death or a specified period |
It is important to acknowledge the fact that annuity payouts can be monthly, quarterly, half yearly or annual.
Note: The key features discussed above are illustrative in nature. For the updated features, terms and conditions refer to the website of LIC.
3. Purchase incentives
All policyholders who invest higher amounts in the plan, receive enhanced and boosted annuity rates. Further, nominees of deceased LIC policyholders are also eligible for better terms. These increased annuity rates act as a financial incentive for individuals planning for a prudent and stable post retirement income stream.
Furthermore, nominees or beneficiaries of deceased LIC policyholders are also eligible for favourable terms and added benefits, depending on the policy conditions and the selected annuity option. These features make the plan not only lucrative for individual investors but also considerate of their respective family’s financial security.
4. Loan and liquidity options
To assist in financial flexibility, LIC permits policyholders to avail of loans after three months from the policy commencement date or after the end of the free look period whichever comes later. This allows individuals to avail and access funds during sudden emergencies or difficult or unforeseen circumstances. That too without terminating the policy.
Furthermore, partial surrender of the policy is also permitted under critical, unforeseen circumstances including serious illness or life altering events. This particular feature ensures that the investors are not locked into their annuity completely and can avail liquidity when genuinely required.
5. Additional benefits
- Death benefit flexibility: Nominees can opt for lump sum payout, instalments or even annuitised benefits.
- Joint life annuity: Upon first death, 100% annuity continues for the remaining survivor.
- Payout customisation: Carefully select the frequency and payout mode as per requirement and your future financial goals.
How to buy a LIC Smart Pension Plan?
- Through the online mode: Visit the official website of LIC to apply directly.
- Through the offline mode: You can purchase the plan through LIC agents, designated representatives, or local CSC centres across the country.
- Documentation needed: You must keep your Aadhaar card, PAN card, address proof, age proof along with recent photographs and bank details ready to meet any required eligibility requirements.
- Select options: Choose your preferred annuity type and payout frequency. The payout frequency can be either monthly, quarterly, half yearly or annually depending on the applicant’s choice.
- Discuss with experts: You can also consult an LIC agent or refer to the official web link of the plan for detailed plan features and benefits before opting for it.
Hence, with a growing elderly population, rising cost of living, lack of efficient planning etc., structured pension products such as LIC’s Smart Pension Plan aim to provide financial independence to retirees.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult the official LIC website or authorised representatives for the latest details before making any investment decisions.