Life Insurance Corporation of India (LIC) has launched an immediate annuity scheme – Saral Pension. It is a non-linked non-participating plan which helps you to overcome the waters of old age. Following the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI), the insurer released a single premium, individual immediate standard annuity plan with effect from July 1. This implies that all the insurers will provide the same terms and conditions for this plan.
Annuity Options: This standard annuity plan offers customers the option to choose the type of annuity they want on payment of a lump sum amount. There are two options: 1) Life annuity with 100% return on purchase price. Under this plan, as per the chosen mode of annuity payment, the annuity payment will be made as long as the annuitant is alive. On the death of the annuitant, the annuity payment will stop immediately and 100% of the purchase price will be payable to the nominee/legal heirs.
2) Joint Life Last Survivor Annuity with 100% return of purchase price on death of last survivor. Under Joint Life Last Survivor Annuity Plan, the annuity amount will be paid as long as the annuitant and/or spouse is alive, as per the chosen mode of annuity payment. The insurer stated that on the death of the last survivor, the annuity payment would stop immediately and 100% of the purchase price would be payable to the nominee/legal heirs. It further mentions, “The annuity option once chosen cannot be changed.”
Annuity Rates: Annuity rates are guaranteed at the inception of the policy and the annuities are payable throughout the life of the annuity. Annuity shall be payable in arrears i.e. after one year, six months, three months and one month from the date of commencement of the policy, depending upon whether the mode of annuity payment is yearly, half yearly, quarterly and monthly respectively Or not .
Minimum Pension: The minimum annuity has been fixed at ₹12,000 per annum. The minimum purchase price will depend on the annuity mode, the option chosen and the age of the annuitant as per LIC. There will be no ceiling on the maximum purchase price.
Surrender Policy: The policy can be surrendered at any time after six months from the date of commencement, if the annuitant or the spouse or any one of the children of the annuitant has been given any of the critical illnesses specified as contracted on the basis of the documents furnished. Diagnosed as suffering from either one. Satisfaction of the Medical Examiner of the Corporation. Upon approval of the surrender, 95% of the purchase price will be paid to the annuitant, subject to deduction of any outstanding loan amount and loan interest, if any. On payment of the surrender value, all other benefits will cease and the policy will terminate.
Loan: Eligible customers can apply for the loan on completion of six months of the policy. Under the joint life annuity option, the loan can be availed by the annuitant and can be availed by the spouse on the death of the annuitant. “The maximum loan amount that can be given under the policy will be as follows”
The effective annual interest amount payable on the loan does not exceed 50 per cent of the annual annuity amount payable under the policy,” LIC said. “The loan interest will be recovered from the annuity amount payable under the policy. The loan will accrue as interest as per the frequency of annuity payments under the policy and will be payable on the due date of the annuity.”
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