LIC Jeevan Akshay VII Annuity Policy – 18 Key points to note
LIC has launched Jeevan Akshay VII Pension plan No 857 few days back. While this is a simple annuity plan, since it is from LIC which is trusted brand in India, it is creating some buzz in the market now. If you are in pre-retirement stage or in retirement stage and thinking how good is this pension plan, this post can help you. In this article we would provide LIC Jeevan Akshay VII Pension plan 857 details and key points one should know before buying such annuity plans?
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LIC Jeevan Akshay VII Annuity Policy – 18 Key Points to know before buying this Plan
LIC has launched this pension plan in the last week of August, 2020. Here are some important key points to know before buying such plans.
1) Minimum age of entry – Which age group can invest?
Any individual who is in the age group of 30 years to 85 years can purchase this annuity plan. One can buy this plan variant F till 100 years of age. While one is at a young age, it might not be that useful as their focus would be on earnings and not to get any regular income from investments. Hence, if you are in the age of 30s or 40s, one can ignore such pension plans and focus on other growth investments like equity mutual funds or direct stocks.
2) Minimum Purchase price
One can purchase this annuity plan with a minimum purchase price of Rs 1 Lakh.
3) Maximum purchase price
There is no maximum limit in this pension plan. One can invest as much as they want to.
4) Immediate pension plan
This is not a pension plan where you can invest regularly and get a pension on your retirement. This is an immediate pension plan where you can pay single premium and start getting pension income from next month. If you are young in age or middle age, you might not need this immediate pension, hence one can stay away from such pension plans. However, when you are in pre-retirement or retirement stage, you would need regular income, hence you may opt it provided you understand complete details and negative points in this plan.
5) Buy online or Offline
Jeevan Akshay Plan no 857 from LIC can be purchased online or offline. If they buy this annuity plan online, one would get a 2% rebate on the annuity price. If one wants to opt for offline mode, they can approach any LIC agent or LIC branch and purchase this. However, one would not get any rebate if bought offline mode.
6) 10 Annuity Options to choose for a pension income
LIC Jeevan Akshay VII comes with 10 different annuity options.
There are 7 options for single life coverage and 3 options for joint life coverage.
Option B, C, D and F would provide a fixed period of annuity income for 5 years, 10 years, 15 years and 20 years respectively. Means irrespective whether annuitant is alive or not, pension income is paid to annuitant or to nominee (post death of annuitant) for such fixed period.
Pension income is flat for the entire duration (except for Option-G).
If one wants to get pension increased year on year, they can go for Option-G. This option would provide a 3 % increase in the pension income year on year.
Here are the 10 annuity options details.
Option A: Immediate Annuity for life.
Option B: Immediate Annuity with guaranteed period of 5 years and life thereafter.
Option C: immediate Annuity with guaranteed period of 10 years and life thereafter.
Option D: Immediate Annuity with guaranteed period of 15 years and life thereafter.
Option E: Immediate Annuity with guaranteed period of 20 years and life thereafter.
Option F: Immediate Annuity for life with return of Purchase Price.
Option G: Immediate Annuity for life increasing at a simple rate of 3 per cent per annum.
Option H: Joint Life Immediate Annuity for life with a provision for 50 per cent of the annuity to the Secondary Annuitant on death of the Primary Annuitant.
Option I: Joint Life Immediate Annuity for life with a provision for 100 per cent of the annuity payable as long as one of the Annuitant survives.
Option J: Joint Life immediate Annuity for life with a provision for 100 per cent of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on death of the last survivor.
7) Zero Maturity Benefit
One should know that there is no maturity benefit. Don’t get confused with return of the purchase price as it is part of death benefit which is paid to the nominee and not to annuitant.
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8) LIC Jeevan Akshay VII Pension calculator for Rs 10 Lakhs annuity price
Here is some sample annuity calculator that are payable yearly for Rs 10 Lakhs annuity price.
9) Surrender Jeevan Akshay in only Option F and J
If one opts this pension plan and want to surrender after free lookup period, they cannot do it except if they have opted Option F and J. They can surrender after 3 months and get the purchase price back after necessary deductions made by LIC which would depend on annuitant age and date of vesting of the policy.
10) No medical tests required
This is not a life insurance plan or health insurance plan, hence no medicals required. One can straight away purchase this pension plan and get an immediate annuity / fixed income.
11) One can buy multiple pension plans
One can buy one ore more pension plans if they think that one pension plan is not sufficient for their regular income. There is no restriction on the number of pension plans that one intend to buy in Jeevan Akshay VII.
12) Free look up period
The free lookup period is 15 days if purchased offline and 30 days if purchased online. If annuitant who purchased this pension plan is not happy for some reason, they can surrender this pension plan within this free lookup period.
13) Loan facility – Option F and J
Jeevan Akshay VI provides loan facility if the annuitant opted Option F and J (which are basically annuity option with return of purchase price). The annuitant can opt for loan on such pension plan after 3 months from the date of the policy and up to maximum 50% of the annuity price. Such loan, along with interest would be recovered in regular pension income.
14) NPS subscribers can opt this Jeevan Akshay
NPS Tier-1 subscribers need to take pension plan post retirement of 60 years. One can opt for Jeevan Akshay 7 plan if they want to take a pension plan based on their eligibility.
15) Government NPS subscribers – Default Option J
If any government NPS subscribers want to subscribe to Jeevan Akshay, their default option is Option J in case their spouse is surviving. In the absence of a spouse, the default option is Option-F.
16) Options for the benefit of dependent with disability
Jeevan Akshay 7 LIC plan provides two good options who has dependent with disability.
- Proposer can purchase an immediate annuity for life with return of purchase price and nominee as dependent disabled person.
- The proposer can purchase an immediate annuity with joint life coverage where proposer can be primary annuitant and dependent person would be secondary annuitant.
17) Taxation of Pension income
Amount invested to purchase annuity plan is exempted from income tax u/s 80c up to Rs 1.5 Lakhs.
Pension income is added to individual income and income tax need to be paid based on income tax slab applicable to that person.
18) Jeevan Akshay VII 857 – interest rate / returns
Pension plans do not offer guaranteed returns as the pension income would be provided based on the annuity price + age of the person + option chosen. One can expect 4% to 5% annualized returns from such pension plans.
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