The Life Insurance Corporation of India (LIC) provides the ‘Saral Pension Plan’ which is a standardised immediate annuity scheme. It is developed to provide retirees with a guaranteed lifelong income stream.
This particular plan has been introduced under the Insurance Regulatory and Development Authority of India (IRDAI) stipulations and guidelines. It aims to boost and simplify pension options and ensure uniformity across insurers.
Key features of the Saral Pension Plan
The LIC’s Saral Pension Plan is a single premium, non linked, non participating and immediate annuity policy. In this policy, investors pay a lump sum and then receive regular pension payments for life. Further, annuity payout options include monthly, quarterly, half yearly or annual frequencies.
The plan provides for:
- Single life annuity with return of purchase price to designated nominee on death.
- Joint life last survivor annuity with return of purchase price.
Additional features of Saral Pension Plan include:
- Lowest possible annuity payouts: ₹1,000/month, ₹3,000/quarter, ₹6,000/half year or ₹12,000/year are the minimum annuity payouts.
- Facility to avail loan: The holder of the plan is allowed to avail a loan after six months of policy commencement.
- Surrender of benefits: Permitted under specific critical illness conditions faced by plan holders.
- Tax rebates and benefits: Eligible under Sections 80C and 10(10D) of the Income Tax Act. This makes the plan more lucrative.
- Flexibility in purchase price: There is no upper limit on the investment amount allowing customization based on retirement needs.
- Pension starts immediately: It is important to note that pension payments begin in one month after the purchase.
- Nominee facility: Due to this facility, the nominee of the policyholder will witness smooth transfer of benefits on the annuitant’s death.
Note: The features discussed above are illustrative in nature. For the updated terms, conditions and features refer to the official website of LIC.
Regulatory background
The IRDAI has mandated the ‘Saral Pension Plan’ to standardise immediate annuity products across insurers. This particular initiative boosts transparency, accountability and simplifies pension plan comparisons. It also strengthens consumer protection within the insurance sector.
The main objective of the plan is to provide efficient services to the individuals who apply for the product. LIC also has a dedicated customer service team to assist individuals who aspire to avail themselves with any of their product offerings.
Planning retirement in India’s changing demographics
It is important to acknowledge the fact that India’s elderly population is expected to exceed 324 million by 2050 as per the United Nation’s World Population study 2022. That is why, structured pension schemes such as LIC’s Saral Pension Plan provide a prudent and secure income option to applicants.
Still, it is equally important for investors to consider inflation, healthcare costs and personal goals and explore diversified retirement strategies to ensure financial stability and security in later years.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers are advised to consult a licensed insurance advisor or financial planner before making any investment decisions.