LIC’s Saral Pension Plan

Saral Pension Plan by Life Insurance Corporation (LIC) of India is a non-linked, non-participating, single premium, individual immediate annuity plan which not only provides coverage but also annuity.  

If you are a policyholder, then you will have the option to choose the type of annuity, and this policy can also be purchased both online and offline.

What is LIC Saral Pension Yojana?

LIC Saral Pension plan is a retirement scheme, which is launched under the IRDAI (Insurance Regulatory and Development Authority of India) guidelines. This Standard Immediate Annuity plan provides financial security to the policyholders after retirement from employment. The annuity will be paid throughout their lifetime and the rates will be guaranteed after the commencement of the pension plan.

The following are the key objective of LIC Saral Pension Plan:

  1. Builds trust between insurer and insured
  2. Minimizes plan misuse
  3. Creates uniformity
  4. Creates common guidelines to eliminate disputed among insurance companies
  5. Customer-friendly policy

Benefits of LIC Saral Pension Yojana:

The following are the key benefits of LIC Saral Pension Plan:

  1.  Offers various death benefits, such as:

o    Returns 100% purchase price on demise of policyholder under single annuity option

o    Under joint-life annuity option:

§  Spouse will receive same annuity amount in case of death of annuitant

§  Nominee will receive 100% of the purchase price on demise of spouse

§  Annuitant will continue to receive annuity if the spouse dies before annuitant

§  Nominee will receive 100% of annuity amount, if both the annuitant and the spouse die

  1. Free-look period: The plan offers 15 days or 30 days free-look period if purchased offline or online, respectively.
  1. Loan benefit: Loan can be availed only after six months of the commencement of the policy. The maximum loan amount to be offered will be such that the total annual interest paid should not be more than 50% of the annuity.
  1. Tax benefits: According to the Income Tax Act, 1961, policyholders will be exempted from tax under this pension scheme.
  1.  Survival benefit: Annuity amount will be paid to the policyholder or the nominee, as applicable, under the survival benefit.

Annuity options offered by LIC Saral Pension Plan:

There are two annuity options offered by LIC if you avail yourself of the Saral Pension Plan:

  1.  Life Annuity where 100% of the purchase price will be returned:

o    The option is available to only single policyholders

o    A benefit of Rs.12,000 is provided to the single policyholder till they survive the policy term

o    In the annuity option, the premium is returned to the nominee in case the life assured dies

  1. Joint Life Last Survivor Annuity where 100% of the purchase price will be returned on death of last survivor: due to the death of the policyholder.

o    The option is available to the joint policyholders

o    Pension benefit will be provided to the couple

o    Total premium amount will be returned to the nominee on demise of last surviving spouse

Benefits of LIC Saral Pension Plan Annuity Options:

The benefits of LIC Saral Pension Plan annuity options are given below:

Option

Benefits

Option 1

  1. Depending on the style of annuity payment selected, the annuity payments must be made in arrears for the duration of the annuitant's life.
  2. If the annuitant dies, the annuity payment will stop immediately, and the nominees or legal heirs will get 100% of the purchase price.

Option 

Option 2

  1. Depending on the style of annuity payment selected, the annuity amount shall be paid in arrears for as long as the annuitant and/or spouse are alive.
  2. The payment of annuity will stop immediately upon the passing of the last survivor, and 100% of the Purchase Price will be paid to the nominee(s)/legal heirs.

Eligibility Criteria of Saral Pension Plan:

The eligibility criteria you will have to fulfil to apply for Saral Pension Plan are given below:

  1. The minimum entry age is 40 years, while the maximum entry age is 80 years.
  2. The minimum annuity offered is given in the table below:

Mode of annuity

Monthly

Quarterly

Half-yearly

Annual

Minimum annuity

Rs.1,000 p.m.

Rs.3,000 per quarter

Rs.6,000 per half-quarter

Rs.12,000 p.a.

  1. The minimum purchase price will depend on the minimum annuity chosen, and the age of the policyholder.
  2. There is no maximum purchase price specified.

Features of LIC Saral Pension Plan:

Some of the features of LIC Saral Pension Plan are given below:

  1. Surrender Value: Six months after the policy's start date, the insurance may be cancelled at any time. 95% of the Purchase Price will be paid to the annuitant upon approval of the surrender, less any outstanding loan balance and any applicable loan interest.
  2. Loan: Six months after the policy's start date, the policy loan may be requested at any time. The loan can be obtained under the joint life annuity option by the annuitant and, in the event of the annuitant's death, by the spouse. The maximum loan amount allowed by the policy must be calculated so that the effective annual interest rate paid on the loan cannot be greater than 50% of the annual annuity payment allowed by the policy.
  3.  Free Look Period: Once you avail yourself of the loan, you get a free look period. During this period, if you do not agree with any terms and conditions of the policy, you can return it within 30 days of the issuance of the receipt. Whatever amount you have paid will be refunded. 
  4. Tax Advantages: Benefits from tax savings are accessible in accordance with the current Income Tax Act, 1961 laws.

List of critical illnesses covered under the Saral Pension Plan:

Given below is the list of critical illnesses covered under the Saral Pension Plan

  1. Cancer
  1. Myocardial Infarction
  1. Open Chest CABG
  1. Open heart replacement or repairing of heart valves
  1. COMA of varied specificity
  2. Failure of kidney or if regular dialysis is required
  1. Stroke resulting in permanent symptom
  2. Transplant of bone marrow or major organ
  3.  Permanent paralysis of limbs
  1. Motor neuron disease with permanent symptoms
  2. Multiple sclerosis with persisting symptoms
  1. Benign brain tumor
  1. Blindness
  1. End state lung failure
  1. End stage liver failure
  1. Loss of limbs
  1. Loss of speech
  2. Major head traum
  1. Loss of limbs
  1. Primary pulmonary hypertension
  2. Third-degree burns

FAQs on LIC’s Saral Pension Plan

  • Can the annuity option be altered at a later date

    Once you have chosen an annuity option, you cannot get it altered.

  • Will I be covered if I lose my limbs due to alcohol abuse?

    No, you won’t be covered if you lose your limbs due to alcohol or drug abuse.

  • Will I be covered if my blindness is temporary?

    No, coverage is provided only in case of permanent or irreversible blindness.

  • I got a call from IRDAI where I was offered an insurance policy. What should I do?

    IRDAI will never call you and sell insurance policies, or announce any bonuses. In case you get a call from IRDAI, lodge a police complaint.

  • I have applied for a loan against policy. What will the interest rate?

    If you have availed loan against policy with the period commencing between 1 May 2022 and 30 April 2023, the interest rate applicable will be 8.98% p.a.

  • Can the spouse of the policyholder apply for loan against policy after the death of the policyholder?

    Yes, if the policy is taken as a joint life annuity option, the spouse of the policyholder can avail loan against the policy after the death of the policyholder.

  • Will I get a rebate if I purchase the Saral Pension Plan online?

    Yes, if you purchase the Saral Pension Plan online, then you will get a rebate of 2%.

  • Can joint life annuity be taken with my spouse only?

    Yes, joint life annuity can only be taken with your spouse where the eligibility criteria to avail of this policy will be applicable to them as well.

Disclaimer
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.