LIC’s New Jeevan Shanti
LIC’s New Jeevan Shanti is a Non-Linked, Non-Participating, Individual, Single Premium, Deferred Annuity plan wherein the Policyholder has an option to choose between Single life and Joint life Deferred annuity The annuity rates are guaranteed at the inception of the policy and annuities are payable post deferment period throughout the life time of Annuitant(s).
This is a non-participating product under which benefits payable on death or survival are guaranteed and fixed (as per the chosen Annuity Option) irrespective of actual experience. Hence the policy is not entitled to any discretionary benefits like bonus etc. or share in Surplus.
1. Key Features:
- Single Premium Deferred Annuity Plan
- Two annuity options to suit your needs
- Flexibility to choose from:
- Single Life Annuity and Joint Life Annuity.
- Mode of Annuity payments (yearly, half-yearly, quarterly and monthly).
- Option to take death benefit as Lump-sum, in the form of Annuitisation or in Installments
2. Annuity Options:
The options available are:
Option 1: Deferred annuity for Single life
Option 2: Deferred annuity for Joint life
Annuity option once chosen cannot be altered.
3. Benefits:
Benefits payable are:
| Options | Benefits |
|---|---|
| Option 1 | During Deferment Period:
|
After Deferment Period:
| |
| Option 2 | During Deferment Period:
|
After Deferment Period:
|
- Death Benefit: Death Benefit under both of the Options shall be:
Higher of- Purchase Price plus Accrued Additional Benefit on Death (as specified below) minus Total annuity amount payable till date of death, if any or
- 105% of Purchase Price
- Accrued Additional Benefit on Death: Additional Benefit on Death shall accrue at the end of each policy month, till the end of Deferment Period only. The rate of Additional Benefit on Death during the deferment Period shall be as under:
Additional Benefit on Death per month= (Purchase Price * Annuity rate p.a. payable monthly) / 12
Where, Annuity rate p.a. payable monthly shall be equal to annuity rate per unit Purchase Price applicable for monthly mode without applying any incentive and shall depend on the Option chosen, Age at entry of the annuitant(s) and the Deferment Period opted for.
In case of death of the annuitant or surrender of the policy during the deferment period, Additional Benefit on Death for the policy year in which the death/surrender has occurred shall accrue till the completed policy month as on the date of death/surrender.
4. Eligibility Criteria:
The above mentioned minimum purchase price would be increased appropriately to meet minimum annuity criterion as specified below.
| Annuity Mode | Monthly | Quarterly | Half-yearly | Annual |
|---|---|---|---|---|
| Minimum Annuity | ₹1000 per month | ₹3000 per quarter | ₹6000 per half-year | ₹12000 per annum |
Joint Life: The joint life annuity can be taken between any two lineal descendant ascendant of a family (i.e. Grandparent, Parent, Children, Grand children) or spouse or siblings.
*Exceptional cases where minimum annuity and minimum Purchase Price of ₹1,50,000/- shall not be applicable:
If the plan has been purchased for the benefit of dependant person with disability (Divyangjan) as specified in Para 9.ii below, the proposal shall be allowed without any restriction on minimum annuity and the minimum Purchase Price under such cases shall be ₹50,000/-.
5. Mode of Annuity Payment:
The modes of annuity available are yearly, half-yearly, quarterly and monthly. The Annuity shall be payable in arrears i.e. the annuity payment shall be after 1 year, 6 months, 3 months and 1 month from the date of vesting of Annuity depending on whether the mode of annuity payment is Yearly, Half yearly, Quarterly and Monthly respectively.
6. Incentive:
The following incentives are available under this plan:
-
Incentive for Higher Purchase Price:
Incentive for higher purchase price by way of increase in the annuity rate is provided for three slabs of purchase price
- ₹ 5,00,000 to ₹ 9,99,999
- ₹ 10,00,000 to ₹ 24,99,999
- ₹ 25,00,000 and above.
The incentive for higher purchase price depends on the purchase price slab and also on the deferment period. The incentive increases as the purchase pric moves from the lower slab to higher slab of the purchase price and also along with increase in deferment period.
-
Incentive for Existing Policyholder and Nominee/ Beneficiary of the Deceased Policyholder:
The Incentive by way of increase in Tabular Annuity Rate for different category of existing policyholders including the nominee or beneficiary of deceased policyholder provided the new policy is taken through any Agent/Corporate Agent/ Broker/ Insurance Marketing Firm under this plan shall be as under:
Category of Policyholder Incentive (%) In case an existing Policyholder having a policy with the Corporation which has matured within one year before the registration of proposal under this product and purchases this plan on his/her life and/or on thelife of any of the family members;
Or
If this plan is purchased by Nominee/Beneficiary of the deceased Policyholder of the Corporation where date of death is within one year before the registration of proposal under this product;
Or
If this plan is purchased by an existing Policyholder having an in-force policy with the Corporation.0.15% -
Incentive for Direct Sale by way of Increase in the Annuity Rate is as under:
For policies sold directly without any involvement of Agent/ Corporate Agent/Broker/ Insurance Marketing Firm, incentive by way of increase in the Tabular Annuity Rate shall be available to the annuitant as mentioned below:
SI. Category of Policyholder Incentive Purchase Price less
than ₹10,00,000/-Purchase Price
₹10,00,000/- and aboveA. Online Sale – New Customer 2.00% 2.50% B. Online Sale – Existing Policyholder and Nominee/ Beneficiary of the deceased Policyholder Refer to Para 6.II above for details and conditions regarding Existing Policyholder and Nominee/ Beneficiary of the deceased Policyholder. 2.15% 2.50% C. QROPS 2.00% 2.50% Customer can opt for only one of incentives mentioned above i.e. either Online Sale - New Customer or Online Sale - Existing Policyholder and Nominee/Beneficiary of the deceased Policyholder or QROPS.
7. Reduction in Annuity Rates:
For annuity payment frequencies other than yearly mode, reduction by way of decrease in annuity rate shall be applicable. The reduction is as under:
| Mode | Percentage Reduction in (Yearly) annuity rate |
|---|---|
| Half-yearly | 2% |
| Quarterly | 3% |
| Monthly | 4% |
8. Illustration:
| Annuity Option | Annuity amount payable for various annuity payment modes (₹) | |||
|---|---|---|---|---|
| Yearly | Half-yearly | Quarterly | Monthly | |
| Option 1: Deferred annuity for Single life | 1,41,100 | 69,139 | 34,217 | 11,288 |
| Option 2: Deferred annuity for Joint life | 1,32,100 | 64,729 | 32,034 | 10,568 |
For death benefit under above options, please refer to Para 3 above.
9. Options:
-
Options Available for Payment of Death Benefit:
The Annuitant(s) will have to choose one of the following options for the payment of the death benefit to the nominee(s).The death claim amount shall then be paid to the nominee(s) as per the option exercised by the Annuitant(s) and no alteration whatsoever shall be allowed to be made by the nominee(s). This option has to be exercised by Annuitant(s) at the proposal stage. However, this option can be subsequently modified by Annuitant(s) during his/her life during the currency of the policy.
- Lumpsum Death Benefit: Under this option the entire Death benefit shall be payable to the nominee(s) in lumpsum.
- Annuitisation of Death Benefit: Under this option the benefit amount payable on death shall be utilized for purchasing an Immediate Annuity from the Corporation for nominee(s) effective from the date of death of the annuitant/last survivor. The annuity amount payable to the nominee(s) on the admission of death claim shall be based on the age of nominee(s) and immediate annuity rates prevailing as on the date of death of Annuitant (last survivor in case of Joint Life Annuity). This option can be opted for full or part of the benefit amount payable on death. However, the annuity payments for each nominee(s) shall be subject to the eligibility conditions of the annuity plan available at that time and then prevailing Regulatory provisions on the minimum limits for annuities. In case the eligibility conditions of the annuity plan available at that time are not met or the benefit amount payable on death is insufficient to purchase the minimum amount of annuity, then the said amount shall be paid as a lumpsum to the nominee(s).
- In Installment: Under this option the benefit amount payable on death can be received in installments over the chosen period of 5 or 10 or 15 years instead of lumpsum amount. This option can be exercised for full or part of the Death Benefit payable under the policy. The amount opted by the Annuitant(s) (i.e. net claim amount) can be either in absolute value or as a percentage of the total claim proceeds payable.
The installments shall be paid in advance at yearly or half-yearly or quarterly or monthly intervals, as opted for, subject to minimum installment amount for different modes of payments being as under:
Mode of Installment payment Minimum installment amount Monthly ₹ 5,000/- Quarterly ₹ 15,000/- Half-Yearly ₹ 25,000/- Yearly ₹ 50,000/- If the Net Claim Amount is less than the required amount to provide the minimum installment amount as per the option exercised by the Annuitant(s), the claim proceed shall be paid in lumpsum only.
For all the installment payment options commencing during the 12 months’ period from 1st May to 30th April, the interest rate applicable for arriving at the instalment amount shall be annual effective rate not lower than 10 year semiannual G-Sec rate minus 2%; where, the 10 year semi-annual G-Sec rate shall be as at last trading day of previous financial year.
Accordingly, for the 12 months’ period commencing from 1st May, 2024 to 30th April, 2025, the applicable interest rate for the calculation of installment amount shall be 5.07% p.a. effective.
-
Option to take the Plan for the Benefit of Dependant Person with Disability (Divyangjan):
If the Proposer has a dependant person with disability (Divyangjan), the Proposer can purchase Deferred Annuity for Single life (Option 1) on own life for the benefit of Divyangjan as Nominee, subject to minimum Purchase Price of ₹50,000/-.
In case of death of the Annuitant (Proposer), where the Purchase Price is less than ₹1,50,000, the Death Benefit shall compulsorily be utilized to purchase Immediate Annuity (as per option chosen by the Annuitant) on the life of the Divyangjan who would be the nominee.
In case of Annuitisation, the annuity payment to Divyangjan shall be paid irrespective of any limit on minimum annuity payment, minimum age at entry and Purchase Price criteria and annuity rates applicable shall be then prevailing Immediate Annuity rates.
For deciding the eligible disability of dependant person with disability (Divyangjan) as Nominee reference is to be made to meaning of “person with benchmark disability” as assigned to it in Section 2(r) of “The Rights of Persons with Disabilities Act, 2016” as amended from time to time or any other applicable Act in this regard.
10. Plan purchased as QROPS:
This plan can be purchased as QROPS (Qualifying Recognized Overseas Pension Scheme), through transfer of UK tax relieved assets subject to listing and terms and conditions prescribed by HMRC (His Majesty Revenue and Customs) such as:
Minimum Vesting Age shall be 55 years.
If the policy is cancelled during the Free Look Period, the proceeds from cancellation shall only be transferred back to the fund house from where the money was received.
Subject to specific Plan features including Minimum Annuity as specified in Para 4, all other terms and conditions of HMRC shall also apply as applicable from time to time.
11. Surrender Value:
The policy can be surrendered at any time during the policy term.
The surrender value payable shall be higher of Guaranteed Surrender Value or Special Surrender Value.
Guaranteed Surrender Value (GSV):
Guaranteed Surrender Value = (GSV Factor * Purchase Price) minus total annuity amount payable up to the date of surrender.
Where, applicable Guaranteed Surrender Value (GSV) Factors shall be:
| Policy Year | 1 | 2 | 3 | 4 | 5 and above |
|---|---|---|---|---|---|
| GSV Factor | 75% | 75% | 75% | 90% | 90% |
Special Surrender Value:
The Special Surrender Value is reviewable and shall be determined by the Corporation from time to time subject to prior approval of IRDAI.
Any loan amount outstanding along with interest and/or any other amount recoverable from Annuitant shall be recovered from the surrender value payment.
In case of QROPS, the surrender provisions shall be further subject to any specific provisions regarding procedures as per Rules and Regulations of the HMRC.
Note: The insurance policy being a long term contract should be taken from the long term perspective of continuing the policy. While there is provision for surrender under various annuity options mentioned above, it may be noted that there can be significant loss on surrender of a policy and hence, it is advisable to continue the policy.
12. Loan:
The Policy loan shall be allowed at any time after three months from the completion of policy (i.e. 3 months from the date of issuance of policy) or after expiry of the free-look period, whichever is later. Policy loan shall be available during as well as after deferment period subject to terms and conditions of the Corporation in this regard.
Under joint life annuity option, the loan can be availed by the Primary Annuitant and in the absence of Primary Annuitant the same can be availed by the Secondary Annuitant.
The maximum amount of loan that can be granted under the policy shall be such that the effective annual interest amount payable on loan does not exceed 50% of the annual annuity amount and shall be subject to maximum of 80% of Surrender Value.
The loan interest rate for all the loans commencing during the 12 months’ period from 1st May to 30th April, shall be compounding half-yearly rate not exceeding 10 year G-Sec Base/Par yield p.a. compounding half-yearly plus 300 basis points. The 10 year G-Sec Base/Par yield shall be as at last trading date of previous financial year. The calculated interest rate shall be applicable for full term of Loan.
For the loan sanctioned during the 12 months’ period commencing from 1st May, 2024 to 30th April, 2025, the applicable interest rate is 9.50% p.a. compounding half-yearly for entire term of the loan.
Any change in basis of determination of interest rate for policy loan shall be subject to prior approval of IRDAI.
13. Tax:
Statutory Taxes, if any, imposed on such insurance plans by the Government of India or any other constitutional Tax Authority of India shall be as per the Tax laws and the rate of tax as applicable from time to time.
The amount of any applicable taxes, as per the prevailing rates, shall be payable by the policyholder on Premium payable under the policy, which shall be collected separately in addition to the Premium payable by the policyholder. The amount of Tax paid shall not be considered for the calculation of benefits payable under the plan.
Regarding, Income tax benefits/implications on premium(s) paid and benefits payable under this plan, please consult your tax advisor for details.
14. Free Look Period:
If the Policyholder is not satisfied with the “Terms and Conditions” of the policy, the policy may be returned to the Corporation within 30 days from the date of receipt of the electronic or physical mode of the policy bond, whichever is earlier, stating the reasons for objections. On receipt of the same the Corporation shall cancel the policy and return the Premium paid after deducting the charges for stamp duty and annuity paid, if any. However, this condition of Free Look period shall only be applicable in case of new purchase of Deferred Annuity plan. Wherever the purchase is from the existing fund the same shall not be applicable.
The treatment of other policies shall be as below:
If this policy is purchased out of proceeds of a deferred pension plan of any other Life Insurer: The proceeds from cancellation will be transferred back to that Life Insurer.
If the policy has been purchased as QROPS as detailed in Para 10 above: The proceeds from cancellation shall only be transferred back to the fund house from where the money was received. In case of QROPS, above provisions shall be further subject to any specific provisions regarding procedures as per Rules and Regulations of the HMRC in this regard.
15. Exclusions:
Suicide:
The policy shall be void if the Annuitant/ Last Survivor in case of joint life annuity (whether sane or insane at the time) commits suicide at any time within 12 months from the date of commencement of risk. In such case, an amount which is higher of 80% of the Premium paid or Surrender Value shall be payable. The Corporation will not entertain any other claim.
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