LIC's Saral Pension
1. Introduction:
This is a Standard Immediate Annuity plan as per the guidelines of Insurance Regulatory and Development Authority of India (IRDAI), which offers same terms and conditions across all the life insurers.
The Policyholder has an option to choose type of annuity from two available options on payment of a lump sum amount.
The annuity rates are guaranteed at the inception of the policy and annuities are payable throughout the life time of Annuitant(s).
2. Annuity Options:
The available annuity options under this plan are as under:
Option I: Life Annuity with Return of 100% of Purchase Price.
Option II: Joint Life Last Survivor Annuity with Return of 100% of Purchase Price on death of the last survivor.
Annuity option once chosen cannot be altered.
3. Benefits:
Benefits payable under above options are:
| Options | Benefits |
|---|---|
| Option I |
|
| Option II |
|
4. Eligibility Criteria:
| Minimum Age at Entry | : 40 years (completed) |
|---|---|
| Maximum Age at Entry | : 80 years (completed) |
| Minimum Purchase Price | : Minimum Purchase price shall depend on the Minimum Annuity as specified in (iii) above, Option chosen and age of the Annuitant. |
| Maximum Purchase Price | : No Limit |
| Minimum Annuity | ||||
|---|---|---|---|---|
| Annuity Mode | Monthly | Quarterly | Half-yearly | Annual |
| Minimum Annuity | ₹1,000 per month | ₹3,000 per quarte | ₹ 6,000 per half year | ₹12,000 per annum |
Note:
The Joint Life Annuity, i.e. Option II, can be taken with spouse only.
For Joint life annuity options, age of spouse shall also be subject to Minimum Entry age as specified in (i) and Maximum Entry Age as specified in (ii) above.
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 commencement of policy depending on whether the mode of annuity payment is Yearly, Half yearly, Quarterly and Monthly respectively.
6. Incentives:
The following incentives are available under this plan:
-
Incentive for higher purchase price by way of increase in the annuity rate is as under:
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 on mode of annuity payments. The incentive increases as the purchase price moves from the lower slab to higher slab of the purchase price. The incentive also increases with the reduction in frequency of annuity payments.
-
Incentive for Online Sale by way of increase in the annuity rate is as under:
A rebate of 2% by way of increase in annuity shall be available for policies purchased Online.
7. Illustration:
| Annuity Option | Annuity Option Amount (₹) |
|---|---|
| Option I: Life Annuity with Return of 100% of Purchase Price | 64,350 |
| Option II: Joint Life Last Survivor Annuity with Return of 100% of Purchase Price on death of the last survivor. | 63,650 |
For death benefit under above options, please refer to Para 3 above.
8. Surrender Value:
The policy can be surrendered at any time after six months from the date of commencement, if the annuitant or spouse or any of the children of the annuitant is diagnosed as suffering from any of the specified critical illnesses as Annexure, based on the documents produced to the satisfaction of the medical examiner of the Corporation.
On approval of the surrender, 95% of the Purchase Price shall be paid to the annuitant, subject to deduction of any outstanding loan amount and the loan interest, if any.
On payment of the surrender value, all other benefits shall cease and the policy shall terminate.
Any change in the surrender value calculation method shall be applicable only after the prior approval of IRDAI.
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, it may be noted that there can be significant loss on surrender of a policy and hence, it is advisable to continue the policy.
9. Loan:
The Policy loan shall be allowed at any time after six months from the date of commencement of the policy.
Under joint life annuity option, the loan can be availed by the Annuitant and on death of Annuitant the same can be availed by the spouse.
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 payable under the policy.
Loan interest will be recovered from annuity amount payable under the policy. The Loan interest will accrue as per the frequency of annuity payment under the policy and it will be due on the due date of annuity. The loan outstanding shall be recovered from the claim proceeds under the policy. However, the annuitant has the flexibility to repay the loan principal at any time during the currency of the annuity payments.
The loan interest rate for all the loans commencing during the 12 months’ period from 1st May to 30th April, shall be annual effective rate equal to 10 year G-Sec rate p.a. plus 200 basis points. The 10 year G-Sec rate shall be as at 1st April of relevant 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, 2022 to 30th April, 2023, the applicable interest rate is 8.98% p.a. effective 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
10. Tax:
Statutory Taxes, if any, imposed on such insurance plans by the Govt. 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 (such as GST), payable 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.
11. 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 Document, 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. The treatment of the policy shall be as below:
For standalone immediate annuity policies: The proceeds from cancellation shall be returned to the policyholder.
If this policy is purchased out of proceeds of a deferred pension plan of any other insurance company: The proceeds from cancellation will be transferred back to the insurance company.
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