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LIC Saral Pension Plan monthly income: Having a secure pension without any market risk is the biggest need to handle regular monthly expenses after retirement and maintain financial independence. Annuity plans run by Life Insurance Corporation of India (LIC)—commonly known as ‘LIC Monthly Income Scheme’ or pension plan—are considered to be the most reliable means for senior citizens and retired workers. The biggest feature of this system is that in this you have to deposit a lump sum amount (Single Premium) only once and from the very next month, a fixed monthly pension for life starts coming directly into your bank account. Market fluctuations do not have any negative impact on these schemes, which are protected by the sovereign guarantee of the Central Government (under Section 37 of the LIC Act).
There are mainly two types of annuity plans available with LIC to get monthly pension:
- Immediate Annuity: As soon as the lump sum amount is deposited in this, pension starts from the next month. Under this, ‘LIC Saral Pension’ (Plan 862) and ‘LIC Jeevan Akshay-VII’ (Plan 857) are the most popular.
- Deferred Annuity: If you are still young and want to start pension after 1 to 12 years, then options like ‘LIC New Jeevan Shanti’ (Plan 858) and ‘New Jeevan Dhara-II’ are available. By adding guaranteed additions during the deferred period, the amount of monthly pension received in future increases significantly.
To receive pension, mainly two major options are given to the investor:
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Single Life Annuity (Return of Purchase Price – ROP): In this option, the policyholder continues to receive a fixed monthly pension for life. After the demise of the policyholder, the entire principal amount deposited (100% Purchase Price) is returned to the nominee.
- Joint Life Annuity: In this, both husband and wife get pension cover. After the death of the primary account holder, the spouse continues to receive the same monthly pension throughout his life. After the demise of both, the entire original investment amount is returned to the legal heir or nominee.
How much monthly pension will you get on depositing ₹10 lakh?
Pension rates depend on the age of the investor, the option chosen and the amount of investment. The mathematics of estimated monthly pension for a lump sum investment of ₹ 10 lakh at the age of 60 is as follows:
| Plan/Option | Estimated Annual Annuity Rate | pension received every month | Corpus return on death |
|---|---|---|---|
| Saral Pension (Plan 862) – ROP | 6.50% – 6.80% | ₹5,400 to ₹5,700 | 100% returned to the nominee |
| Jeevan Akshay-VII (Option F) – ROP | 6.60% – 6.90% | ₹5,500 to ₹5,800 | 100% returned to the nominee |
| Jeevan Akshay-VII (Without Principal Refund) | 8.00% – 8.50% | ₹6,600 to ₹7,000 | No refund (life pension) |
| New Jeevan Shanti (5 Years Deferred) | 9.00% – 9.50% | ₹7,500 to ₹8,000 | 100%+ Guaranteed Edition Back |
If an investor deposits ₹20 lakh, he gets a fixed pension of around ₹11,000 to ₹12,000 monthly and around ₹28,000 to ₹30,000 per month for an investment of ₹50 lakh, for life.
Eligibility Criteria, Age Limit and Investment Terms
The rules for entry into LIC Monthly Income Plans are extremely flexible and clear:
- Entry Age: The minimum age for Saral Pension Scheme is 40 years and maximum 80 years. Whereas, persons between 35 years to 85 years can participate in Jeevan Akshay-VII. People between 30 years to 79 years can invest in Deferred Annuity (New Jeevan Shanti).
- Minimum investment amount: The minimum purchase price should be such that a pension of at least ₹1,000 per month (or ₹12,000 annually) can be generated. Generally it starts from a minimum of ₹1 lakh.
- Maximum investment limit: There is no upper limit for investment in this; You can deposit any amount as large as you wish.
- Medical Examination: No medical test is required to avail these schemes.
Important rules related to loan, surrender and tax
Liquidity has also been taken care of in LIC’s pension plans. After 6 months of policy inception, the facility to take loan against the policy is available if needed. If the insured, his/her spouse or child is diagnosed with a critical illness, the policy can be surrendered with a refund of up to 95% of the purchase price. In terms of tax, single premium investments are exempt under Section 80CCC of the Income Tax Act. However, the pension received every month is fully taxable and is added to the investor’s total income and taxed as per his applicable tax slab.
There are two easy options to invest in LIC Monthly Income Scheme:
- online media: Visit the official website of LIC (licindia.in). Go to ‘Buy Policy Online’ or ‘Pension Plans’ section on the homepage. Choose your preferred scheme (like Saral Pension or Jeevan Akshay). View premium quotations online by entering your date of birth, investment amount and pension option. After this upload the scanned copy of PAN Card, Aadhar Card and Bank Passbook and complete the payment through Net Banking or UPI.
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Offline medium: Visit your nearest LIC branch office or contact an authorized LIC agent. Get the application form of the respective annuity plan, fill it clearly with personal details, name of the nominee and bank account details (to which the pension will be transferred every month). Make payment through check or demand draft by attaching identity proof, address proof, PAN card and canceled cheque. After document verification, the policy bond will be issued and your monthly pension will start from the next month.