The Life Insurance Corporation of India (LIC) has launched an immediate annuity plan — Saral Pension. It is a non-linked non-participating plan to help you sail through the choppy waters of old age. Following the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI), the insurer released a single premium, individual immediate standard annuity plan, effective from July 1. It implies that all insurers will provide the same terms and conditions for this plan.
Annuity Options: This standard annuity plan provides the customers an option to choose the type of annuity they want on payment of a lump sum amount. The two options are: 1) Life annuity with 100 per cent return of purchase price. Under this plan, the annuity payments shall be made in arrears for as long as the annuitant is alive, as per the chosen mode of annuity payment. On death of the annuitant, the annuity payment shall cease immediately and 100% of Purchase Price shall be payable to nominee(s)/legal heirs.
2) The joint life last survivor annuity with 100 per cent return of purchase price on death of the last survivor. Under joint life last survivor annuity plan, the annuity amount shall be paid in arrears for as long as the Annuitant and/or spouse are alive, as per the chosen mode of annuity payment. On death of the last survivor, the annuity payments will cease immediately and 100% of purchase price shall be payable to the nominee(s)/legal heirs, the insurer added. “Annuity option once chosen cannot be altered," it further mentioned.
Annuity Rates: The annuity rates are guaranteed at the beginning of the policy and annuities are payable throughout the lifetime of the annuitant(s). The annuity shall be payable in arrears i.e. the annuity payment shall be after one year, six months, three months and one month from the date of starting of policy depending on whether the mode of annuity payment is yearly, half yearly, quarterly and monthly respectively.
Minimum Pension: The minimum annuity is fixed at ₹12,000 per annum. The minimum purchase price will depend on the annuity mode, chosen option and age of the annuitant, as per the LIC. There will be no cap on the maximum purchase price.
Surrender Policy: 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.
Loan: Eligible customers can apply for loan once the policy completes six months. 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 per cent of the annual annuity amount payable under the policy," the LIC said. “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," it added.