LIC’s 4 popular pension plans
When it comes to retirement, the biggest fear is that when the salary message in the bank account stops coming every month, then how will the household expenses be managed. Investing money in the ups and downs of the stock market is not everyone’s cup of tea, especially when the age is approaching and the means of regular earning have stopped.
In such a situation, people look for a place where their money remains safe and a fixed amount comes into their hands every month. The pension plans of LIC (Life Insurance Corporation of India), the country’s largest and most trusted insurance company, fulfill this need. Let us understand in detail how these plans work, what is the mathematics of profit, should you invest your hard-earned money in it?
Understand the real fund of pension plan
In financial language it is called ‘Annuity Plan’. This is a financial product where you pay small premiums during your working age or give a lump sum to the company at the time of retirement. In return, the insurance company gives you a fixed amount on monthly, quarterly or yearly basis for your lifetime (or for a fixed period), which is called pension.
Four most popular plans of LIC
- LIC Jeevan Akshay VII: This is an ‘Immediate Annuity’ plan. That means, deposit the lump sum money today and get your pension started from the very next month. This is a great option for those who have retired immediately. There is an option of single life (only for you) as well as joint life (for both husband and wife).
- LIC New Jeevan Shanti: This is a ‘deferred annuity’ plan. Today the investment is made in lump sum, but the pension starts after a few years (after the deferment period). Its biggest advantage is that your future pension rate gets locked only on today’s investment. This is great for those who are currently employed.
- LIC Saral Pension: Like the name, this is a very simple and standardized product. There are no complications or hidden rules. Invest the money in lump sum, get assured pension instantly for life. This is a simple option with low risk.
- LIC New Pension Plus: This is a ‘Unit Linked’ Plan (ULIP). In this, a part of your money is invested in the stock market (Market-linked funds). If you are investing for a long term and can take some risk, then this plan can create a big retirement corpus for you.
How much pension will you get after depositing Rs 10 lakh?
The pension amount directly depends on your age, option chosen, your total investment. LIC does not just distribute interest like bank FD. It calculates your principal amount, interest rate, and your expected life.
If we understand in numbers, suppose a 60 year old person invests Rs 10 lakh in lump sum, then he will get approximately ₹ 5,000 to ₹ 7,000 per month. If you invest Rs 25 lakh, this amount can be around ₹ 13,000 to ₹ 17,000 per month, if you deposit 1 crore, it can be around ₹ 55,000 to ₹ 70,000 per month.
If a 40 year old person invests Rs 10 lakh, he will get only Rs 4-5 thousand per month, whereas a 70 year old person can get up to Rs 8-9 thousand on the same Rs 10 lakh. This is the reason why many elderly people invest their property or retirement fund money directly in it.
