Jeevan Akshay VI is the LIC’s Single Premium Pension Plan. This plan reintroduced from 1st December, 2016 with some changes. Let us see the additional features of it.
Many agents spread rumors that this plan is going to be closed soon. But in reality, LIC revamped the annuity payout, few features of this plan and reintroduced it. As expected, annuity was dropped under this plan to match with falling interest rate.
Before proceeding further, let us understand few new words related to pension or annuity plans.
What is the meaning of annuity?
In simple term, you can say it as a Pension, where you will get regular income up to the specified period or conditions. There are two types of annuity.
1) Immediate Annuity-In this case, you invest a lump sum in a product and your pension or annuity starts immediately. Let us say you have around Rs.1 Cr and if you buy immediate annuity plans, then the pension will start immediately from next month.
2) Deferred Annuity-In this case your annuity starts after a certain period. Let us say your current age is 30 years and you are planning to retire at the age of 60 years. If you buy a deferred annuity plan, then you will invest up to your retirement age i.e. up to 60 years of age. After 60 years of retirement, your pension will start.
I tried to explain the same with below illustration as below.
Features of Jeevan Akshay VI – LIC’s Single Premium Pension Plan
LIC’s Jeevan Akshay VI is an immediate annuity plan. This plan is available both in offline and online mode. Click HERE to buy online.
# Minimum Age 30 Yrs.
# Maximum Age 85 Yrs.
# For Offline the minimum purchase price Rs.1,00,000. For online the minimum purchase price is Rs.1,50,000.
# No maximum limit.
# No medical examination required for buying this plan.
# Premium must be payable as a lump sum.
# Pension may be paid either at monthly, quarterly, half-yearly or yearly intervals. It is purely your choice.
# If your purchase price is Rs. 2.50 lakh or more, you will receive the higher amount of annuity due to available incentives.But I have not found what incentives LIC Provides.
# For policies sold online, a rebate of 1% by way of increase in the annuity rate shall also be available.
# No loan facility available under this plan.
# If you are not satisfied with the Terms and Conditions of the policy, you may return the policy within 15 days from the date of receipt of the Policy Bond. On receipt of the policy, LIC will cancel the same and the amount of premium deposited by you will be refunded to you after deducting the charges for stamp duty.
# Nomination is allowed under this plan.
# Assignment of this policy is not allowed.
# Backdating not allowed.
Annuity or Pension Options available in LIC’s Jeevan Akshay VI
- Annuity payable for life at a uniform rate-Once the death occurs the pension holder, then pension ends there itself and the nominee will not receive anything.
- Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive-Once the death occurs the pension holder, then pension ends there itself and the nominee will not receive anything.
- Annuity for life with return of purchase price on death of the annuitant-Once the death occurs the pension holder, then pension ends there itself and the nominee will receive the invested amount.
- Annuity payable for life increasing at a simple rate of 3% p.a. Here the pension will be increased at 3% per year throughout the policy period. Once the death occurs the pension holder, then pension ends there itself and the nominee will not receive anything.
- Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
- Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
- Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her lifetime on death of the annuitant. The purchase price will be returned on the death of last survivor.
How much pension you receive from LIC’s Jeevan Akshay Plan?
Effective from 1st December, 2016 LIC reduced the annuity rate of this plan. In below image, I showed you the earlier annuity rates.
In below image, I will show you the Jeevan Akshay VI annuity rates applicable effective from 1st December, 2016.
Notice the difference. LIC reduced the annuity rates to match with the current falling interest trend.
For your age and the options you want to choose, you can calculate the premium HERE.
Jeevan Akshay VI – LIC’s Single Premium Pension Plan changes from 1st December, 2016
What are the changes that were made to earlier plan? Earlier you are not allowed to surrender in this plan. Now it is allowed. But there are few conditions to it.
# Annuity rates were dropped drastically to match the falling interest rates. I already showed the earlier rates to current rates in above images.
# Surrender is allowed after the completion of a policy period.
# Surrender is allowed for the annuity options where you have the option of “Annuity with return of purchase price”. Therefore, from above annuity options, only the options 3rd (Annuity for life with return of purchase price on death of the annuitant) and option 7th (Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her lifetime on death of the annuitant. The purchase price will be returned on the death of last survivor.)
# If the annuitant is shifting to another country permanently as evidenced in their visa or citizenship documents. The surrender value payable shall depend on the age (last birthday) of the policyholder at the time of surrender of the policy.
# If the annuitant is diagnosed as suffering from any of the following critical illnesses:
- Cancer of specified severity
- Myocardial infarction
- Open Chest CABG
- Open Heart Replacement or Repair of Heart Valves
- Kidney Failure requiring regular dialysis
- Stroke resulting in Permanent Symptoms
- Major Organ/Bone Marrow Transplant
- Permanent Paralysis of Limbs
- Motor Neurone Disease with Permanent Symptoms
- Multiple Sclerosis with Persisting Symptoms
- Benign Brain Tumor
- End-stage Lung failure
- End stage liver failure
- Loss of speech
- Loss of Limbs
- Major Head Trauma
- Primary(Idiopathic)Pulmonary Hypertension
- Third Degree Burns
Long back I wrote a post on this plan (LIC’s first online plan “Jeevan Akshay-VI”-Review). However, I thought to write it once again after the new changes done to this plan.
Whether LIC’s Jeevan Akshay VI is the best pension plan in India?
This is the immediate pension plan. Therefore, once you accumulate the retirement corpus then you can think of this plan. This plan offers FIXED pension based on the option you opted.
If you accumulated enough retirement corpus, then you can think of buying this plan as it offers FIXED returns. Whether the interest rate falls or goes up, you no need to bother.
The biggest concern is, this product will not take care of inflation. LIC provided the 3% inflation-adjusted pension payment in one of the above annuity option. But in my view, 3% is not at all enough when the real inflation rate is more than 7%.
The second biggest concern is taxation. The pension you receive from this plan is added to your income and taxed as per your tax slab. Therefore, if your agent lure you that this plan offers more than 7% returns, the post-tax return reduce further.
Many spread rumors that this is the BEST retirement product. But in my view, it fails to give you the post-tax real returns. However, I must admit that if someone is looking for a constant stream of income (without bothering about taxation and inflation), then you must go ahead.