Categories: Insurance Planning

Jeevan Akshay VI – LIC’s Single Premium Pension Plan Reintroduced

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
Angioplasty
Benign Brain Tumor
Blindness
Deafness
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.

BasuNivesh

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View Comments

Syed khader says:

January 19, 2020 at 12:12 PM

Please explain details of LIC of India plan. Table 803 issued in 2010. Investment plan.
- Basavaraj Tonagatti says:
  
  January 20, 2020 at 10:09 PM
  
  Dear Syed,
  What details you want?
Prakash naik says:

July 30, 2019 at 10:38 PM

if i want to remove my cash from jeevan akshay akshay 6 policy how can i remove......
- Basavaraj Tonagatti says:
  
  July 31, 2019 at 8:46 AM
  
  Dear Prakash,
  Please be in touch with the home branch.
Mayank Gaur says:

April 5, 2018 at 7:05 AM

Hello Basu,

Hope you are doing well.

This is regarding Immediate annuity with return of purchase price plan(Plan C). As for an NRI, if they opted for this plan, TDS will be deducted directly from annuity/Pension amount rest we will get in our bank account.

Can we file tax return to get back the amount deducted as TDS ? Please mention the detail.

Looking for positve response from yourside.

Thank You
- Basavaraj Tonagatti says:
  
  April 5, 2018 at 12:08 PM
  
  Mayank-Yes, you can file ITR and get it back if your tax payment is less than what they deducted.
Rajeev says:

November 28, 2017 at 1:39 PM

Lock in period is death for Jeevan Akshay VI ? Basavaraj please comment on this/
- Basavaraj Tonagatti says:
  
  November 28, 2017 at 1:42 PM
  
  Rajeev-Refer my above post. There is no such lock-in. But you are not allowed to withdraw or close this plan easily. Refer the conditions set for closure.
  - Rajeev says:
    
    November 28, 2017 at 8:26 PM
    
    Same thing , If we are unable to withdraw or close this plan easily.Why People are purchasing it.
    - Basavaraj Tonagatti says:
      
      November 29, 2017 at 10:56 AM
      
      Rajeev-Because they need a secured monthly return.
      - Jalakrut says:
        
        December 24, 2017 at 5:55 PM
        
        Sir,
        Is this plan still available? LIC website lists this plan under "Withdrawn products" - https://licindia.in/Products/Pension-Plans/jeevan_akshay. Also, is this the best immediate annuity plan available in India?
      - Basavaraj Tonagatti says:
        
        December 24, 2017 at 6:57 PM
        
        Jalakrut-It is relaunched and available now also. Please check HERE.
MANI says:

November 27, 2017 at 10:42 AM

send details for single time payment and immediate pension scheme
- Basavaraj Tonagatti says:
  
  November 27, 2017 at 10:48 AM
  
  Mani-The details are available in above post.
ram says:

November 23, 2017 at 2:41 AM

Hello, I am interested in taking this policy. I'm 37 years old. I want to invest 54 lakhs and take an immediate annuity with option of return on purchase price upon death. The online payment seems a little complicated as they are only accepting net transfer and there is hardly any help. Can you please explain how much is the monthly annuity payout if I take this policy off-line compared to online?
- Basavaraj Tonagatti says:
  
  November 23, 2017 at 7:48 PM
  
  Ram-May I know what prompted you to choose this plan at this age?
  - ram says:
    
    November 28, 2017 at 1:41 PM
    
    Bank FD interest rates are falling day by day and future repo rates are sure to fall. So I am rolling the dice and taking a change. I work in a private sector so I think I better secure my future with at least 20% of my income from pension source
    - Basavaraj Tonagatti says:
      
      November 28, 2017 at 1:44 PM
      
      Ram-How you assume that FUTURE REPO RATES fall? Do remember that return from this plan is taxable income for you like salary income.
Kumar Divyaprakash says:

May 16, 2017 at 8:52 AM

My wife and I are 26 and 29 yrs old, currently no child and both are working in software industry. We have corporate insurance of 3L sum insured each. Should we also take family health insurance which include us and my child in future? if yes, please suggest plan.
Thanks
- Basavaraj Tonagatti says:
  
  May 16, 2017 at 10:08 AM
  
  Kumar-Yes, having own health insurance is a must.
  - Kumar Divyaprakash says:
    
    May 16, 2017 at 10:45 AM
    
    Thanks,
    Which one will be better individual or family plan?
    Could you please suggest few plan?
    - Basavaraj Tonagatti says:
      
      May 16, 2017 at 11:26 AM
      
      Kumar-You have to go for family floater plans. Refer my earlier post, which may help you in shortlisting the product "IRDA Incurred Claim Ratio 2015-16 | Best Health Insurance Company in 2017".
RiteshM says:

March 24, 2017 at 11:03 AM

People are talking about LIC Jeevan Akshay and Fixed Deposits for retirement planning. However, very few paying heed to SWP of Mutual Funds.

Provided one is ready to stay in stock market for long term via Mutual Fund, one can easily invest a major portion of investment in 2-3 mutual fund schemes. One can choose Equity balanced fund and start withdrawing at 7% - 8% per year. Equity funds have a lock in period of 1 year for getting tax exemption. Hence, after 1 year a person can get steady monthly income that too tax free (since it is redemption of units) and original corpus would also increase significantly (assuming mutual fund would generate higher return than above-mentioned 7%-8% )

This way a person can take care of both tax liability and capital appreciation.
pratik sengupta says:

March 14, 2017 at 9:55 PM

Sir,I have a query to you
1.Is SCSS scheme for once in life for maximum period of 8 years(15 lakh) with extension or I can reinvest as a same person after 8 years over?
- Basavaraj Tonagatti says:
  
  March 15, 2017 at 12:37 PM
  
  Pratik-Refer my post regarding SCSS at "Post Office Senior Citizen Scheme (SCSS)-Benefits and Interest Rate".
John Ipe says:

March 14, 2017 at 2:02 PM

I am retired,68. For my essential monthly expense, I have FDs in two banks. Bit extra money in hand, I approached LIC. Agent gave me Jeevan akshay VI scheme brochure, and I chose the most risky(risk calculated) one, which gives me a return of 10.5% or above, BUT..that is, as long as I am alive. Once kick the bucket..no corpus..no interest nothing. Where I fell in love with the scheme is when I was told, no tax on interest. But that was a professional lie.. Still, don't you think, its wise to take juice out, when the fund tangible?..............??????
- Basavaraj Tonagatti says:
  
  March 15, 2017 at 1:32 PM
  
  John-You are still in the illusion that this plan offers you 10.5% returns (irrespective of whatever the option you select). Second thing is, you can opt for ONLINE, then why you took it OFFLINE? The monthly pension you receive from this scheme is taxable income to you. Also, surrender is allowed only with few options, not for all.