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LIC Jeevan Akshay Plan

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LIC Jeevan Akshay Plan is a Pension Plan with immediate annuity taken by senior citizens of the country and is offered by one of the most prestigious insurance companies of India – Life Insurance Corporation (LIC). It is a highly recommended pension plus investment plan where a lump-sum amount is paid, and the policy remains valid for a regular interval of time after which payment is made to the policyholder as pension as per the convenience of his mode and type for which many options are available.

* LIC Jeevan Akshay VI Plan has been withdrawn by LIC.

What is LIC Jeevan Akshay Plan?

LIC Jeevan Akshay Plan offers lucrative options to the policyholder to receive pay-outs during the lifetime of the annuitant who has paid the premium as a lump-sum amount. The annuity can be paid in monthly/quarterly/bi-annually/annually and has 6 options to choose from. The chosen option of pay-out cannot be changed as the pension start immediately after the period specified.

Features of the LIC Jeevan Akshay Plan

Type of Plan

An Annuity Pension Plan

Premium

Has to be paid in lump-sum as a one-time payment

Annuity Payment

Monthly. Quarterly, bi-annually or annually

Medical Examination

Not Applicable

Special Incentives

Only if the plan is bought online.

If the cost of purchases is more than Rs. 2.5 Lakh, then the policyholder will be eligible for incentives which will give the benefit of a higher amount of annuity.

Cost of Policy

A minimum one-time payment is Rs. 1 Lakh

If a policy is purchased online, then a minimum amount of one-time payment is Rs. 1.5 Lakh

Maximum Limit – No Upper Limit

Entry Age

30 years

Maximum Age

85 years

Free Look Period

15 days

Grace Period

Not Applicable

Loan Facility

Not Applicable

Surrender Value

Not Applicable

Additional Riders

Not Applicable

Paid-up Value

Not Applicable

Options regarding Annuity

There are seven options available under this category:

Option 1 – Annuity for Life

The pension amount is paid to the policyholder till he is alive.

Option 2 – Annuity guaranteed for a certain period

Under this option, it does not matter if the policyholder is alive or not, but the pension is payable for a specific period.

Option 3 – Annuity with a return of purchase price on the individual’s death

Pension is paid to the policyholder till the time he is alive. After his unfortunate death, the remaining amount is paid out to the beneficiary or nominee of the policyholder.

Option 4 – Increasing Annuity

Under this option, the pension amount is paid out to the insured at the rate of 3% per annum till the time he is alive.

Option 5 - Joint Life Last Survivor Annuity

Under this option, in case of the unfortunate death of the annuitant, 50% of the annuity that is payable is paid out to the spouse till the time he/she is alive.

Option 6 - Joint Life Last Survivor Annuity

In this case, 1000% of an annuity can be payable to the spouse in the same conditions as in option 5.

Option 7 - Annuity for life

This comes with a provision of pay-out of 100% annuity, which is payable to the policy holder's spouse during their entire life in case of the policy holder's death. In this case, the purchase price will also be returned and paid out when the last survivor dies.

Options regarding Annuity

Let us study the above 7 Annuity options with a given example:

Single-Premium Amount

Mode of Pension

The age of the policyholder

Rs 5 Lakh

Annual

60 years

Option 1 – Annuity for Life

Under this plan, as per the above example, Rs. 48, 750 will be payable to the insured as annual pension which remains constant and won't change once the policyholder fixes this option.

Option 2 – Annuity guaranteed for a certain period

Under this option, the policyholder will receive the annuity whether he is alive or not, and he has 4 options to choose from. Let us study the plans available under this category:

  • For 5 years – In this case, Rs. 48,300 will be paid as pension for 5 years whether the policyholder is alive or not. In case the annuitant survives, the same amount of pension will be paid out to him till the time he is alive.
  • For 10 years - In this case, Rs. 47,300 will be paid as pension for 5 years whether the policyholder is alive or not. In case the annuitant survives, the same amount of pension will be paid out to him till the time he is alive.
  • For 15 years - In this case, Rs. 45,950 will be paid as pension for 5 years whether the policyholder is alive or not. In case the annuitant survives, the same amount of pension will be paid out to him till the time he is alive.
  • For 20 years - In this case, Rs. 44,400 will be paid as pension for 5 years whether the policyholder is alive or not. In case the annuitant survives, the same amount of pension will be paid out to him till the time he is alive.

Option 3 – Annuity with a return of purchase price on the individual’s death

This option is more like a fixed deposit, in which the depositor gets the money back that was invested by him along with the benefit of pension plans. Under this option of annuity, the policyholder will get Rs. 37550 as an annual pension till the time he is alive. After the unfortunate death of the annuitant, an amount of Rs. 5 lakhs will be paid to the beneficiary of the policyholder and the policy is terminated.

Option 4 – Increasing Annuity

Under this option, the pension amount is paid to the insured at the rate of 3% per annum till the time he is alive. So, the amount of Pension paid out each year will be Rs. 39, 650 till the time the annuitant is alive. Every year, Rs. 1190 will be added, which is calculated at 3% of Rs. 39650.

Option 5 - Joint Life Last Survivor Annuity

Under this option, in case of the unfortunate death of the annuitant, 50% of the annuity that is payable is paid out to the spouse till the time he/she is alive. In this case, the policyholder gets Rs. 45200 as an annual pension till the time he is alive. After his death, his spouse will be eligible for a 50% of this pension amount, i.e. Rs. 22600.

Option 7 - Annuity for life

This comes with a provision of pay-out of 100% annuity, which is payable to the policyholder's spouse during their entire life in case of the policyholder's death. In this case, the purchase price will also be returned and paid when the last survivor dies. So, the policyholder will get Rs. 37050 as an annual pension till he or she is alive. After that, the nominee will also get Rs. 37050 as an annual pension. It is only after the death of the spouse, that a lump-sum amount of Rs. 5 lakhs is also paid out.

Benefits of LIC Jeevan Akshay Plan

Here is a rundown to the core benefits offered by LIC Jeevan Akshay Plan:

Maturity Benefits

Unlike other LIC Plans, there is no maturity benefit offered to the policyholder. The pay-out depends on a one-time payment, soon after which the pension for the policyholder starts. Some options are available to extend the benefits to the spouse even after the death of the insured at specific time gaps.

Death Benefits

Again, unlike other LIC Plans, there is no maturity benefit offered to the policyholder. The pay-out is made as a one-time payment, soon after which the pension for the policyholder starts. Some options are available to extend the benefits to the spouse even after the death of the insured at specific time gaps.

Profit Participation

There is a good chance to earn some profit which can benefit the insured during the policy term. This is made good only if the policy is in force and is active. The policy is applicable for a simple reversionary bonus which is further calculated based on the amount of premium paid.

Pension Rate

The rate of the amount of Pension depends upon the annuity plan chosen from the 7 available annuity options, by the policyholder as discussed above. But if the option is chosen, the insured cannot go back on the plan as the benefits of the pension immediately start after making a one-time payment towards the plan.

Annuity Benefit

The minimum amount of pension that can be paid out is Rs. 6000 and the maximum can go up to Rs. 60000 (approximately) as the amount varies depending on the payable taxes. The mode of the annuity is chosen from the 7 given benefits and pensions immediately starts as soon as the premium is paid up by the insured.

Tax Benefit

Just like the other LIC policies, LIC Jeevan Akshay is also applicable for tax deductions. The amount of premium paid towards the policy is exempted from tax under section 80C of the Indian Income Tax Act, 1961. The amount of pension received is also exempted from tax as per the terms and conditions. *Tax benefit is subject to changes in tax laws.

Inclusions of LIC Jeevan Akshay Plan

Eligibility conditions are as follows

Minimum Age Entry

30 years

Maximum Age Entry

65 years

Minimum Purchase Cost

Rs. 1 Lakh and for online mode it is Rs. 1.5 Lakh

Maximum Purchase Cost

Unlimited

Mode of Payment

Monthly, Quarterly, Half-yearly and Yearly


When does the Annuitant get the Pension?

Based on the plan of annuity chosen by the policyholder and the mode of payment selected by the annuitant, the policy is paid out as follows:

Monthly

Starts 1 month after the annuity is purchased

Quarterly

Starts 1 month after the annuity is purchased

Half- Yearly

Starts 1 month after the annuity is purchased

Yearly

Starts 1 month after the annuity is purchased

 

Details of Premium to be paid (standard rate is taken as Rs. 1 Lakh)

Age in years

Annuity Options

1

2

3

4

5

6

7

30

Rs. 7190

Rs. 7160

Rs. 6890

Rs. 5250

Rs. 7080

Rs. 6970

Rs. 6860

40

Rs. 7510

Rs. 7440

Rs. 6930

Rs. 5610

Rs. 7310

Rs. 7120

Rs. 6890

50

Rs. 8140

Rs. 7950

Rs. 7000

Rs. 6280

Rs. 7760

Rs. 7420

Rs. 6930

60

Rs. 9350

Rs. 8790

Rs. 7110

Rs. 7530

Rs. 8640

Rs. 8030

Rs. 7010

70

Rs. 12080

Rs. 9830

Rs. 7260

Rs. 10220

Rs. 10560

Rs. 9370

Rs. 7130

80

Rs. 17880

Rs. 10440

Rs. 7480

Rs.  15890

Rs. 14600

Rs. 12340

Rs. 7290


Incentives for Higher Price of Purchase

If a policy is bought which has a purchase price of above Rs. 2.5 lakhs, then it is applicable for an incentive.

Also, if the policy is bought online, a rebate of 1% applies to the rate of the annuity.

Service Tax

The applicable service tax rate, which is applicable as per the service tax laws at a regular period of times, is paid along with the purchase price according to the prevailing rates. *Tax benefit is subject to changes in tax laws.

Surrender Value

The policyholder can surrender the policy only after it completes one year in case of two options – Annuity option and Annuity option with the return of purchase price.

The circumstances are as follows:

• Cancer of specified severity

• Cancer of specified severity

• Cancer of specified severity

• Myocardial infarction

• Myocardial infarction

• Myocardial infarction

• Open Chest CABG

• Open Chest CABG

• Open Chest CABG

• Open Heart Replacement or Repair of Heart Valves

• Open Heart Replacement or Repair of Heart Valves

• Open Heart Replacement or Repair of Heart Valves

• Kidney Failure requiring regular dialysis

• Kidney Failure requiring regular dialysis

• Kidney Failure requiring regular dialysis

• Stroke resulting in Permanent Symptoms

• Stroke resulting in Permanent Symptoms

• Stroke resulting in Permanent Symptoms

• Bone Marrow/Major Organ Transplant

• Bone Marrow/Major Organ Transplant

• Bone Marrow/Major Organ Transplant

Documents Required to buy LIC Jeevan Akshay Policy

Below is the list of documents that one needs to buy LIC Jeevan Akshay Policy:

  • Duly filled plan application form with the latest photograph of the applicant attached
  • Residence proof
  • Age Proof
  • Income Proof
  • Identity Proof

FAQs

  • Q1. What are the advantages of buying a LIC Pension Plan?

    A1. There are many apparent and non-apparent advantages of buying a pension plan from LIC like:

    • A regular income generated when the senior citizen is out of employment
    • Hassle-free income, without knocking at doors and making much of an effort for it. The income is generated smoothly to the policyholder without any hassles
    • Great opportunity for people in Private Jobs as in public organisations, the government takes care of factors like gratuity, pension, and retirement. But privately employed people have to plan for their retirement.
    • Besides the amount of insurance, the return of these pension plans is much than the invested amount
    • A guaranteed payout for the rest of the life of the annuitant is one of the many popular facilities offered by LIC Pension Plans.
  • Q2. What are the basic factors that one must consider for calculating his retirement corpus before purchasing LIC Jeevan Akshay or any Pension Plan?

    A2. Some of the important factors that need to be considering for calculating the retirement corpus are as follows:

    • Monthly expenditure of self, including necessitates and basic comforts
    • Rate of Inflation as for retirement one needs to think many years ahead
    • Age of retirement
    • Expected number of years depending on the medical condition of the person that one expects to survive after retirement. Although there can be no certain number but based on the current condition, it can just be estimated.
  • Q3. Should I buy a LIC Pension Plan if I already have an operational PF account?

    A3. Yes, Provident Fund is a lump-sum payment and can only be used for a few months or years, but it cannot suffice the entire period of retirement or no work period of the policyholder. A Pension Plan is a substitute for monthly or annual payment that the annuitant can take advantage of in the period of his retirement.

  • Q4. What is an annuity?

    A4. An annuity is a regular income also popularly known as pension or allowance that is paid out by LIC to the policyholder after he retires.

  • Q5. Is it possible to surrender the LIC Jeevan Akshay Policy?

    A5. Under most of the options available, there is no surrender value attached with LIC Pension plans which means that no lump-sum payment will be paid if the plan is surrendered. But with recent updates, many changes have been made within the policy and there is a surrender value attached with a few conditions only under the option "Return of Purchase Price". The conditions are:

    • If the annuitant has shifted permanently to another country
    • If the policyholder has been diagnosed with a critical illness
  • Q6. Is Annuity Income from LIC Jeevan Akshay Taxable?

    A6. The annuity received by the policyholder by the corporation during his retirement is termed as income in the hands of the annuitant. The amount will be taxable as per the prescribed tax provisions and the tax bracket in which the policyholder falls into.

  • Q7.What is the advantages and disadvantages of Annuity?

    A7.

    Advantages of Annuity

    Disadvantages of Annuity

    The amount to be paid under annuity is guaranteed

    The return rate is quite low as compared to the other insurance policies.

    There is no maximum or upper limit of the invested amount

    The amount derived from the reinvested annuity is taxable

    Tax exemptions are available

    The annuity plan cannot be changed once it is fixed at the beginning of the policy

Written By: Paisawiki - Updated: 12 April 2021