Major USP of Pension Plus:
- Guaranteed return on maturity
- Low charges
- All payment options available- monthly, quarterly, semi-annual, yearly
Age eligibility of Pension Plus
Minimum Entry Age – 18 Years
Maximum Entry Age - 75 Years
Minimum Age at Vesting- 40 Years
Maximum Age at Vesting- 85 Years
Maximum Entry Age - 75 Years
Minimum Age at Vesting- 40 Years
Maximum Age at Vesting- 85 Years
Premium Options in Pension Plus
Minimum Regular Premium: Rs 15,000 per annum
Minimum Single Premium: Rs 30,000 per annum
Minimum Single Premium: Rs 30,000 per annum
What benefits does LIC Pension Plus offer?
Death benefit: In case the Life Assured passes away during the policy term, the beneficiary will receive Fund Value as lump sum or annuity as per his preference.
Maturity Benefit: One third of the maturity amount can be received as lump sum and the rest of amount through annuity.
Flexibility in Premium Payment: Both single and regular premium options are available. The payment mode available is yearly, semi-annual, quarterly and monthly.
Guaranteed Maturity Benefit: Pension Plus provides minimum guaranteed interest on gross premium paid. The guarantee interest should be 0.50% above the average reverse repo rate. For the current financial year, the minimum guaranteed return is 4.5% for all premiums received till March 31, 2011.
Maturity Benefit: One third of the maturity amount can be received as lump sum and the rest of amount through annuity.
Flexibility in Premium Payment: Both single and regular premium options are available. The payment mode available is yearly, semi-annual, quarterly and monthly.
Guaranteed Maturity Benefit: Pension Plus provides minimum guaranteed interest on gross premium paid. The guarantee interest should be 0.50% above the average reverse repo rate. For the current financial year, the minimum guaranteed return is 4.5% for all premiums received till March 31, 2011.
How is my money invested in LIC Pension Plus? What’s the risk?
LIC Pension Plus is low risk product as it invests the money in debt oriented fund. LIC Pension Plus has two funds available:
Debt Fund: its low risk fund where the amount is invested in debt market and no amount is allocated in equity market.
Mixed Fund: Its low- medium risk with 15% to 35 % allocation of amount invested in equity market and the rest in debt market.
Debt Fund: its low risk fund where the amount is invested in debt market and no amount is allocated in equity market.
Mixed Fund: Its low- medium risk with 15% to 35 % allocation of amount invested in equity market and the rest in debt market.
What will be my returns from LIC Pension Plus?
The important question that customer wants answered is “What will be my returns in Pension Plus?” Let us take an example: Bhupinder aged 30 invests Rs 25,000 for policy term of 20 years and chooses debt fund.
Assume fund value after four years is Rs 2 lacs,
Death Benefit: If Bhupinder passes away after four years, his wife will get fund value. In this case, Rs 200,000 will be given to his wife.
Maturity Benefit: The returns that Bhupinder will make by investing Rs 25,000 in Pension Plus can be seen graphically:
Assume fund value after four years is Rs 2 lacs,
Death Benefit: If Bhupinder passes away after four years, his wife will get fund value. In this case, Rs 200,000 will be given to his wife.
Maturity Benefit: The returns that Bhupinder will make by investing Rs 25,000 in Pension Plus can be seen graphically:
He gives in total amount of Rs 500,000 to LIC. At maturity, assuming growth of 10% the amount he will receive is approximately Rs 1,333,836. The maturity amount could be more depending on the money market scenario. Longer terms typically provide good returns.
Are there any tax benefits?
Under Section 80C you can avail tax benefit, yearly premium (not more than 1lac) will be deducted from taxable income.
Under Section 10(10D) death claim is completely tax free.
Under Section 10(10D) death claim is completely tax free.
What charges does LIC Pension Plus deduct and how much?
Premium Allocation Charges: These charges are deducted as percentage of premium. Insurer deducts these charges on account of expenses incurred by the company – medical examination, policy issuance, underwriting bills. Premium allocation charge in Pension Plus is 6.75% for first year, 4.50% till fifth year and 2.50% thereafter.
Fund Management Charge: The annual charges for debt fund is 0.70%, mixed fund is 0.80% in Pension Plus.
Policy Administration Charge: These are monthly deductions which start from first month and are for maintaining the policy- paperwork, work force etc. The charge is Rs 30 per month during first year with escalation of 3% per annum till end of policy term.
Fund Management Charge: The annual charges for debt fund is 0.70%, mixed fund is 0.80% in Pension Plus.
Policy Administration Charge: These are monthly deductions which start from first month and are for maintaining the policy- paperwork, work force etc. The charge is Rs 30 per month during first year with escalation of 3% per annum till end of policy term.
What else should I know about?
Top-Up premium: This is the additional premium which can be added above the usual premium to get more units if you think the particular fund is providing good returns. Top-Up cannot be made in last 5 policy years. The minimum Top-Up in Pension Plus is Rs 1,000.
Switch: Switch is made to transfer the fund value from one fund to another. You can make two free switches per year and additional switches can be made by paying Rs 100.
Partial Withdrawal: It is not permitted in Pension Plus.
Grace period: Pension Plus can be renewed within 30 days from the premium due date. Additional 30 days are given after notice has been sent to revive or discontinue the policy.
Free Look Period: Pension Plus plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.
Switch: Switch is made to transfer the fund value from one fund to another. You can make two free switches per year and additional switches can be made by paying Rs 100.
Partial Withdrawal: It is not permitted in Pension Plus.
Grace period: Pension Plus can be renewed within 30 days from the premium due date. Additional 30 days are given after notice has been sent to revive or discontinue the policy.
Free Look Period: Pension Plus plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.
Pension plus Policy Plan illustration details below :
Good Info
ReplyDeleteWhat will be the yearly pension after commutating 1/3 under option F for pension fund of 2581186(maturity fig)
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