Best LIC Scheme for Senior Citizens

To secure the golden years of your life, i.e., the retirement period, it’s vital to select the appropriate insurance scheme. LIC (Life Insurance Corporation of India) offers a number of policies that address the needs of the elderly; among these include the LIC New Pension Plus, LIC Jeevan Akshay-VII, LIC New Jeevan Shanti, LIC Varishtha Pension Bima Yojana and LIC Saral Pension Yojana.

These schemes offer a source of regular income, tax exemption, and more benefits, which we are going to discuss in this blog. 

Let’s begin to know in detail the best LIC scheme for senior citizens. 

What are LIC Schemes For Senior Citizens?

Retirement can be an exciting phase of life, but it can also be stressful if not properly planned. That's where LIC, India's leading government-backed life insurance company, comes in. They offer schemes aimed at addressing the financial needs of seniors both before and after retirement. 

These LIC schemes for senior citizens are aimed at ensuring the elderly live out their old age comfortably and without stress, with guaranteed returns and an income stream. Without the fear of dipping into their savings to achieve their other financial goals, LIC provides seniors with a range of options to suit their expenses, health care, and lifestyle. 

For people who wish to have a dependable ally during their old age, these plans provide great financial protection!

Best LIC Schemes for Senior Citizens

Here are the top 5 LIC schemes designed especially for senior citizens, offering great financial relief for retirement life. 

1. LIC New Pension Plus

The LIC New Pension Plus is a ULIP, a non-participating retirement pension plan that provides income to individuals after retirement. This plan enables one to create a retirement fund and also purchase an annuity to cover their post-retirement life. 

Key Benefits:

• Vesting Benefit: On survival till vesting, i.e., end of the policy term, the Unit Fund Value can be used in the below ways.

1. The entire amount can be used to buy an immediate or deferred annuity at the current rates from LIC.

OR

2. Buy an annuity from another insurance company for up to 50% of the amount.

OR

3. Take up to 60% of the amount as a lump sum and use the remaining amount to buy an immediate or deferred annuity from LIC.

OR

4. Buy an annuity from another insurance company for up to 50% of the remaining amount after taking the lump sum.

• Death Benefit: If the life assured dies before the policy term completion, the Higher of Unit Fund Value or 105% of total premiums, minus any partial payouts, is given to the nominee as a death benefit. 
• Guaranteed Additions: GAs are added at the end of 6 years, 10 years, and each year from the 11th policy year for the policies in force. 
• Withdrawal Options: The LIC New Pension Plan allows for partial withdrawals after 5 years of lock-in period to cater for life events such as education, health care or home building. Policyholders are allowed up to three withdrawals during the term of the policy.
• ULIP Fund Benefits: The holders of the policy can opt for one fund among the available four funds depending on the risk tolerance ranging from low risks (Pension Bond Fund) to high risks (Pension Growth Fund). The plan allows the option of switching funds and, therefore, ensures steady investment growth based on market conditions.

2. LIC Jeevan Akshay-VII

LIC Jeevan Akshay–VII is a non–linked, single premium, immediate annuity plan. Under this policy, one has to invest a lump-sum amount, and in return, they can get guaranteed income for a lifetime immediately after the investment. (2)

Key Benefits:

• Lifetime Annuity:  All monthly or yearly annuity payments are guaranteed for the life of the annuitant.
• Death Benefit: Under certain options, the purchase price or annuity will be paid to the nominee/secondary annuitant.
• Flexible Annuity Options: There are a number of flexible annuity choices available, including an annuity for life, an annuity with a guarantee period or a joint life annuity for couples. 
• Annuity Payment Options: Monthly, Quarterly, half-yearly and Yearly payouts are available.
• Loan Benefits: Loan facilities are offered to policyholders after three months of policy issuance or after the end of the free-look period. Currently, the loan facility can be availed under the below two annuity options, 

1. 1. Immediate annuity with return of purchase price
   2. Joint Life Immediate Annuity for life with 100% annuity payable as long as one annuitant is alive and return of Purchase Price on the death of the last survivor. 

3. LIC New Jeevan Shanti

LIC's New Jeevan Shanti is a deferred annuity plan in which the individual needs to make an investment. In return, they’ll receive the annuity payouts at a future date. Because it’s a single premium plan, only a one-time investment is required. (3)

Key Benefits:

• Available Annuity Options:  Deferred annuity for Single or Joint life. 
• Death Benefit: If the insured dies during the accumulation phase, the nominee will be given the option to receive the death benefit either in the form of a lump sum or for the purchase of an immediate annuity. This allows the family to be secured financially and the income to flow out evenly through annuity payments.
• Flexible Premium Payments: Policyholders have great flexibility in terms of contributing premiums.
• Loan Benefit: A loan against the policy may be requested any time after three months from the date of issuance of a policy or after the free look period has lapsed. 

4. LIC Varishtha Pension Bima Yojana

LIC Varishtha Pension Bima Yojana is specially designed to cater to the needs of elderly citizens with a focus on providing safety as well as regular lifetime income. Here is what makes the scheme unique:

• Regular Assured Income for Life: Once the purchase price is paid, LIC starts paying annuity amounts immediately as per the chosen mode. This will go on until the demise of the senior citizen. The maximum annuity amount is capped at ₹60,000 per year.
• Return of Purchase Price on Death: Upon the death of the policyholder, the purchase price will be returned to the family/spouse/beneficiary. In case a loan has been taken, the principal amount will be reduced by any unpaid debt or accrued interest.
• Guaranteed Assured Return: This plan guarantees a return of 9% annually, which is higher than most fixed deposits or savings accounts, making it an ideal plan for elders who want stable incomes.
• Loan Benefit: After three years, the policyholders are eligible to take a loan of up to 75% of the purchase price of the policy. LIC will recover the interest rate from each pension installment.
• Income Tax Benefit: Tax benefits are available on the purchase price under Section 80CCC of the Income Tax Act, making this policy an income tax-efficient option for retirees.

5. LIC Saral Pension Yojana

This LIC scheme for senior citizens is an immediate annuity plan which is best for those who want immediate money right after the investment. Below are some of the key features of LIC Saral Pension Yojana. (5)

Key Benefits:

• Annuity Options:

Option I: A Lifetime Annuity with a 100% Refund of Purchase Price upon the death of the annuity's owner. 

Option II: Joint Life Last Survivor Annuity with a 100% Refund of Purchase Price upon the death of both the annuitant and spouse.

• Death Benefit: In both cases, upon life assured’s death, the annuity ceases, and the nominee/legal heirs receive 100% of the purchase price.
• Lifetime Income: The annuitant or annuitants (in the case of Joint Life) shall receive the annuity payments for the whole of their lives, ensuring uninterrupted cash flow.
• Flexible Payment Modes: The available annuity modes are annual, half-yearly, quarterly or monthly intervals.
• Online Purchase Incentive: A 2% discount from the annuity rate is offered for purchasing the policy online. 

Comparing the Top LIC Schemes for Senior Citizens

Let’s compare the top LIC schemes for senior citizens —

Benefits of Choosing LIC Schemes for Senior Citizens

LIC schemes for senior citizens offer a number of benefits, including: 

1. Regular Income through Annuities

LIC policies for senior citizens offer a regular payout in the form of annuities or pensions offered to the policyholder. This means that even if a policyholder doesn't have any regular income after retirement, they can still manage to get a fixed amount to maintain their lifestyle.

2. Tax Benefits

The premiums paid towards LIC schemes are tax-exempt under section 80C of the Income Tax Act, thus adding further help to the elderly. 

3. Flexible-Premium Payment Options

LIC provides ease in premium payment structures. The policyholders have the option of making payments annually, semiannually, quarterly, and even monthly.

4. Loan Facilities

Under some LIC senior citizens' policies, policyholders are permitted to apply for policy loans using their policies as collateral. This helps to reduce financial burdens without having to surrender the policy.

Conclusion

LIC provides a number of best schemes for senior citizens that are specially designed to ensure safety and peace of mind after retirement. These policies, ranging from a fixed annuity to multiple payment options, serve diverse needs. 

To better assess the right policy, you are advised to contact an insurance consultant who will assist you in choosing the best plan!

Frequently Asked Questions

Ques 1. How does the LIC New Jeevan Shanti work?

Ans. It is a deferred annuity scheme containing a one-off initial investment and provides lifetime income after a specific timeframe.

Ques 2. What are the advantages of LIC Saral Pension Yojana?

Ans. The LIC Saral Pension Yojana has two options available: A lifetime annuity with a refund of the purchase price upon death and a joint life last survivor annuity. It ensures constant cash flow benefits to the insured and the insured's spouse.

Ques 3. Can senior citizens avail of tax benefits under these policies?

Ans. Yes, section 80CCC of the Income Tax Act allows claims of tax deductions on premiums paid for all LIC schemes, thus easing the financial burden upon the people when they retire.

Ques 4. Are there flexible premium payment options available?

Ans. Definitely! There are different premium payment modes provided by LIC schemes for senior citizens, such as annual, half-yearly, quarterly, or monthly, to suit personal financial needs.

Ques 5. What is the guaranteed return rate for LIC Varishtha Pension Bima Yojana?

Ans. This plan assures a return of 9% interest per annum, which is more than most savings provisions.