WHAT IS A PENSION PLAN?
A defined benefit pension plan is a type of pension plan in which an employer/sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age, rather than depending directly on individual investment returns.
Here Comes The Best Pension Plans:
LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan which provides for death cover during the deferment period and offers annuity on survival of the date of vesting.
(A) Death Benefit:
Death during first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition shall be paid as lump sum or in the form of annuity or partly in lump sum and balance in the form of an annuity to the nominee/legal heir at the then prevailing immediate annuity rates.
Death after first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition, Vested simple Bonuses and final additional bonus, if any, shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee/legal heir at the then prevailing immediate annuity rates.
(B) Participation in profits:
The policy shall participate in profits from the 6th policy year onwards till the end of the deferment period and at such rates as may be declared by the corporation provided the policy is kept in force for full Sum Assured.
Final Additional Bonus, if any, may also be declared under the policy depending upon the experience of the corporation and shall be payable either on vesting or on either death provided the policy has run for certain minimum term.
(C) Optional Benefit:
LIC’s Accidental Death and Disability Benefit Rider is available as an option rider by payment of additional premium. In case of accidental death, the Accident Benefit Sum Assured will be payable as lump sum along with the death benefit under the basic plan. In case of accidental permanent disability arising due to accident ( within 180 days from date of accident), an amount equal to the accident benefit sum assured will be paid in equal monthly installments spread over 10 years and future premiums for accident benefit sum assured as well as premiums for the portion of basic sum assured is equal to accident benefit sum assured under the policy, shall be waived.
LIC’S Jeevan Akshay Plan is a Immediate Annuity plan. ( Annuity means a fixed amount of money will be paid to you each year typically for the rest of your life)
TYPES OF ANNUITIES AVAILABLE
Various annuity option available under the plan are as under:
- Annuity for life.
- Annuity guaranteed for 5, 10, 15 or 20 years and for life thereafter
- Annuity with return of purchase price
- Annuity for life increasing at a simple rate of 3% p.a.
- Annuity for life with a provision for 50% of the annuity to the spouse of the annuitant for life on death of the annuitant.
- Annuity for life with a provision for 100% of the annuity payable to spouse on death of annuitant with return of purchase price on death of the last survivor.
The first installment of annuity shall be paid one year, six months, three months or one month after the date of purchase of the annuity depending on whether the mode of annuity payment is yearly, half-yearly, quarterly or monthly respectively. Further, annuity shall be paid during the life time of the annuitant with the following provisions on death of the annuitant for different options as follows:
- Under option (1) – payment of annuity ceases.
- Under option (2) –
- (a) On death during the guarantee period- annuity is paid to the nominee till the end of the guaranteed period after which the same ceases.
- (b) On death after the guarantee period – payment of annuity ceases.
- Under option (3) – payment of annuity ceases and the purchase price is return to the nominee.
- Under option (4) – payment of the annuity ceases.
- Under option (5) – payment of annuity ceases and 50% of the annuity is paid to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, nothing is payable after the death of the annuitant.