Updated on – 03 Feb 2021
You pay a fixed amount to LIC and LIC keeps you paying regular income as an annuity (in simple words pension) for the lifetime. This is the concept of the LIC New Jeevan Shanti plan. LIC New Jeevan Shanti policy launched on 21st October 2020 (replacing Jeevan Shanti Plan).
In New Jeevan Shanti, you can fix your pension amount and pay the one time premium that would match your future annuities.
Let’s understand what LIC New Jeevan Shanti’s plan is, how it works, and is it worth locking a big amount or not.
LIC New Jeevan Shanti Review
If you are planning for retirement and want to invest a lumpsum amount in a secure investment instrument to get a regular income in return, then you can go for LIC New Jeevan Shanti Plan.
Another benefit of New Jeevan Shanti is you can initiate your pension after a certain period of time if you don’t want any immediate regular income. For example, you are of 31 years and want a pension at the age of 60.
Let me throw light on some major key features of the LIC New Jeevan Shanti Single Premium Plan.
Lifetime Income – You get lifetime income with a one-time investment
Deferred Annuity – Means you can start receiving the pension after a certain period of time.
Easy to Purchase – You can buy this policy online as well as offline. 2% rebate if you purchase online.
Joint Plans – You can choose a joint plan with a spouse, grandparent, sibling, or parents.
Annual Increase – 1.5% to 2.7% of the annual increase in annuity rate as below –
Multiple Choice – Multiple annuity options available as per your requirements such as yearly, half yearly, quarterly and monthly.
Additional Death Benefit – are added to the principal amount every year if you have chosen Deferred Annuity Plan.
Divyangjan Plan – You can also purchase a plan for the benefit of a handicapped dependant under Divyangjan Plan
Online Purchase Benefit – If you purchase the LIC New Jeevan Shanti plan online, you will get 2% more pension.
Reduction in Annuity Rates – If you select annuity payment frequency other than yearly mode, you get reduction in annuity rates as below –
Let’s dig deep to understand New Jeevan Shanti Plan in detail.
LIC New Jeevan Shanti Plan Details
Earlier LIC Jeevan Shanti plan offered plan offered two annuity options – Immediate Annuity and Deferred Annuity. But LIC launched Jeevan Akshay (Plan no. 857) as Immediate Annuity Plan, and replaced LIC Jeevan Shanti (Plan no. 850) with LIC New Jeevan Shanti (Plan no. 858) as a Deferred Annuity Plan.
If you want to start your pension after a certain period of time then you can select Deferred Annuity.
For example, if your current age is 40 years and you want to start the pension at the age of 50, then you can choose that under Deferred Annuity.
Eligibility Criteria for LIC New Jeevan Shanti Plan
- The minimum purchase price is Rs. 1,50,000 and no limit on the maximum purchase price.
- The minimum entry age is 30 years and max. is 79 years
- The deferment period is a minimum of 1 year and a maximum of 20 years (depending on vesting age)
- Minimum Vesting age – 31 years and Maximum vesting age – 80 years
Payout Options and Other Benefits
There are two options under the Deferred Annuity Plan –
- Deferred Annuity for Single Life
- Deferred Annuity for Joint Life
| Annuity Option | Annuity Description | Single Life/ Joint Life | Survival Benefit | Death Benefit |
| 1 | Deferred Annuity for Single Life | Single Life | Nothing is payable till the vesting date. After the date of vesting, you will receive the annuity as long as you live, as per the annuity option you have selected. | If the annuitant dies investing period, the nominee will get the death benefit as per the option selected and then the policy terminates. If the annuitant dies after the vesting date, the annuity payout stops immediately. The nominee will get the death benefit as per the option selected and then the policy terminates. |
| 2 | Deferred Annuity for Joint Life | Joint Life | Nothing is payable till the vesting date. After the date of vesting, the primary and secondary annuitant will receive the annuity as long as anyone of them lives, as per the annuity option selected. | If any of the annuitants die, the annuity is paid to the surviving annuitant. On the death of the last survivor, Annuity payout stops immediately. Death Benefit will be paid to the nominee as per the option selected and the policy terminates. |
Benefits Of LIC New Jeevan Shanti Plan
#1. LIC New Jeevan Shanti Interest Rate
Annuity rates (interest rate) also depend on your age. Not only yours, but your joint life partner’s age also matters to fix the annuity rates, if you are going to take a joint plan. The annuity swill increase with the age of the policyholder.
For example, a 30-year-old person would receive a pension for many more years (as compared to a 60-year-old). Therefore, the annuity rate will be lower for a 40-year-old and higher for a 70-year-old. Because the insurance companies provide a higher rate when their liability is lower.
The deferred annuity rates would be as below (at different ages) –
Note – The above rates are for single life plans only.
#2. Incentive on the Higher Purchase Price
LIC gives incentives in the form of increased annuity (pension) rate if you pay a big single premium above Rs. 5 lakh. The details are as below.
LIC gives incentives in the form of increased annuity (pension) rate if you pay a big single premium above Rs. 5 lakh. The details are as below.
For example, if you have invested 10 lakh rupees as a single premium, you will get a pension of Rs. 92,442 per annum instead of Rs 90,942. (For details of annuity rate please refer to benefit #1 – Interest rates section)
As you can see, the pension is higher by Rs 1,500 per annum (1.5 * 10 lakh/1000).
Another benefit is that you will also get 2% more pension if you buy the policy online or you are an NPS subscriber.
#3. LIC New Jeevan Shanti Tax Benefit
You will get a tax benefit of up to Rs. 1.5 lakhs per annum under section 80CCC of the Income Tax Act, 1961. The pension you would get isn’t tax-free but the purchase price if returned is totally tax-free.
#4. LIC New Jeevan Shanti Loan Benefit
You can apply for loan any time after three months from the completion of policy or freelook up period whichever is later. You get a maximum loan under the policy such that the effective annual interest amount payable on loan should not exceed 50% of the annual annuity amount payable under the policy and a maximum of 80% of surrender value of policy.
#5. Death Benefit Of LIC New Jeevan Shanti Plan
LIC New Jeevan Shanti offers death compensation to the nominee on the demise of annuitants under Deferred Annuity. The nominee would get the amount from two options given below (whichever is higher).
- Purchase Price + Additional Benefit on Death – Total annuity payment made till the date of death, OR
- 105% of the Purchase Price
Additional Benefit on Death (monthly basis) = Purchase price * Monthly tabular annuity rate (given in the table below)
For example, if you are 30 years and you have paid a single premium of Rs. 10 lakh that would be your purchase price. The nominee would get the claim amount as below.
| Policy Year | Age | Purchase Price | Additional Death Benefit | Death Claim |
| 1 | 31 | 1000000 | 78528 | 1078528 |
| 2 | 32 | – | 157056 | 1157056 |
| 3 | 33 | – | 235584 | 1235584 |
| 4 | 34 | – | 314112 | 1314112 |
| 5 | 35 | – | 392640 | 1392640 |
| 6 | 36 | – | 471168 | 1471168 |
| 7 | 37 | – | 549696 | 1549696 |
| 8 | 38 | – | 628224 | 1628224 |
| 9 | 39 | – | 706752 | 1706752 |
#6. Annuity Payment Mode
You can also select annuity payment mode from monthly, quarterly, half-yearly, and annually.
The minimum annual payment is Rs. 12,000. The other minimum annuity payment options are as below.
#7. Disable Dependent Benefit
You can also purchase the plan for the benefit of disable dependent with a minimum purchase price of Rs. 50,000.
#8. Guaranteed Surrender Value
You can surrender the policy anytime after completing the freelook period. The Guaranteed Surrender Value is as below –
Freelook period is 15 days from the date of issuance if purchased offline and 30 days from the date of issuance if you buy the policy online.
LIC New Jeevan Shanti Calculator
With this calculator, you can get an idea of how much pension you would receive if you pay an Rs. 10 lakh as a single premium at the age of 50.
You can understand better with the table below –
Let’s go in detail with year-wise benefit illustration.
| Policy Year | Age | Purchase Price | Additional Death Benefit | Death Claim | Surrender Value | Yearly Return |
| 1 | 51 | 1000000 | 86304 | 1086304 | 760413 | – |
| 2 | 52 | – | 172608 | 1172608 | 820826 | – |
| 3 | 53 | – | 258912 | 1258912 | 818293 | – |
| 4 | 54 | – | 345216 | 1345216 | 900000 | – |
| 5 | 55 | – | 431520 | 1431520 | 930488 | – |
| 6 | 56 | – | 517824 | 1517824 | 986586 | – |
| 7 | 57 | – | 604128 | 1604128 | 1042683 | – |
| 8 | 58 | – | 690432 | 1690432 | 1098781 | – |
| 9 | 59 | – | 776736 | 1776736 | 1154878 | – |
| 10 | 60 | – | 863040 | 1863040 | 1117824 | – |
| 11 | 61 | – | 863040 | 1771040 | 1025824 | 92000 |
| 12 | 62 | – | 863040 | 1679040 | 933824 | 92000 |
| 13 | 63 | – | 863040 | 1587040 | 850000 | 92000 |
| 14 | 64 | – | 863040 | 1495040 | 850000 | 92000 |
| 15 | 65 | – | 863040 | 1403040 | 850000 | 92000 |
| 16 | 66 | – | 863040 | 1311040 | 850000 | 92000 |
| 17 | 67 | – | 863040 | 1219040 | 850000 | 92000 |
| 18 | 68 | – | 863040 | 1127040 | 850000 | 92000 |
| 19 | 69 | – | 863040 | 1050000 | 850000 | 92000 |
| 20 | 70 | – | 863040 | 1050000 | 850000 | 92000 |
| 21 | 71 | – | 863040 | 1050000 | 850000 | 92000 |
| 22 | 72 | – | 863040 | 1050000 | 850000 | 92000 |
| 23 | 73 | – | 863040 | 1050000 | 850000 | 92000 |
| 24 | 74 | – | 863040 | 1050000 | 850000 | 92000 |
| 25 | 75 | – | 863040 | 1050000 | 850000 | 92000 |
| 26 | 76 | – | 863040 | 1050000 | 850000 | 92000 |
| 27 | 77 | – | 863040 | 1050000 | 850000 | 92000 |
| 28 | 78 | – | 863040 | 1050000 | 850000 | 92000 |
| 29 | 79 | – | 863040 | 1050000 | 850000 | 92000 |
| 30 | 80 | – | 863040 | 1050000 | 850000 | 92000 |
| 31 | 81 | – | 863040 | 1050000 | 850000 | 92000 |
| 32 | 82 | – | 863040 | 1050000 | 850000 | 92000 |
| 33 | 83 | – | 863040 | 1050000 | 850000 | 92000 |
| 34 | 84 | – | 863040 | 1050000 | 850000 | 92000 |
| 35 | 85 | – | 863040 | 1050000 | 850000 | 92000 |
| 36 | 86 | – | 863040 | 1050000 | 850000 | 92000 |
| 37 | 87 | – | 863040 | 1050000 | 850000 | 92000 |
| 38 | 88 | – | 863040 | 1050000 | 850000 | 92000 |
| 39 | 89 | – | 863040 | 1050000 | 850000 | 92000 |
| 40 | 90 | – | 863040 | 1050000 | 850000 | 92000 |
| 41 | 91 | – | 863040 | 1050000 | 850000 | 92000 |
| 42 | 92 | – | 863040 | 1050000 | 850000 | 92000 |
| 43 | 93 | – | 863040 | 1050000 | 850000 | 92000 |
| 44 | 94 | – | 863040 | 1050000 | 850000 | 92000 |
| 45 | 95 | – | 863040 | 1050000 | 850000 | 92000 |
| 46 | 96 | – | 863040 | 1050000 | 850000 | 92000 |
| 47 | 97 | – | 863040 | 1050000 | 850000 | 92000 |
| 48 | 98 | – | 863040 | 1050000 | 850000 | 92000 |
| 49 | 99 | – | 863040 | 1050000 | 850000 | 92000 |
| 50 | 100 | – | Assumed Death (Paid to Nominee) | 1100000 |
LIC New Jeevan Shanti Agent Commission
Since the LIC New Jeevan Shanti plan comes under “Single Premium” products, the LIC agent commission is fixed for such products is 2% of the premium amount.
For example, if you start LIC New Jeevan Shanti by paying a single premium of Rs. 10,00,000, the agent would get a commission (2% of Rs. 10 lakh) – Rs. 20,000.
He won’t get any recurring commission as happens in regular life insurance plans.
LIC New Jeevan Shanti Disadvantages
#1. Low Annual Increase
The major disadvantage of LIC New Jeevan Shanti is a low annual increase in the monthly pension amount.
The annual increase of Annuity at 3% is not sufficient. A meager 3% increase can’t beat inflation. At least the 6% to 8% increase is a must to match the expense increase per year.
#2. Lifetime Lock-in Period
You have to lock your accumulated wealth for a lifetime to get regular annuity payments. You can’t even withdraw your money in case of urgency.
However, you can surrender the policy but you would get only 75% of purchase amount for 1st three years and 90% of purchase amount after 4 years.
LIC New Jeevan Shanti Vs LIC Jeevan Akshay
The main difference between LIC New Jeevan shanti and Jeevan akshay is that Jeevan Shanti has a “Deferred Annuity” facility if you want to start receiving a pension after a certain period of time which is not available in Jeevan Akshay.
Secondly, in Jeevan Akshay, you can surrender only if you have selected Option – 3 after one year if suffering from certain diseases as per the clause.
On the other hand, in New Jeevan Shanti, you can surrender the policy (If you have selected Option -F and Option – J) after 3 months of the period without any special condition.
You can go through the table below for better understanding.
| New Jeevan Shanti | Jeevan Akshay |
| Only deferred annuity | Only immediate annuity |
| Joint policy available with family members other than a spouse (like grandparent, parents, children, grandchildren) | Joint policy for with spouse only |
| Secondary annuitant’s age is required for the annuity calculation. | Spouse age was not required for pension calculation |
| Loan facility available | Loan facility not available |
| Minimum purchase price – Rs. 1.5 lakh | Minimum purchase price -Rs. 1.5 lakh |
| Surrender anytime throughout the policy term | Surrender only after 3 months |
Final Review
If you are inclined to buy LIC New Jeevan Shanti plan just because it will give you regular income with life cover to help your family in case of any mishappening, then I would suggest you go for a Term-insurance plan.
Because you have to pay a nominal premium for a bigger life cover, term insurance will provide your family with a way better financial support in case you are no more.
For example, if you are 30 years age healthy and a non-smoker, you can get a 1 crore term insurance cover for 30 years at the annual premium of around Rs. 10,000.
On the other hand, if you have paid a single premium of Rs. 10 lakh, then the life cover would be of the same amount. You can see the difference.
You can take term-insurance and invest rest of the money in PPF if you wanna play safe, or another option is mutual funds if you can take some risk.
These investment instruments will provide you much better returns. And you can also take advantage of Tax deductions in PPF and ELSS mutual funds.
I feel taking LIC New Jeevan Shanti’s plan is just like accumulating wealth whole life and pay to LIC’s for their benefit, not yours.
