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 Jeevan Shanti plan.
You can fix your pension amount and pay the one time premium that would match your future annuities.
Let’s understand what LIC Jeevan Shanti’s plan is, how it works, and is it worth locking a big amount or not.
LIC 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 Jeevan Shanti Plan.
Another benefit of 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 30 years and want a pension at the age of 60.
Let me throw light on some major key features of the LIC Jeevan Shanti Single Premium Plan.
- Lifetime Income – You get lifetime income with a one-time investment
- Flexibility – You can start immediate pension under Immediate Annuity or 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
- Joint Plans – You can choose a joint plan with a spouse, grandparent, sibling, or parents.
- Annual Increase – 3% of the annual increase in annuity rate under option – G
- Multiple Choice – Multiple annuity options available as per your requirements
- Guaranteed Additions – 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
- If you purchase the LIC Jeevan Shanti plan online, you will get 2% more pension.
Let’s dig deep to understand Jeevan Shanti Plan in detail.
LIC Jeevan Shanti Plan Details
LIC Jeevan Shanti’s plan offers two annuity options – Immediate Annuity and Deferred Annuity.
#1. Immediate Annuity
You can avail immediate pension once you paid the single premium, you can opt for “Immediate Annuity”. Under this plan, your monthly pension starts from the next month of the plan purchased.
Eligibility criteria for immediate annuity
- 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 85 years (and 100 years under Option – F)
Payout options and other benefits
You will get the 10 options to get the annuity in the immediate annuity plan as per your needs. You can understand better from the table given below –
| Annuity Option | Annuity Description | Single Life/ Joint Life | Survival Benefit | Death Benefit |
| Option – A | Immediate Annuity for life | Single Life | You will get the annuity as long as you live and nothing would be payable thereafter and the policy would be terminated. | NIL |
| Option – B | Immediate Annuity with Annuity Certain for 5 years and then for life thereafter | Single Life | You will get the annuity for a minimum period of 5 years and then as long as he lives and nothing would be payable thereafter. | If the annuitant dies before 5 years of an annuity payment period, then the nominee will receive the remaining guaranteed annuities and the policy would be terminated. However, if the annuitant dies after the first 5 years of an annuity payment, nothing would be paid as Death Benefit |
| Option – C | Immediate Annuity with Annuity Certain for 10 years and then for life thereafter | Single Life | You will get the annuity for a minimum period of 10 years and then as long as he lives and nothing would be payable thereafter. | If the annuitant dies before 10 years of an annuity payment period, then the nominee will receive the remaining guaranteed annuities and the policy would be terminated.However, if the annuitant dies after the first 10 years of the annuity payment, nothing would be paid as Death Benefit |
| Option – D | Immediate Annuity with Annuity Certain for 15 years and then for life thereafter | Single Life | You will get the annuity for a minimum period of 15 years and then as long as he lives and nothing would be payable thereafter. | If the annuitant dies before 15 years of an annuity payment period, then the nominee will receive the remaining guaranteed annuities and the policy would be terminated. However, if the annuitant dies after the first 15 years of the annuity payment, nothing would be paid as Death Benefit |
| Option – E | Immediate Annuity with Annuity Certain for 20 years and then for life thereafter | Single Life | You will get the annuity for a minimum period of 20 years and then as long as he lives and nothing would be payable thereafter. | If the annuitant dies before 20 years of an annuity payment period, then the nominee will receive the remaining guaranteed annuities and the policy would be terminated. However, if the annuitant dies after the first 20 years of the annuity payment, nothing would be paid as Death Benefit |
| Option – F | Immediate Annuity for Life with Return of Purchase Price | Single Life | You will get the annuity as long as you live | After the policyholder expires, the nominee will get the entire purchase price (which is the premium paid towards the annuity corpus) and the policy would be terminated. |
| Option – G | Immediate Annuity for Life with an increasing rate of 3% p.a. | Single Life | You will get the annuity as long as you live at an increasing rate of 3% per annum. | NIL |
| Option – H | Joint Life Annuity – Immediate Annuity for life with 50% is payable to the secondary annuitant | Joint Life | You will get the annuity as long as you live.50% of the annuity would be paid to the secondary annuitant till as long as he/she lives and after the death of both the annuitants, the policy gets terminated. | If the primary policyholder dies, the joint policyholder gets the 50% of the annuity till as long as he/she lives and after the death of both the annuitants, the policy would be terminated and nothing is paid to the nominee. |
| Option – I | Joint Life Annuity – Immediate Annuity for life with 100% is payable to the secondary annuitant | Joint Life | You will get the annuity as long as you live.100% of the annuity would be paid to the secondary annuitant till as long as he/she lives and after the death of both the annuitants, the policy gets terminated. | If the primary policyholder dies, the joint policyholder gets the 100% of the annuity till as long as he/she lives and after the death of both the annuitants, the policy would be terminated and nothing is paid to the nominee. |
| Option – J | Joint Life Annuity – Immediate Annuity for life with 100% is payable to the secondary annuitant and then Return of Purchase Price on death of the last survivor | Joint Life | You will get the annuity as long as you live.100% of the annuity would be paid to the secondary annuitant as long as he/she lives. | If the primary policyholder dies, the joint policyholder gets the 100% of the annuity till as long as he/she lives and after the death of both the annuitants, the nominee would get the entire amount ( the premium paid towards the annuity corpus) and the policy would be terminated. |
#2. Deferred Annuity
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 deferred annuity
- The minimum purchase price is Rs. 1,50,000 and no limit on the maximum purchase price.
- Minimum entry age is 30 years and max. is 79 years
- Deferment period is minimum 1 year and 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 Jeevan Shanti Plan
#1. LIC Jeevan Shanti Interest Rate
You get a better annuity rate (interest rate) if you have chosen a longer deferred annuity period.
Annuity rates 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 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.
Let’s understand the annuity rate at different ages. If you have invested Rs. 10 lakh, the immediate annuity rate would be as below.
The deferred annuity rates would be as below –
Note – The above rates are for single life plans only.
#2. LIC 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.
#3. Guaranteed Additions
Apart from the annual increase, if you have chosen a deferred plan, you get “Guaranteed Additions” accrued to your account at the end of each policy month.
You will get the guaranteed additions till the end of the deferment period only.
Formula to calculate the guaranteed additions –
Guaranteed Additions per month = (Purchase Price * Annuity rate p.a. payable monthly) /12
For example, if you are 40 years and you have paid a single premium of Rs. 10 lakh that would be your purchase price. You want to start a pension at the age of 60.
You would get guaranteed additions against your purchase price for 19 years as below.
Note – I have calculated the guaranteed additions annually for ease of calculation.
#4. 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.
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.
#5. Death Benefit Of LIC Jeevan Shanti Plan
LIC 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 + Accrued Guaranteed Additions – Total annuity payment made till the date of death, OR
- 110% of the Purchase Price
For example, if you are 40 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.
#6. Loan Facility
Loan facility is available with selected plans only that is Option F and Option J. You can avail loan facility after completing the 1 year of policy purchase.
You can get up to an 80% amount as a loan. Interest on the loan amount cannot exceed 50% of the annual pension.
#7. 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.
LIC Jeevan Shanti Surrender Value
You can surrender the policy after completing the 3 months from the date of issuance except for Option F and Option J.
For Option F and Option J, you can surrender the policy after the free-look period is over.
The Option F and Option J are as below (explained in the LIC Jeevan Shanti Plan details section).
- Option F – Immediate Annuity for Life with Return of Purchase Price
- Option J – Immediate Annuity for life with 100% is payable to the secondary annuitant and then Return of Purchase Price on death of the last survivor
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 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.
You can understand better with 3 options of monthly pension starts at the age of 50, age 60, and age 70.
LIC Jeevan Shanti Agent Commission
Since the LIC 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 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 Jeevan Shanti Disadvantages
#1. Low annual increase
The major disadvantage of LIC 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 the 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 that option depends on the plan you have chosen and you will get money after deductions.
LIC Jeevan Shanti Vs Jeevan Akshay
The main difference between LIC 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 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.
| Jeevan Shanti | Jeevan Akshay |
| Immediate & 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 -Offline – Rs. 1 lakhOnline – Rs. 1.5 lakh | Minimum purchase price -Rs. 1.5 lakh |
| Surrender only after 1 year in Option – C | Surrender only after 3 months |
Final Review
If you are inclined to buy LIC 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 rather invest 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 Jeevan Shanti’s plan is just like accumulating wealth whole life and pay to LIC’s for their benefit, not yours.
