Understanding How an LIC Annuity Plan Works

Retirement planning, while necessary, can often be cumbersome. With a plethora of options available in the market, an additional challenge can be faced in the form of selecting the best plan out of them for yourself. However, by opting for a plan from a leading provider, you can have great retirement planning and secure your financial future after retirement.

If you are looking for stable income-generating retirement options, you can certainly select LIC International for the same. With LIC annuity plans, specifically, you can have the assurance of financial assistance after your retirement.

Let’s go through the available LIC annuity plans and cover their key features, functioning, terms and conditions, and more in the article below.

What is an Annuity and How Does it Work?

An annuity is a type of insurance product that offers fixed income to the policyholder for a specified period. You assure this return by paying a lump sum amount or a series of instalments to the insurer or the insurance company.

Annuity plans make for a great option with respect to retirement planning. Instead of letting your savings rest in a bank account, your money is invested in various instruments by the insurance company. Once you retire or reach the specific age for which the plan was taken, you would start receiving this grown wealth in the form of monthly payments. Remarkably, some plans keep paying out the sum to the spouse of the policyholder even if the latter passes away during the tenure of the plan.

What is the LIC Annuity Plan?

Touted to be one of the best LIC International schemes, the Deferred annuity plan without/with life cover (Plans 227 and 228, respectively) offers guaranteed pension income that remains unaffected by market fluctuations.

Moreover, under the life cover option, a lump sum payment equal to the sum assured plus any vested bonuses will be made to the nominee in the event of the demise of the policyholder, provided the policy is still in effect. The premiums paid under the “no life cover” option will be refunded along with interest at the rates decided by the company.

Making a retirement plan with this policy is fairly easy, as you can easily use the LIC annuity plan calculator to determine your annuity value, rates, and more.

Accident Benefit – Another Key Feature

With a life cover plan, you would also have the opportunity to add an accident benefit rider for as long as the policy is in effect or until the age of 70 years. Here, the accident benefit sum assured is paid in addition to the regular claim amount in the event of accidental death.

Accident benefits are also offered in case of total and permanent disability of the policyholder. In such a case, all future premiums, up to the amount of the accident benefit sum, are waived. Moreover, the benefit sum will be paid out in equal monthly increments over a ten-year period.

Benefits of an LIC Annuity Plan

Discussed below are the top advantages of this LIC annuity plan –

1. Flexibility with Premium Payments

One of the key benefits of an LIC annuity plan is that it provides great flexibility with respect to premium payments. For instance, if you have paid premiums (3 years for a full-term policy or 2 years for limited-term insurance) earlier but cannot continue paying them due to any adverse circumstances, your policy may automatically get converted into a lower paid-up pension policy in such a case.

2. Ease of Payment

With respect to the LIC annuity plan, on vesting, the annuity shall be paid out annually, half-yearly, quarterly, or in monthly instalments, with the minimum annuity instalment being as low as US$ 265.

3. Premium Sealing

If feasible, you can also pay the premium in a lump sum for a period of 5 years and avail of a discount rate. In this case, a refund can be availed for funds that have not been utilised.

4. Portability

If you return to India and have paid at least two years’ worth of premiums, the transfer value under the policy would be used to buy a pension under the annuity plans of LIC India so that no major changes are made to your retirement planning.

5. Option to Draw a Loan

As a policyholder, you can draw a loan against your LIC annuity, subject to the terms and conditions. This can come in handy during emergencies.

Wrapping Up

Retirement planning is not a hassle if you start early and have a suitable plan in your financial portfolio. You can add a plan like an LIC annuity plan that can ensure guaranteed returns and fixed income for your retirement life. With additional benefits like life cover, accident benefits, and more, you can also be sure that your family would have proper financial coverage in case of any unfortunate event.