LIC Pension Plan: What are its various benefits?

Last updated:
LIC Pension Plan: What are its various benefits?

LIC Pension Plan: An Overview

Life Insurance Corporation of India is one of the oldest life insurance companies running successfully in our nation. The company came into existence in 1956 with the core responsibility of making the lives of Indian citizens secure with the help of insurance. With the help of LIC pension plans for India, you can now make your dream of living the ideal retirement true. 

The main goal of the LIC pension plan is to make the insurance holder financially independent when they finally resign from their job. In addition, these LIC pension plans are designed to protect individuals from any form of uncertainty that arises in their post-retirement life. These plans are curated keeping in mind the needs of senior citizens looking to plan out their retirement more effectively. 

Benefits Of LIC Saral Pension Plan

Below are the reasons why you should invest some money in LIC pension plans and make your retirement life financially secure. 

Regular Income

Once you are done with your job, you won’t be receiving your regular income that used to come in the form of a salary. In that case, LIC pension plans can help you ensure that you are getting a steady income once the annuity period of the LIC policy starts. This way, you could maintain your current standard of living even after you take retirement from your job. 

Easy Processing 

There is no need to run to the bank each month to get your pension; with all the LIC pension plans, your money will automatically be sent directly to your bank account. In addition, with the advancement of technology and the internet, you can now quickly get the payout annuity payout. You can even check all the different forms of exiting certificates that can be accessed via several channels. 

Great Alternative For Those Who Are In Private Sector

One of the significant advantages of working in the public sector is that you will be getting a certain percentage of the salary as your pension once you are retired. But that is not the case with private sector employees. As a result, LIC Pension plans are an excellent alternative for people working in the private sector to get a regular income after they retire from their job. With LIC pension plans, you don’t have to stick yourself with the same company, you can move around and explore new opportunities, and while doing so, you can still save money for your future. 

Guaranteed Payout

The payments you will get under the LIC pension plans are sure-shot guaranteed. Not only will you be getting the monthly payouts from the policy, but you also get to plan out your upcoming major finances well in advance. With a LIC pension, a person can easily chalk out how much they need for their future and invest accordingly over a much longer period.

How Does LIC Pension Work?

A pension plan by LIC is a financial tool that makes it possible for users to accumulate funds for their golden years of retirement. What user needs to do is invest regularly in their pension funds. By doing this over the years, the user is able to make a considerable amount of corpus. In addition to this, there are two phases of LIC pension plans. 

The first one is the accumulation phase, where a user needs to invest their money into a pension fund regularly. The second phase is called the vesting phase, and it starts from the day you retire from your job. In the second phase, you will begin receiving a steady flow of income according to your requirement from your LIC pension plan. 

Once your LIC pension plan attains maturity, you can start receiving its benefits which are also known as vesting. Once the vesting phase of your LIC pension plan starts, there are two options for you to choose from. First, you can start receiving the pension benefits or withdraw the proceeds and purchase an immediate annuity plan from the same company. 

Alternatives to LIC Pension Plan 

If you are not inclined towards the LIC pension policy, even then, you will have a number of options available in which you can invest your money and make your future financially secure. Given below, we have provided some of the significant alternatives to the LIC of India pension plan for you to check out. 

National Pension Plan (NPS)

This one is a long-term retirement-focused plan which is regulated by Pension Fund Regulatory and Development Authority (PFRDA). The user needs to invest in this plan until they are 60 years of age. After that, they will start receiving an annuity from a life insurance company on the 40% of the corpus which they invested in the plan. In addition to this, you can take out the balance anytime your want once the NPS matures. The underlying asset classes for this plan are equity, corporate bonds, government bonds, and more. NPS also comes with a tax advantage on the amount you are investing in it. 

Public Provident Fund (PPF)

PPF is considered to be time tested long-term investment plan. In most cases, the PPF comes with 15 years of tenure. With this, you are also taking the benefit of compounding a tax-free interest that becomes huge with time. The interest rate on PPF is set by the government authorities. Apart from this, the interest earned and the principal amount you are investing are backed by the sovereign guarantee. As a result, it leads to a much safer investment. 

Employee Provident Fund 

In this LIC pension plan, alternatively, one needs to pay a certain amount of contribution towards the scheme. At the same time, the employer also needs to invest the same amount in the fund. Thus, at the maturity of EPF, the user will get the lump sum amount which is an addition to their own investment and the investment done by the employer as well. You will also get interested in both investments upon your retirement. Here the contribution paid by the employer is 12% of the basic wage in addition to the dearness allowance and retaining allowance. 

Mutual Funds Schemes

There are four different types of mutual fund schemes that are specifically designed to make people save money for their retirement. These four mutual fund schemes are Franklin India Pension Fund, UTI Retirement Benefit Pension Fund, Reliance Retirement Fund, and HDFC Retirement Saving Fund. All of these mutual fund schemes have one thing in common, which is they are less exposed to the equities that consider having the potential of giving the user a high inflation-adjusted return over the long term. 

The lock-in period in these mutual funds varies with a typical 3% of the exit load if you think about redeeming it before 58 years of age or before reaching the target amount. On the other hand, there are no penalties if you redeem it after 58 years. Also, one can take out the whole amount of corpus in one transaction. 

Feature Alert: Avail a Term Insurance Plan in a few simple steps here.

Protect yourself and your family with the help of Goal Based Planning from INDmoney. Seldom do we keep track of the extent of insurance protection available for our families. Do all this and a lot more with INDmoney. Check if your life insurance plan matches your life goals here.

Wrapping Up

So this is what LIC pension plans for India are all about. It is a tremendous overall scheme, but in truth, we don’t want you to fix all your hopes of financially independent retirement on just a LIC pension policy, as the monthly payouts are relatively less than other forms of retirement investment plans. 

  • Shall I invest in a LIC pension plan for my retirement?

  • How much money will I get from the LIC pension plan after it gets matured?

  • Will I be getting a monthly payment from the LIC pension policy?

  • What are some of the charges I need to pay to avail LIC pension plan?

  • How can I make the payment of my LIC pension premium?