LIC launches Jeevan Shanti pension plan with one-time premium

Chennai: The banking sector is in turmoil and Centre has been working on ways to curb the issue from getting out of hands, what with mergers and other measures. It is not uncommon that other associated fields that work close with banks to face some heat at times like these.

But, Life Insurance Corporation of India (LIC) has launched, what it claims to be the first-of-its-kind country-wide plan, Jeevan Shanti, wherein a one-time premium will yield monthly pension for two generations.

Manager, LIC (South Zone), R Thamodharan spoke to News Today about the scheme and the next possible set of actions that LIC might undertake.

Excerpts from his interview:

Q: Let us know more about Jeevan Shanti.
A: It’s a non-linked, non-participating, single-premium annuity plan wherein the policy holder has an option to choose an immediate annuity or deferred annuity with the deferment period ranging between one and 20 years. While there are host of options to choose in the plan, some of the prominent ones include joint life annuity option which can be exercised with grand parent, parent, children and grand children or spouse or siblings as secondary life. That’s not all, if the holder has a handicapped dependant, even s/he can become a nominee or even a second annuitant under the immediate annuity option. Above all, the annuity options under immediate annuity are even applicable to the National Pension Scheme subscribers helping them receive double pension. This plan also provides 80C tax benefit.

Q: How will the interest rates be for the annuity?
A: It will differ based on the deferment period selected. If the highest 20 year period is selected, we are offering up to 21.43 per cent interest for one-time premiums starting from Rs 1.5 lakh onwards. So, post the completion of 20 years, the customer will be getting Rs 32,000 every year for two generations.

Q: How has been this possible?
A: All this time, insurances weren’t given any guarantee thanks to the highly fluctuating market. Same is the case with mutual funds and share markets. So, annuities were usually based on the amount matured and the interest rates at that time. LIC was one of the first to break this existence with its Jeevan Shree and Jeevan Suraksha. In fact, even to this date, we are paying 12 per cent interest rates to our policy holders at a time when bank interest rates have dwindled down. This has been possible through our hard work and better decision making.

Q: How has the reception been so far?
A: It was over whelming. We had the country-wide launch on 12 September and by 30 September, we got 31,235 policies registered with a total income of Rs 1,312.46 crore from this plan alone. As far as reception is considered, north India fared better than the south. In south zone, 3,880 policies have been sold collecting Rs 163.51 crore. In Kerala, 1,661 policies have been sold collecting Rs 75.77 crore. Thrissur division is top performer in south zone and holds eighth position at the national level single-handedly collecting Rs 22.66 crore. In Tamilnadu, 2,219 policies have been sold collecting Rs 87.74 crore. Chennai is the topper, collecting Rs 17.11 crore.

Q: Is Systematic Investment Plan (SIP) available for Jeevan Shanti? Also, are guaranteed additions available?
A: As of now, we have only one option of receiving a single one-time premium and no SIP. But accrued guaranteed additions are there under deferred annuity option where they will be accrued at the end of each policy month till the end of the deferment period. We also have an option under both immediate and deferred annuity. When purchase price is high, incentive by way of increase in the tabular annuity rate will be given to the annuitant.

Q: Are there options for policy closure if money is required by the policy holder immediately?
A: There is a liquidity option available where the customer can either get a loan and and surrender as well for annuity options with death benefit. Death proceeds can also be claimed in lump sum or installments or in even annuity form.

Q: What’s next for LIC? Are there any plans of venturing into vehicular insurance?
A: As of now, we want to popularise Jeevan Shanti plan and bring in more people into its fold. In this day and age, people don’t realise the importance of getting pension in the later stages of their life. They focus on earning and spending. There is more to life than meets the eye. So, we want maximum number of people to get benefitted. Secondly, as of now, we don’t have any plans of venturing into vehicle insurance.


IDBI bank acquisition

LIC has proposed to acquire upto 51 per cent stake in IDBI Bank and a decision will be taken tomorrow. LIC is expected to pump in Rs 10,000-12,000 crore for the in stake IDBI, from 7.89 per cent shares it had on June. Government holds 85.96 per cent now, which will be reduced to below 43 per cent. But Insurance Regulatory and Development Authority of India (IRDAI) had said LIC shouldn’t seek management control as it lacks the expertise to run a bank.

S Ben Raja