Pension Plan New Jeevan Suraksha-I

Income Tax provisions under New Jeevan Suraksha 1
1. New Jeevan Suraksha-I is a scheme approved by IRDA as envisaged in Section 10(23 AAB) of the Act.
2. The income of the fund maintained under this pension scheme is totally exempt from income tax being a fund maintained under section 10(23 AAB) of the Act.
3. The deduction under Section 80CCC is available up to a sum of Rs.10,000/- to the assessee, who is an individual in respect of any sum deposited by him into the above plan.
4. The deduction under Section 80 CCC is not available to a Hindu Undivided family.

Bonuses:
Jeevan Suraksha 1 is an with-profit plans and participate in the profits of the LIC’s annuity / pension business. Policies get a share of the profits in the form of bonuses. Simple Revisionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year.  Once declared, they form part of the guaranteed benefits of the plan. Final (Additional) Bonuses may also be payable provided policy has run for a certain minimum period.

a) On vesting:
The Notional Cash Option together with Revisionary Bonuses and Final additional Bonuses ( if any ) with or without 25% commutation will be compulsorily converted into annuity having following options.

• Annuity for life.
• Annuity for life with guaranteed period of 5, 10, 15, 20 years.
• Joint life and last survivor annuity to the annuitant and his/her spouse under which annuity payable to the spouse on death of the purchaser will be 50% of that payable to the annuitant.
• Life annuity with return of purchase price.
• Life annuity with annuities increasing at a simple rate of 3% per year.

T he annuity rates will be that available under the version of the New Jeevan Akshaya Plan current at the date of vesting. A rebate of 3% will be available on the purchase price of the New Jeevan Akshaya Policy. Option for the annuity type is to be exercised at least 6 months before the date of vesting.

b) During Deferment:

A term rider option will be available. On the death of the policyholder who has opted for the term Assurance rider ( provided the policy is in-force), the Term Assurance Sum Assured along with all premiums ( excluding term Assurance premium and extra premium if any ) paid up to the date of death accumulated at the rate of 5% p.a. compounding or at such rates as decided by the Corporation from time to time will be paid to the nominee. When the policy is not in-force, only return of premiums with interest as stated above will be available.

For those not opting for the Term Assurance Rider, in respect of policies which are in-force or in a paid up condition, all premium accumulated at 5% p.a. compounding or at such rates as decided by the Corporation from time to time, will be paid to the nominee. Term Rider Option will be available only on the Annual Premium Plan.

Eligibility Conditions and Restrictions for LIC Jeevan Suraksha 1

Minimum age at entry : 18 years.
Maximum age at entry: 65 years
Minimum vesting age : 50 years
Maximum vesting age : 79 years
Minimum deferment period : 2 years
Maximum deferment period : 35 years
Minimum Notional cash option for regular premium policies :Rs.50,000/-
Minimum premium : Rs.2,500/- p.a for regular premium Rs.10,000/- for single premium policies 

In this plan, the premium is paid till the end of the policy term, i.e. till the pension starts from the Vesting Date. At the start of the plan, the policyholder gets to select a Notional Cash Option. The Notional Cash Option along with accrued Bonuses forms the maturity proceeds. The policyholder can withdraw 25% of the entire maturity proceeds including bonus and receive a lumpsum amount on vesting and the remaining 75% amount will surely be converted into annuity. There are 5 annuity choices at present to choose from. An additional 3% rebate would be given on the purchase price of the annuity at the vesting date. At the time of vesting, the annuity rates for Immediate Pension Plan LIC Jeevan Akshay VI Plan would be considered.

However, if the life insured dies before pension starts, all premiums paid + interest on the same is returned. If death occurs after vesting date, it depends entirely upon the pension option whether any Death Benefit would be payable or not.

Key Features of LIC New Jeevan Suraksha-1 Plan

§  This plan is a deferred pension plan with bonus facility

§  Death Benefit after the Vesting Date depends on the annuity option chosen.

§  Upon Vesting, there are 2 Vesting Options available to the life insured

o    He may choose to withdraw 25% of the corpus tax free and avail pension from the remaining 75% of the corpus

o    He may choose to avail pension from the entire corpus

§  An additional 3% rebate would be given on the purchase price of the annuity at the vesting date.

§  At the time of vesting, the annuity rates for Immediate Pension Plan LIC Jeevan Akshay VI Plan would be considered.

§  There are 5 options for Pension- Annuity for Life- where pension is paid till the life assured is alive and nothing is payable on death, Annuity Guaranteed for Certain Periods- where pension is paid for 5/10/15 or 20 years as chosen whether the life assured is alive or not, Annuity with Return of Purchase Price on Death- pension is paid till the life assured is alive and the remaining amount of the corpus is paid to the nominee as death benefit , Increasing Annuity- pension is paid till the life assured is alive at an increasing rate of 3% p.a. and Joint Life Last Survivor Annuity- pension is paid till the life assured is alive. On the death of the life insured, 50% of the pension is payable to spouse as long as the spouse if alive.

§  Optional higher cover through Term Rider is available for annual premiums only.

§  There is large cash option rebate.

Benefits you get from LIC New Jeevan Suraksha-1 Plan

Death Benefit – In case of death of the Life Insured before the vesting date, the nominee receives all premiums paid till death + Term Rider Sum Assured(if chosen) together with 5% compounding interest.

In case of death of the Life Insured after the vesting date, it entirely depends upon pension option chosen.

Maturity Benefit – At the maturity of the policy, the insured will get some choices

·         To choose whether to withdraw 25%of the fund tax free and avail pension from the remaining or take pension from the entire corpus

·         To choose the type of pension

o    Annuity for Life- where pension is paid till the life assured is alive and nothing is payable on death

o    Annuity Guaranteed for Certain Periods- where pension is paid for 5/10/15 or 20 years as chosen whether the life assured is alive or not

o    Annuity with Return of Purchase Price on Death- pension is paid till the life assured is alive and the remaining amount of the corpus is paid to the nominee as death benefit

o    Increasing Annuity- pension is paid till the life assured is alive at an increasing rate of 3% p.a.

o    Joint Life Last Survivor Annuity- pension is paid till the life assured is alive. On the death of the life insured, 50% of the pension is payable to spouse as long as the spouse if alive.

Income Tax Benefit – Premiums paid under life insurance policy are exempted from tax under Section 80 C and 1/3^rd of the maturity proceeds are exempted from tax under Section 10 (10A) but only 25% can be withdrawn on maturity. Pension that is received is taxable.

Eligibility conditions and other restrictions in LIC New Jeevan Suraksha-1 Plan

	Minimum	Maximum
Notional Cash Option (in Rs.)	50,000 (for Regular Premium)	No Limit
Deferment Period (in years)	2	35
Premium Payment Term (in years)	2	35
Entry Age of Policyholder (in years)	18	70
Age at Vesting (in years)	50	79
Premium (in Rs.)	10,000 for Single 2500 for Regular	No Limit
Payment modes	Single, Yearly, Half-yearly, Quarterly, Monthly and SSS

Sample illustration of premium for LIC New Jeevan Suraksha-1 Plan

The below illustration is for a healthy Male of Age 30 years (non-tobacco user) opting for a

Notional Cash Option = Rs. 5,00,000.

Additional Features and Benefits of LIC New Jeevan Suraksha-1 Plan

Riders- There is 1 additional rider available:

·         Term Assurance Rider

What happens if?

You stop paying the premium – If you stop paying the premiums after 3 policy years, the policy lapses and all benefits cease. The amount of Notional Cash Option shall be reduced by the payment ratio. However, the policy can be revived if all due premiums and interest is paid up.

You want to surrender the policy – There is a Guaranteed Surrender Value after 2 policy years
Guaranteed Surrender Value = 90% of all premiums regular paid– 1st year’s premium or 90% for Single Premium

There is Special Surrender Value under this plan as well.

You want a loan against your policy – Loan facility is not available under this policy