In old age, people are most concerned about money. Life Insurance Corporation of India (LIC) understands this basic requirement and created separate plans in order that old age people can often managed with their dignity and there is no dependency on anyone with the help of assured income.
Of these options, Monthly Income Scheme has parametered as a ray of light for the ones looking for stability after their retirement.
In this exhaustive analysis, find out how LIC’s Jeevan Shanti can offer a secured monthly income of ₹12,000 per month, ensuring peace throughout your golden years.
Interpretation of LIC’s Monthly Income Guarantee
The financial planning for retirement is typically about developing sources of income that will be reliable even in the face of wobbly markets. LIC’s Monthly Income Scheme takes care of this by providing fixed and regular payouts irrespective of market conditions.
The plan works on a very fundamental principle, you invest either as a single premium or in a regular payment mode over specific period of time and in return LIC undertakes to pay you a fixed sum of ₹12,000 per month for the term policy term you opt.
Such structure serves as a financial back-cushion to protect you against the vagaries of other investment options.
Unlike market-related investments where returns can vary according to economic factors, LIC’s guaranteed income is just that—a guarantee—adding peace of mind for retirees for whom certainty is a lot more important than possibly higher, but risk-laden returns.
Key Features of LIC’s Monthly Income Plan
What’s striking about LIC’s Monthly Income Scheme is the thoughtful construction of the product that fits retirement planning like a glove:
Guaranteed Income: That’s according to me the most attractive proposition that you will get ₹12,000 cash in your account every month irrespective of market fluctuation or economic downturn. This is what make sit easier to budget and manage funds in retirement.
Premium Paying Mode: The plan is flexible as it provide options to make payments of premium, either as single term or as regular payment installment for the opted period. This flexibility makes the plan affordable for those with various spending limitations.
Life insurance coverage: Building on the income protection benefit, the policy offers life cover – the death benefit pays out a once-off lump sum that can be used by loved ones for making ends meet, paying off debts, and taking care of daily expenses even after you are gone.
This two way achievement of earning and life cover makes it a complete financial solution.
Tax Advantages: Premiums paid towards this plan may be eligible for tax benefits under Section 80C of the ITA and the death benefit is usually tax free under Section 10(10D). Nevertheless, depending on income tax law, monthly income is arguably taxable.
Loan Feature: The policy offers loan facility against the policy, by its surrender value on completion of a certain Policy Term, ensuring availability of funds for unexpected financial emergencies and no disturbance in the flow of income.
Purchase Price return: There is a purchase price return provided in some versions of the plan to the nominees after the end of the income period or on the demise of the policyholder and it that way the principal investment is not lost.
How Much You Need to Invest to Earn ₹12,000 per Month
Yes it is possible to avail a guaranteed monthly income of ₹ 12,000 p.m from LIC – of course the investment amount will determine on various factors such as: Your age at entry The policy term that you opt for The interest rates that are prevalent at the time when you purchased the plan.
Typically, for a 60-year-old, looking at a ₹12,000 monthly income for an LIC Jeevan Akshay VII plan, to yield the current interest rates, the indicative single premium would be around ₹18-20 lakhs, give or take for what exact conditions are taken.
The calculation is very simple, the annual payout rate (about 7-8% if we consider the market dynamics of today) observation tells how much corpus should have so your requirement is going to be fulfilled. For instance:
Annual Income Required: ₹1,44,000 (₹12,000 × 12 months)
Payout Rate: 7.5% (approximate current rate)
Required Investment: ₹1,44,000 ÷ 0.075 = ₹19,20,000
Worth noting that these numbers are example and may be different based on which actual plan you choose and what are the interest rates when you actually buy the plan. Calculations in the table above is for illustration purpose.*f or exact figure as per your own premium consult with authorised LIC agent.finacial advisor.
Comparison with Other Earners
Comparing LIC Monthly Income Scheme with other retirement income In comparison to other retirement income products, here are a few of the differences:
Senior Citizen’s Savings Scheme (SCSS): SCSS gives competitive interest rates (currently 8.2%/annum) but has an investment amount cap at ₹15 lakhs with a fixed term of 5 years. On the other hand, LIC’s plan can give income for a longer duration with no upper cap on investment.
Bank Fixed Deposits: Bank FDs are the most liquid form of investment, but the interest earned on bank FDs is comparatively lower than LIC’s income plans. Furthermore, the interest earned on FDs is completely taxable and in such case, one’s effective returns might be lowed if one is in a higher tax slab.
Post Office Monthly Income Scheme (POMIS) : Just that, the limit investible is only ₹9 lakhs (and ₹18 lakhs for joint accounts) for a term of 5 years, POMIS has far less capacity than available with LIC’s various more flexible plans that may absorb much bigger investments over a longer period.
Mutual Fund Systematic Withdrawal Plans (SWPs) Another option that could potentially yield more, SWPs are subject to market risk and there are no guarantees regarding the amount of income you receive. LIC’s assured income is a source of comfort for those retirees who lack confidence in SWPs.
What makes LIC’s scheme click is not just its offering of assured returns, long tenure of payment (15 years) and the comfort of it being a government backed institution with decades of financial soundness — all of which lend credibility and confidence in a retired person who is wary of taking risks.
In Real-life Who Gains Most?
Here are some of the retirement scenarios where the Monthly Income Scheme helps:
Case 1.‘ The corporate retiree * /Meet the Iceman An intriguing exploration of a man in the moment of his salvation By projection expertMOISES LOPESDE CULTURE WRITER© Copyright 2007 Globe Newspaper Company. From Boston.com
Rajesh left for the heavens at 60 with a pretty big sum from his provident fund and gratuity. Having invested ₹19 lakhs in LIC scheme he gets ₹12,000 per month as additional income along with his pension. And that extra income, it allows him to live at the same quality of life he lived prior to retirement, because he does not have to draw down his savings.
Example 2: The Freelance Professional
A self-employed consultant who is not entitled to a pension, Priya deposited investment in the scheme during her work years. From her 58th birthday, she now gets ₹12,000 every month, in what has become for Ms. Shin a kind of pension system, ensuring some financial security in her old age without a company retirement program.
Case 3: The Early Planner
Amit bought LIC’s deferred income plan at the age of 45 and paid regular premiums for 15 years. Now 60, he gets ₹12,000 every month without even making a sizable lump-sum investment, showing how planning early in life can help harness the power of compounding.
Thus, LIC’s Monthly Income Scheme, as outlined in the examples above, can be modelled as per different financial cases and retirement plans; catering to different requirements.
Application Procedure and Documentation
The process to join LIC’s Monthly Income Scheme is as simple as follows:
Choosing Plan Option: Choose the plan option which best suits your needs in terms of the premium payment options as well as the income period you would want to avail.
Application Process: Fill in the proposal form, which can be picked up from the LIC branches or an authorised agent, as per the details of your life and finances.
Documentation: Document the following as applicable:
Proof of identity (Aadhaar, PAN, passport)
Proof of address (utility bills, Aadhaar)
Evidence of age (Copy of birth certificate, passport)
Two latest passport size photographs
-Proof of income (for policies with higher sum assured)
Banking information for premium payments and income credits
Medicals: Required based on your age & investment made at the time of policy issuance.
Payment of the Premium: Pay the premium online You can pay the premium in many ways such as Net Banking, Credit/Debit Card, or UPI.
When the policy is accepted, LIC will give the policy document that embodies all the terms and conditions. The monthly income begins according to the terms of your policy, generally straight to your nominated bank account.
Things to Remember Before Investing
Even though there are many advantages of LIC’s Monthly Income Scheme, it is important to consider the following points before making a decision: 1.
Inflation Impact: The fixed nature of ₹ 12,000 monthly income means that the purchasing power of ₹ 12,000 will erode over time on account of inflation. Ask yourself if this amount will be enough to last you through retirement, with the cost of living increasing every year.
Lock-In Period: These plans generally have higher surrender charges in the earlier years. Just double check that you don’t need access to the invested money during that time or be at risk for financial losses from early withdrawals.penalties.
Opportunity Cost: The assured yet modest returns entail the loss of opportunity to earn higher returns through market-linked returns. Determine if that trade-off matches your broader financial picture and risk appetite.
Need for Diversification: From an investment point of view, advisors usually refrain from suggesting that your entire retirement kitty be invested in one instrument. You might want to spread your money over different types of investments to find a mix that gives you a blend of security and growth.
Tax Impacts: Although premiums may be tax-deductible, the income that consumers are paid each month is generally taxable. Compute the after-tax income to get a feel for what your actual return will be on this investment.
Preparing for the Worst in Retirement
To make sure your income plan stays on track through retirement, even when the economic and interest-rate landscapes shift, it pays to go back to basics.
Laddered Investments: Don’t invest in the full amount at one go, create a ‘ladder’ by buying a few income plans with maturities at regular intervals. This strategy enables you to remain flexible without waiting to benefit from higher rates in the future.
Diversifying: Balance of the security of securities that protects against inflation, with the security of the potential for growth of assets, such as funds or real estate, which contribute towards an inflation-protected portfolio.
A Regular Review Have a regular review period to check if the ₹12,000 you are taking will be sufficient for your requirement. If needed, use further top ups to fill any new limits between revenue and costs.
Keep a separate cache of liquid emergency fund with a lock of at least 6 months expenses. This cushion prevents your income plan from falling apart during unexpected financial emergencies.
Securing The Golden Years
For individuals who want to ensure that they have a regular income during retirement, LIC’s Guarnateed Monthly Income Scheme is a sensible option to consider.
The guarantee of ₹12,000 a month does not only give monetary comfort, but emotional as well — that your minimum expenses will be taken care of even if the economy sputters.
Although one financial product cannot meet all the requirements at retirement, LIC’s income plans are the foundation stones of a complete retirement planning.
When part of a balanced portfolio in concert with other investments and regular financial monitoring, these plans can add to the peace of mind and dignity enjoyed during retirement.
Keep in mind, retirement planning is a very individualized thing and depends on personal circumstances, financial goals and appetite for risk. By talking with reputable financial advisors prior to heavy investing you can guarantee your chosen path is the best fit for your personal retirement.
So with meticulous planning and with the help of assured income options such as LIC Fixed Monthly Income Plan retirement can be good what it is supposed to be: a rewarding period enjoying financial independence and peace of mind!