It is no secret that with the mushrooming cost of living, extended life expectancy, and inflation, it is imperative to include investments in your financial planning for retirement. Equally crucial is making sufficient contributions to your retirement fund. The question arises: How can one ascertain that the investments made for the post-retirement fund are deemed “adequate”? This is where the importance of a retirement plan comes in!
For instance, let’s consider Mr. Sharma, an individual with a financial goal of building a substantial corpus for his child’s education. In pursuit of this objective, Mr. Sharma opts for a retirement plan. By doing so, he combines the benefits of life insurance coverage with the potential for wealth creation. Over the policy term, the investment component has the potential to grow, providing Mr. Sharma with the means to fund his child’s education expenses.
Since the market is bombarded with many, HDFC Life Click 2 Retire and LIC’s New Jeevan Shanti are two of the plans that are gaining traction among customers. If you want to choose one, you need to get information on both of them.
Differences Between HDFC Life Click 2 Retire and LIC’s New Jeevan Shanti
Here is the complete comparison of HDFC Life Click 2 Retire and LIC’s New Jeevan Shanti.
| Parameters | HDFC Life Click 2 Retire | LIC’s New Jeevan Shanti |
| Minimum Age at Entry | 18 Years | 30 Years |
| Maximum Age at Entry | 65 years | 79 years for Deferred annuity |
| Minimum Vesting Age | 45 Years | 31 years (last birthday) |
| Maximum Vesting Age | 75 years | 80 years (last birthday) |
| Death Benefit | 105% of the Purchase Price. | 105% of Purchase Price (Increasing death benefit during deferment period) |
| Maturity Benefit | Your policy vests at the end of the policy term, and your Maturity (Vesting) Benefit will be the higher of the following:
| There is no maturity benefit under this policy. |
| Incentives | Under HDFC Life Click 2 Retire, there is no such option of offering incentives. | With LIC Jeevan Shanti, if your purchase price is Rs. 5,00,000/- or more, you will receive a higher amount of annuity due to available incentives. |
| Loan | There is no loan facility available under the HDFC Life Click 2 Retire. | The policy loan can be taken out at any point after the free-look period has ended or three months have passed since the policy’s conclusion, which is three months from the date of issuance. Policy loans are available both during and after the deferment period, according to the Corporation’s terms and conditions. |
| Technology | Elle- Virtual Assistant HDFC Life App | LIC Digital & Virtual Assistant (LIC Mitra) |
What is HDFC Life Click 2 Retire Plan?
HDFC Life Click 2 Retire is a Unit Linked Investment Plan (ULIP) Pension Plan designed to provide policyholders with financial security after retirement. Retirement is inevitable for all of us, and this plan enables policyholders to build a corpus, ensuring a continued enjoyable lifestyle and meeting the challenges of rising living costs and inflation. With an Assured Vesting Benefit, this policy allows you to create a secure retirement fund and potentially benefit from market upswings. Offering flexibility, the plan allows you to start as early as 18 years of age, with a low vesting age of 45 years. Additionally, it provides various payment options, including Regular, Single Pay, and Limited Pay.
What Are the Key Features and Benefits of HDFC Life Click 2 Retire?
Listed below are the salient features and benefits of Click 2 Retire by HDFC Life Insurance.
Death Benefit:
In the unfortunate event of the policyholder’s demise before the policy matures, the nominee will receive a death benefit, determined as the higher of the following:
- Fund Value
- 105% of the total premiums that were paid till death
The nominee has the option to receive the amount as an annuity from the insurer or withdraw the proceeds. Once HDFC Life has disbursed the death benefit amount, the policy will conclude, and no additional benefits will be provided. If you choose to convert the maturity into an annuity, you will need to acquire a new policy from HDFC Life at that juncture.
Free-look Period:
If the policyholder disagrees with the terms and conditions outlined in the policy documentation, they can choose to return the policy to the insurer within 30 days. Upon receiving the letter along with the original policy documents, HDFC Life will facilitate a refund of the value of allocated units, minus the cancellation charges. Once the policy is returned, reinstatement, restoration, or revival is not possible, and a new proposal must be initiated for a new policy.
Vesting Benefit:
This policy reaches maturity after the policy term, and your Maturity (Vesting) Benefit will be greater than the Fund Value or Assured Vesting Benefit. The Assured Vesting Benefit can be computed using the formula:
[101% +1% (Policy Term – Premium Paying Term)] Total premiums paid
Upon vesting, you can choose to commute up to one-third of the maturity benefit, which is tax-free under Section 10(10A) of the Income Tax Act, 1961.
Discontinuance:
The grace period is the duration following the premium due date during which the policy remains in force with full risk coverage. HDFC Life Click 2 Retire offers a grace period of 30 days from the premium due date for policies with annual, semi-annual, and quarterly frequencies. For policies with a monthly frequency, the grace period extends to 15 days from the premium due date. It is essential to ensure timely payment of the premium throughout the premium payment term.
Revival of Discontinued Policies:
You can reinstate your lapsed policy within two years from the discontinuance date by clearing all outstanding premiums. However, the decision is contingent on underwriting policies.
Tax Benefits:
It offers tax benefits under applicable sections of the Income Tax Act, providing potential tax savings.
What is LIC’s New Jeevan Shanti?
LIC’s New Jeevan Shanti is an Annuity plan that offers the option of purchasing a Deferred annuity, available through a one-time lump sum payment. The plan ensures regular annuity payments throughout the lifetime of the annuitant. It provides both immediate and deferred annuity options, allowing individuals to decide when they prefer their annuity payments to commence. With appealing annuity rates and flexibility in selecting the annuity mode, LIC’s New Jeevan Shanti serves as a dependable and convenient solution to ensure a stable income stream for retirees, enabling them to enjoy a comfortable post-retirement life.
What Are The Key Features and Benefits of LIC’s New Jeevan Shanti?
The following are the features and benefits of LIC’s New Jeevan Shanti.
Multiple Annuity Options:
The LIC’s New Jeevan Shanti policy offers both immediate and deferred annuity options, wherein the insured can select from the wide range of options available within the policy.
Assured Returns:
These returns are added to the LIC’s New Jeevan Shanti Plan every month and can be received easily after the deferred period.
Guaranteed Income:
The policyholder will receive a guaranteed monthly income for their entire lifetime. There are several options available wherein the nominee/secondary annuitant can receive the guaranteed income even at the early demise of the primary annuitant.
Single-Premium Plan:
It is a single-premium plan, meaning policyholders make a lump-sum payment at the beginning of the policy term.
Joint Life Option: Some variants of LIC’s New Jeevan Shanti may offer a joint life option, where the annuity is paid until the last surviving policyholder in the case of a joint-life policy.
Loan Facility:
The policyholder becomes eligible to apply for a loan after completing the first year of the policy term. The loan facility is applicable exclusively under the immediate annuity plan. In the case of deferred annuity plans, it is accessible for both single and joint life options.
Death Benefit:
Regarding the Death Benefit, specific options of the immediate annuity plan provide a death benefit for the nominee. In the case of deferred annuity plans, death benefits are available for both single and joint plans.
Surrender Value:
The LIC’s New Jeevan Shanti policy allows surrender within three months of purchase. For the immediate annuity plan, the surrender value is accessible. In the case of a deferred annuity plan, the surrender value is available for both options.
Premium Calculation of LIC’s New Jeevan Shanti
Meet Mr. Sharma, aged 45, who is planning for a financially secure future. He has opted for an annuity plan with specific parameters to ensure a steady income post his deferment period.
Details:
- Purchase Price: Mr. Sharma invests ₹10 lakh (excluding applicable taxes) to secure his future income.
- Deferment Period: He chooses a deferment period of 12 years, allowing his investment to grow.
- Secondary Annuitant: If applicable (Option 2), Mr. Sharma can include a secondary annuitant, says his spouse, aged 35 at entry, enhancing the plan’s flexibility.
| Annuity Option | Annuity Amount Payable for various annuity payment modes (Rs.) | |||
| Yearly | Half Yearly | Quarterly | Monthly | |
| Option 1: Deferred annuity for Single life | 1,39,900 | 68,551 | 33,926 | 11,192 |
Option 2: Deferred Annuity for Joint life | 1,32,200 | 64,778 | 32,059 | 10,576 |
Premium Calculation of HDFC Life Click 2 Retire
Mr. Verma, a 35-year-old employee of an MNC, recently finished making plans for his retirement. To his astonishment, he discovered that his present investments and superannuation funds would only yield about Rs 10,50,000, or 35% of the entire amount needed, out of the total of Rs 30 Lakhs that he would need. He must immediately begin making provisions for the additional 65% of his post-retirement income that he will require. We’ll explore if HDFC Life Click 2 Retire can assist him in reaching his retirement objectives.
Mr. Verma’s requirement is to make sure that, upon retirement, his pension plan provides him with an extra Rs. 20 lakh. Assume Mr. Verma pays a premium of Rs. 1 lakh for HDFC Life Click 2 Retire, which has a 20-year policy term and a 10-year premium payment term.
| The assumed rate of return @ 8% p.a | The assumed rate of return @ 4% p.a | ||
| Fund value on vesting at 55 years of age subject to policy being in force | Annual annuity amount | Fund value on vesting at 55 years of age subject to policy being in force | Annual annuity amount |
| Rs. 23,79,713 | Rs. 1,77,102 | Rs. 13,10,944 | Rs. 97,416 |
What Should You Pick: HDFC Life Click 2 Retire or LIC’s New Jeevan Shanti?
Choosing between HDFC Life Click 2 Retire and LIC’s New Jeevan Shanti requires a careful evaluation of your financial goals, risk tolerance, and preferences. Both plans offer different features, and the decision should align with your specific needs. HDFC Life Click 2 Retire is likely a retirement or pension plan that allows you to accumulate a corpus for retirement. On the other hand, LIC’s New Jeevan Shanti is typically an annuity plan, offering regular income during retirement.
Consider whether you prioritize building a corpus for retirement or securing a regular income post-retirement. If you prefer more control over investments and have a higher risk tolerance, HDFC Life Click 2 Retire may be more suitable. If you seek a guaranteed income with lower risk, LIC’s New Jeevan Shanti might be preferable.
