Retirement planning is extremely crucial as it allows one’s finances to remain secure even after a person has stepped down from their job. With careful planning and adequate savings, you can ensure that your post-retirement life will be free of any financial burdens, and there come the pension plans in the scenario. The amount of money you will need for your post-retirement lifestyle will depend on whether you have any pending loans or liabilities, your retirement age, your medical history, and any other financial goals you have. You will also need to take inflation into account and plan according to the expected rise in goods and services.
HDFC Life and Life Insurance Corporation of India, both insurers have come up with certain retirement plans that are beneficial to plan retirement strategies beautifully. Among them, HDFC Life Smart Pension Plan and LIC’s Jeevan Akshay – VII plan are noteworthy. Both pension plans have come up with multiple advantages and help to build a corpus to secure the golden days of your life. To know more about these plans, have a look at the following mentions.
Comparison Between HDFC Life Smart Pension Plan and LIC’s Jeevan Akshay – VII
The following table gives you a brief idea about these two plans and their differences.
|HDFC Life Smart Pension Plan
|LIC’s Jeevan Akshay – VII
|Minimum Age at Entry
25 years (completed) subject
to a minimum Purchase Price of Rs. 10 lakhs
|Maximum age at entry
85 years (completed)
100 years for Immediate Annuity for life with return of Purchase Price option
|Minimum Age at Vesting Date (in years as on last birthday)
|40 years (55 years for QROPS)
|Maximum Age at Vesting Date (in years as on last birthday)
|Premium Payment Frequency
|Annual, Half-yearly, Monthly
|Annual, Half-yearly, Quarterly, and Monthly
Annual: Rs. 1,00,000
Half Yearly: Rs. 50,000
Monthly: Rs. 10,000
Annual: Rs. 30,000
Half Yearly: Rs. 15,000
Monthly: Rs. 3,000
Single – Rs. 1lakh
Minimum purchase price:
25 years to 29 years (Age at entry) – Rs. 10 lakhs
30 years and above (Age at entry) – Rs. 1,00,000/- subject to Minimum Annuity
|10 annuity options are available
|The death benefit in installment
|Available. Depends on the terms and conditions
Available, after three months
from the completion of the policy
|Free look period
|15 days, and 30 days
|Partial withdrawal can be made only after completion of 5 policy years
|Revival of the lapsed policy
|Premiums paid may be eligible for tax benefits under the Income Tax Act, of 1961
|Available as per the prevailing tax laws
On the death of the life assured before the end of the policy term, the nominee will receive a death benefit which shall be a higher
of the following:
i) Fund value
ii) Sum Assured on Death
|Depends on the annuity option chosen
What is the Smart Pension Plan offered by HDFC Life Insurance Company?
HDFC Life Smart Pension Plan provides life insurance and helps you to save during your working years and build a retirement corpus to prepare for your retirement. You will need to choose a target vesting date, premium payment term, and fund options according to the number of years you expect to save and your risk appetite. On the date of vesting, you may utilize your retirement corpus to get regular annuity/pension payments or alternatively take part in it as a lump sum. A host of flexibilities to alter target vesting date, premium payment term, fund proportions, and encashment options
(subject to conditions) allow you to further customize the plan along your retirement journey.
Major Benefits of the Smart Pension Plan of HDFC Life Insurance Company
Here are the advantages.
Utilization of Death Benefit:
On the death of the life assured prior to the vesting date, the nominee will have the following options:
- Withdraw the entire death benefit under the policy,
- To utilize the entire death benefit of the policy or part thereof for purchasing an immediate annuity (subject to eligibility conditions of immediate annuity) or deferred annuity at the then prevailing annuity rate from the Company.
Utilization of Vesting Benefit:
The policyholder will have the following options:
- To utilize the entire vesting benefit to purchase an immediate annuity or deferred annuity from the Company at the then prevailing annuity rate or to commute up to 60% and utilize the balance amount to purchase an immediate annuity or deferred annuity from the Company at the then prevailing annuity rate.
- To purchase immediate annuity or deferred annuity from another insurer at the then prevailing annuity rate to the extent of 50%, of the entire vesting benefit of the policy net of commutation or such percentage.
Automatic Asset Rebalancing Strategy:
Under this strategy, you can choose to allocate your money in a pre-decided ratio between our equity-oriented funds (Individual Prime Equity Pension Fund/Large Cap – Pension Fund) and debt-oriented fund (Individual Preserver Pension Fund).
Systematic Transfer Strategy:
Systematic Transfer Strategy works on the principle of the rupee cost averaging method to safeguard your wealth against market volatility. If this strategy is chosen provided that Automatic Asset Rebalancing Strategy is not chosen, the premium received net of premium allocation charge shall be allocated first to the Individual Preserver Pension Fund to purchase units.
Postponement of Vesting Date:
On the date of vesting, in addition to the above, the policyholder shall have the option to extend the accumulation period or deferment period within the same policy with the same terms and conditions as the original policy provided the policyholder is below an age of 60 years at the time of exercising this option.
The plan allows you the option of paying additional unlimited Top-up amounts in addition to your premiums within the policy term thereby allowing you to increase your savings at your own pace.
Alter Premium Payment Term:
(for other than a single premium policy) – The plan allows you the option of increasing or decreasing the premium payment term at any time before the end of the premium payment term chosen earlier, subject to eligibility criteria under the plan.
This plan offers you the flexibility to use your fund for any interim financial goals or emergencies by allowing partial withdrawal subject to the conditions. Partial withdrawal can be made only after the completion of 5 policy years. It shall not exceed 25% of the fund value at the time of partial withdrawal. The minimum amount allowed is Rs. 6,000.
Redirection of Premiums:
You have the option to redirect the future allocation of the net amount of premiums available for Investment in any desired proportion in the available Unit Linked Pension funds, either at the policy commencement Date or at any time during the vesting period. You can also choose a pre-defined investment strategy as an Automatic Asset Rebalancing Strategy or Systematic Transfer Plan. Unlimited free premium redirection requests are allowed during the vesting period.
Know about Jeevan Akshay – VII plan
LIC’s Jeevan Akshay-VII is a Non-Linked, Non-Participating, Individual Immediate Annuity Plan. This is an Immediate Annuity plan wherein the Policyholder has the option to choose the type of annuity from 10 available options on payment of a lump sum amount. The annuity rates are guaranteed at the inception of the policy and annuities are payable throughout the lifetime of the Annuitant(s). This plan can be purchased offline as well as online.
Key benefits of Jeevan Akshay – VII plan of LIC
The major benefits are as follows.
Options available for payment of Death Benefit:
Under the annuity options where the benefit is payable on death the Annuitant(s) will have to choose one of the following options for the payment of the death benefit to the nominee(s)
- Lumpsum death benefit
- Annuitisation of death benefit
- In installment
Special provision for people with disabilities:
If the Proposer has a dependant person with a disability (Divyangjan), the plan can be purchased for the benefit of Divyangjan as Nominee/Secondary Annuitant, subject to a minimum Purchase Price of Rs. 50,000/- without any limit on minimum annuity payment and minimum age at entry.
Only under the following annuity options, the policy can be surrendered at any time after three months from the completion of the policy (3 months from the date of issuance of the policy) or after the expiry of the free-look period, whichever is later:
- Immediate Annuity for life with return of Purchase Price.
- Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitants survives and return of Purchase Price on the death of the last survivor.
The loan facility shall be available at any time after three months from the completion of the policy (3 months from the date of issuance of policy) or after the expiry of the free-look period, whichever is later, subject to terms and conditions as the Corporation may specify from time to time.
Mode of annuity payment:
The modes of annuity available are yearly, half-yearly, quarterly, and monthly. The Annuity shall be payable in arrears that is the annuity payment shall be after 1 year, 6 months, 3 months, and 1 month from the date of commencement of policy depending on whether the mode of annuity payment is Yearly, Half yearly, Quarterly and Monthly respectively.
Joint life facility:
The joint-life annuity can be taken between any two lineal descendant/ascendant of a family (Grandparent, Parent, Children, Grandchildren) or spouse or siblings.
Immediate Annuity for life with return of Purchase Price:
On the death of the annuitant, the annuity payment shall cease immediately and the Purchase Price shall be payable to the nominee(s). The annuity payments shall be made in arrears for as long as the Annuitant is alive, as per the chosen mode of annuity payment.
Premium comparison between HDFC Life Smart Pension Plan and LIC’s Jeevan Akshay – VII
Mr. Ahluwalia, a 35-year-old businessman, wants to invest in a pension plan, and he wants to calculate the expenses for these two plans. Let us find out how much money he needs to opt for these two plans for the given conditions.
|Name of the Plan
|LIC Jeevan Akshay – VII
|Rs. 5 lakhs
|Immediate annuity with Life
|Rs. 34600 per year
Now, the same person opts for HDFC Life Smart Pension Plan through HDFC Life Smart Pension Plan paying a premium of Rs. 10,000 every month into Large Cap – Pension Fund while opting to utilize his entire retirement corpus (on survival till vesting date) to purchase HDFC Life Smart Pension Plus: Option B – ‘Life Annuity with return of 100% of Total Premiums Paid’ with a deferment of 5 years to receive annuity payouts annually.
|Premium payment term
|Annuity with return of premium (Paid annually)
HDFC Life Smart Pension Plan, or LIC’s Jeevan Akshay – VII, which one is best for you?
Choosing between these two plans is really a tough job because both plans have come up with certain benefits that can address the specific needs of the policy-seekers. For example, if you need partial withdrawal benefits, or more flexibility to customize your plan, then you should go for HDFC Life Smart Pension Plan. On the other hand, if multiple annuity options to choose from and the flexibility to take the annuity, then LIC Jeevan Akshay – VII is the ideal one for you. Therefore, it totally depends on the requirements of the policy-seekers and which plan will be more suitable for them.