One needs to save from an early age so that he/she can live the golden days of retirement life worry-free. Retirement planning has been very crucial and complex as well since it depends on various factors such as inflation, lifestyle, medical bills, liabilities, dreams, responsibilities, and so on. Keeping in mind all the factors one has to start saving so that post-retirement one does not have to worry about finances. For that one needs to have a good retirement plan so that he/she can build a corpus.
When we are talking about retirement policies, we cannot overlook two insurance companies namely HDFC and LIC as they have come up with multiple retirement products that can help you to raise a handsome amount of money to live your retirement life without any tension. Among many, there are two plans, HDFC Smart Pension Plan and LIC’s Jeevan Akshay – VII which have gained popularity due to their nature. Both plans have come up with multiple benefits and facilities that can help you to build your desired amount. To know more about these two plans, have a look at the following mentions.
Comparison Between HDFC Life Smart Pension Plan and LIC’s Jeevan Akshay – VII
The following table will help you to understand the differences and similarities between these two plans. Have a look.
| Parameters | HDFC Life Smart Pension Plan | LIC’s Jeevan Akshay – VII |
| Age at Entry | Minimum: 18 years Maximum: 70 years | Minimum: 25 years, subject to a minimum Purchase Price of Rs. 10 lakhs Maximum: 85 years 100 years for Immediate Annuity for life with return of Purchase Price option |
| Age at Vesting Date (in years as on last birthday) | Minimum: 40 years (55 years for QROPS) Maximum: 80 years | Not available |
| Price | Minimum premium: 5 pay: Annual: Rs. 1,00,000 Half Yearly: Rs. 50,000 Monthly: Rs. 10,000 Others: Annual: Rs. 30,000 Half Yearly: Rs. 15,000 Monthly: Rs. 3,000 Single – Rs. 1 lakh | 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 |
| Premium Payment Frequency | Annual, Half-yearly, Monthly | Annual, Half-yearly, Quarterly, and Monthly |
| Fund option | 4 | 10 annuity options are available |
| Loan facility | Available. Terms and conditions applicable. | Available, after three months from the completion of the policy. |
| The death benefit in instalment | Available | Available |
| Revival of the lapsed policy | Available | Not available |
| Free look period | 15 days, and 30 days | 30 days |
| Partial withdrawal | Partial withdrawal can be made only after completion of 5 policy years | Not available |
| Online purchase | Yes, available | Yes |
| Tax benefits | Premiums paid may be eligible for tax benefits under the Income Tax Act, of 1961 | Available as per the prevailing tax laws |
| Death benefit | 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 HDFC Smart Pension Plan?
This retirement plan has come up with life insurance facilities that help you to safeguard yourself and your facility during your working age coupled with retirement benefits that can help you to build a hefty amount of money for your retirement days. Under this plan, one is free to choose the premium payment term, vesting age and fund options. One can also choose the number of years he/she wants to invest the amount. One has the option to choose the retirement amount to get regular income or as a lump sum amount. Encashment options are also available to choose from. This Plan offers you maximum choices to customise your plan so that you can make your retirement plan according to your needs.
Benefits of the HDFC Smart Pension Plan
Here are the important mentions.
- If the insured person dies an untimely death before the vesting age then the nominee will either withdraw the entire amount of death benefit or he/she can purchase an immediate annuity or deferred annuity from the same company at the rate of the current annuity. It depends on several terms and conditions.
- One can use the entire vesting benefit either to purchase a deferred or immediate annuity or can also commute up to 60% and use the balance to do the same.
- One can also purchase an immediate or deferred annuity from another insurer using the vesting benefit provided the terms and conditions are followed.
- This policy offers a partial withdrawal facility for financial emergencies. One can only do this partial withdrawal after the completion of 5 years of the policy. It should not exceed 25% of the und value and the minimum amount of partial withdrawal is Rs. 6000.
- To fight against market volatility one can use the benefit of a systematic transfer strategy which is based on the rupee cost averaging method. This helps to minimise the market risks associated with the investment.
- One can increase the savings amount by purchasing the top-up premium which is available with the insurer at a minimum premium amount.
- If you want to extend the deferment period or accumulation period, you also have that option under the same policy and the same terms and conditions. The policyholder has to be below the age of 60 years at the time of choosing this option.
- At the time of the policy commencement date or any time during the vesting period, you can redirect the premium of the available Unit Linked Pension Fund in any proportion that you want. Automatic Asset Rebalancing Strategy and Systematic Transfer Plan – you can choose from any of them. During the vesting age, unlimited premium redirection is allowed.
- Before the end of the premium payment term, one can choose to increase or decrease the premium payment term, provided the terms and conditions are followed.
Know about LIC's Jeevan Akshay - VII
It is an individual immediate annuity plan which is non-linked and non-participating. There are 10 options available from which one can choose the type of annuity he/she wants. The rate of annuity is guaranteed and it will be pre-determined at the time of inception of the policy. The annuity is available throughout the lifetime of the annuitant. Online facilities for purchasing this plan are also available along with the offline facility.
Key benefits of Jeevan Akshay – VII plan of LIC
The important benefits are as follows.
- In the event of an unfortunate demise of the life assured the beneficiary can receive the death benefit either as a lump sum amount, or in instalments, or can do annuitisation of the amount.
- After the expiry of the free look period, or completion of 3 months from the date of commencement, whichever is later, one can surrender the policy at any time provided it follows the terms and conditions.
- The joint life annuity option is also available under this policy which can be taken by any lineal descendants, ascendant siblings or spouse.
- If the life assured has any dependent who is disabled then the policy can be purchased for the benefit of the disabled person. In that case, the minimum purchase value has to be Rs. 50,000.
- One can also avail of the loan facility to meet financial emergencies only after the completion of 3 months of the policy or the expiry of the free look period whichever is later, subject to the terms and conditions of the policy as well as the company.
- The modes of annuity are yearly, half-yearly, quarterly and monthly. The annuity will be paid in arrears which means the annuity will be paid after 1 year, 6 months, 3 months and 1 month.
- In case of death of the insured person, the annuity payment will cease and the nominee will get the purchase price of the policy. The annuity payments are only available as long as the annuitant is alive.
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.
| Age | Name of the Plan | Annuity type | Purchase Price | Annuity option | Annuity amount |
| 35 years | LIC Jeevan Akshay – VII | Immediate | 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 | Policy Term | Vesting Benefit | Annuity with return of premium (Paid annually) | ||
| 10 years | 20 years | 4% return | 8% return | 4% return | 8% return |
| Rs. 17,59,623 | Rs. 31,69,203 | Rs. 1,52,559 | Rs. 2,76,355 | ||
HDFC Life Smart Pension Plan, or LIC’s Jeevan Akshay – VII, which one is best for you?
When it comes to the choice between HDFC Smart Pension Plan and LIC’s Jeevan Akshay – VII plan, it becomes really difficult to choose one because both the policies have come up with different benefits and facilities and are excellent in their terms and fields. However, if someone is looking for multiple fund options to choose from, then LIC’s plan is a good choice. On the other hand, if one is more inclined to avail of the flexibility to customise the plan according to his/her needs, then he/she should go for the HDFC one. Ultimately, it depends on the policy-seeker what are his/her requirements. He/she should check various factors such as budget, requirements, background, future goals, etc, and only go for the one that suits his/her purpose best.
