Categories: Insurance

LIC New Jeevan Shanti Review– Is it a Good Plan?

LIC New Jeevan Shanti

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The current workforce especially in the private sector does not have any social security benefits. Employees in the Organised sector have access to the Employee Provident Fund (EPF) but Gig workers and freelancers have no other option other than the National Pension Scheme (NPS).

So, you need to plan for retirement well in advance.

Accumulating adequate retirement corpus is one of the primary goals of any individual. LIC New Jeevan Shanti guarantees you with lifelong pension. Is LIC New Jeevan Shanti a Good or Bad option for your post-retirement needs?

In this article, let us find the Advantages(pros) and Disadvantages(cons) of LIC New Jeevan Shanti and review the plan to find out whether this plan suits your retirement basket.

Let’s get started!

1.)An overview of LIC New Jeevan Shanti
2.)Features of LIC New Jeevan Shanti – Analysis
3.)Eligibility Criteria of LIC New Jeevan Shanti
4.)Plan options in LIC New Jeevan Shanti – Review
5.)Review of Benefits in detail – LIC New Jeevan Shanti
6.)Free Look Period of LIC New Jeevan Shanti
7.)Surrendering LIC New Jeevan Shanti
8.)Advantages of LIC New Jeevan Shanti – Analysis
9.)Disadvantages of LIC New Jeevan Shanti – Analysis
10.)Research Methodology Of LIC New Jeevan Shanti

Benefit illustration – IRR (Internal Rate of Return) analysis of LIC New Jeevan Shanti

11.)LIC New Jeevan Shanti vs. Other Investment Options

LIC New Jeevan Shanti Vs. ELSS
LIC New Jeevan Shanti vs. LIC New Pension Plus
LIC New Jeevan Shanti vs. LIC Jeevan Akshay – VII

12.)LIC New Jeevan Shanti vs. Other Investment Options – Review Conclusion
13.)Final Verdict on LIC New Jeevan Shanti – Good or Bad?

1. An overview of LIC New Jeevan Shanti

It is a Non-Linked, Non-Participating, Individual, Single Premium, Deferred Annuity Plan. The policy’s inception guarantees the annuity rates, and payments begin after the deferment period and continue for the duration of the annuitant(s)’s life.

2. Features of LIC New Jeevan Shanti – Analysis

Single premium payment and annuity start after the end of the deferment period.
Fixed annuity rates from the inception of the policy.
Multiple annuity options are available.
Option to take death benefit as Lump-sum, in the form of Annuitisation or in Installments.
Option to choose between Single life and Joint life Deferred annuity.

3. Eligibility Criteria Of LIC New Jeevan Shanti

	Minimum	Maximum
Age at entry	30 years	79 years
Age at Maturity	31 years	80 years
Deferment period	1 year	5 years
Purchase Price	1,50,000	No Limit
Annuity Mode	Monthly, Quarterly, Half-yearly and Annual

4. Plan options in LIC New Jeevan Shanti – Review

Option 1: Deferred annuity for Single life

During the deferment period:

On survival of annuitant – Nothing is payable

On death of annuitant – Death Benefit is payable.

After the deferment period:

On survival of annuitant – Annuity is payable in arrears as per chosen mode

On the death of the annuitant – Annuity, payment shall cease and Death Benefit is payable.

Option 2: Deferred annuity for Joint life

During the deferment period:

On survival of primary and/or secondary annuitant – Nothing is payable

On the death of the last survivor – Death Benefit is payable.

After the deferment period:

On survival of annuitant – Annuity is payable in arrears as per chosen mode as long as the Primary

The annuitant and/or Secondary Annuitant is alive.

On the death of the last survivor – Annuity payment shall cease and Death Benefit is payable.

5. Review of Benefits in detail – LIC New Jeevan Shanti

Death Benefit

Death Benefits under both of the Options shall be: Higher of

Purchase Price plus Accrued Additional Benefit on Death minus Total annuity amount payable till date of death, if any OR
105% of Purchase Price

Accrued Additional Benefit on Death: Additional Benefit on Death shall accrue at the end of each policy month, till the end of the Deferment Period.

6. Free Look Period of LIC New Jeevan Shanti

If the LIC New Jeevan Shanti Policyholder is not satisfied with the “Terms and Conditions” of the policy, the policy may be returned to the Corporation within 30 days from the date of receipt of the electronic or physical mode of the LIC New Jeevan Shanti policy bond, whichever is earlier.

7. Surrendering LIC New Jeevan Shanti

The LIC New Jeevan Shanti policy can be surrendered at any time during the policy term. The surrender value payable shall be higher than the Guaranteed Surrender Value or Special Surrender Value.

8. Advantages of LIC New Jeevan Shanti – Analysis

Hassle-free investment.
An annuity could act as a second source of income throughout your lifetime.
Guaranteed annuity and Guaranteed Death Benefit.
The policy loan option is available at any time after three months of issuance of the policy.
Death Benefit can be utilized to purchase an immediate annuity plan from the corporation.

9. Disadvantages of LIC New Jeevan Shanti – Analysis

The annuity amount is not adjusted to inflation. Throughout your lifetime you receive the same amount.
This annuity amount can’t be solely relied upon for all your post-retirement needs.
An annuity is fully taxable.
The maximum deferment period is limited to 5 years, restricting the potential for long-term compounding and wealth accumulation.

10. Research Methodology Of LIC New Jeevan Shanti

One-time premium payments and lifelong annuity an attractive features of LIC New Jeevan Shanti. But we need to analyze the product in terms of return. Guaranteed annuity may look lucrative but we need to figure out the returns. For this, let us analyze the illustration given in the sales brochure

Benefit illustration – IRR (Internal Rate of Return) analysis of LIC New Jeevan Shanti

A 45-year-old male buys LIC New Jeevan Shanti for ₹10 Lakhs.

The deferment period is 5 years. The annual annuity amount is ₹89,400.

Age	45 years
Purchase price	10 Lakhs
Deferment period	5 years
Annuity Mode	Annual
Annuity Amount	89,400

The annuitant is eligible for a lifelong annuity under LIC New Jeevan Shanti. Here, we assumed a life expectancy of 85 years. On the death of the annuitant, a Death Benefit is payable.

Age	Year	LIC New Jeevan Shanti
Age	Year	Single premium / Annuity	Death Benefit
45	1	-10,00,000	10,00,000
46	2	0	10,00,000
47	3	0	10,00,000
48	4	0	10,00,000
49	5	0	10,00,000
50	6	0	10,00,000
51	7	89,400	10,00,000
52	8	89,400	10,00,000
53	9	89,400	10,00,000
54	10	89,400	10,00,000
55	11	89,400	10,00,000
56	12	89,400	10,00,000
57	13	89,400	10,00,000
58	14	89,400	10,00,000
59	15	89,400	10,00,000
60	16	89,400	10,00,000
61	17	89,400	10,00,000
62	18	89,400	10,00,000
63	19	89,400	10,00,000
64	20	89,400	10,00,000
65	21	89,400	10,00,000
66	22	89,400	10,00,000
67	23	89,400	10,00,000
68	24	89,400	10,00,000
69	25	89,400	10,00,000
70	26	89,400	10,00,000
71	27	89,400	10,00,000
72	28	89,400	10,00,000
73	29	89,400	10,00,000
74	30	89,400	10,00,000
75	31	89,400	10,00,000
76	32	89,400	10,00,000
77	33	89,400	10,00,000
78	34	89,400	10,00,000
79	35	89,400	10,00,000
80	36	89,400	10,00,000
81	37	89,400	10,00,000
82	38	89,400	10,00,000
83	39	89,400	10,00,000
84	40	89,400	10,00,000
85		10,50,000	10,00,000


	IRR	6.33%

In the above illustration, the IRR is calculated at 6.33% for LIC New Jeevan Shanti.

The IRR for the cash flow is 6.33%. In the initial years, the annuity may provide you steady stream of income. The purchasing power of money will be reduced year after year.

This option is not viable down the lane. This will leave you in trouble in the later period. The returns are not convincing for a long-term investment.

11. LIC New Jeevan Shanti vs. Other Investment Options

This part of the analysis discusses the other investment opportunities where you can park your lumpsum amount. Over the years, this investment grows and becomes a part of your retirement kitty. This retirement corpus could be invested in a safe place to withdraw regularly similar to an annuity.

LIC New Jeevan Shanti offers life cover. But a similar life cover is not assumed here. Because anyway at the end of the term or on death your investment amount is returned to you or the nominee as the case may be.

i) LIC New Jeevan Shanti Vs. ELSS

10 Lakhs could be invested in an ELSS fund. During the deferment period, the money is parked and allowed to grow. At the time of exiting the fund, capital gains tax is payable. Tax calculation is given below.

The Pre-Tax Value under ELSS is ₹17.62 Lakhs. The post-tax value is ₹ 16.82 Lakhs. The Post-Tax Value is invested in a 7% return instrument.

Similar to the annuity amount under LIC Jeevan, ₹89,400 is withdrawn annually. At the end of 85 years, the balance is assumed to be withdrawn fully (Similar to the Death Benefit).

Age	ELSS
Age	ELSS	Death Benefit
45	-10,00,000	10,00,000
46	0	10,00,000
47	0	10,00,000
48	0	10,00,000
49	0	10,00,000
50	0	10,00,000
51	89,400	10,00,000
52	89,400	10,00,000
53	89,400	10,00,000
54	89,400	10,00,000
55	89,400	10,00,000
56	89,400	10,00,000
57	89,400	10,00,000
58	89,400	10,00,000
59	89,400	10,00,000
60	89,400	10,00,000
61	89,400	10,00,000
62	89,400	10,00,000
63	89,400	10,00,000
64	89,400	10,00,000
65	89,400	10,00,000
66	89,400	10,00,000
67	89,400	10,00,000
68	89,400	10,00,000
69	89,400	10,00,000
70	89,400	10,00,000
71	89,400	10,00,000
72	89,400	10,00,000
73	89,400	10,00,000
74	89,400	10,00,000
75	89,400	10,00,000
76	89,400	10,00,000
77	89,400	10,00,000
78	89,400	10,00,000
79	89,400	10,00,000
80	89,400	10,00,000
81	89,400	10,00,000
82	89,400	10,00,000
83	89,400	10,00,000
84	89,400	10,00,000
85	56,96,229	10,00,000


	7.84%

ELSS Tax Calculation
Pre-tax Maturity value	17,62,342
Purchase price	10,00,000
Long-term capital gains	7,62,342
Exemption limit	1,25,000
Taxable LTCG	6,37,342
Tax paid on LTCG	79,668
Post-tax Maturity value	16,82,674

In the above illustration, the IRR for ELSS investment is calculated at 7.84%. You have full control over your funds here. If you need a step-up income, you have room for that as well. This will help to keep up with inflation. And you have liquidity throughout the term.

Inflation-adjusted annuity and Liquidity are the missing features under LIC New Jeevan Shanti. Alternatively, you can accumulate your retirement corpus through a diversified investment portfolio.

ii) LIC New Jeevan Shanti vs. LIC New Pension Plus

Some of the features of LIC New Pension Plus are,

The option to select the premium payment amount and policy duration is subject to minimum and maximum premium, policy term, and vesting age constraints.
The method of premium payment for regular premiums can be monthly, quarterly, half-yearly, or annually. It must be determined at the start of the policy term.
An option that offers the same terms and circumstances as the initial insurance to extend the accumulation or deferment time inside the same policy.

Read the complete review of LIC New Pension Plus here.

iii) LIC New Jeevan Shanti vs. LIC Jeevan Akshay – VII

Some of the features of LIC Jeevan Akshay – VII are

premium payments made once.
spouse may be covered under joint insurance.
There are ten different Annuity choices available.

Read the complete review of LIC Jeevan Akshay – VII here.

12. LIC New Jeevan Shanti vs. Other Investment Options – Review Conclusion

After comparing and analyzing LIC New Jeevan Shanthi with all other alternate investment options, it is clear that taking a Term Insurance for your life cover needs and then investing some amount in ELSS is a far better option for your retirement needs.

13. Final Verdict on LIC New Jeevan Shanti – Good or Bad?

LIC New Jeevan Shanti is a pension plan, which means it is designed to provide a regular income or pension to the policyholder after a specified period (deferment period).

The deferment period ranges between 1 year and 5 years. Policyholders can choose to start receiving pension payments depending on their financial needs.

Guaranteed annuity throughout the lifetime and one-time premium payment will be the sales pitch by agents to sell this plan to you for their agent commission.

But one must look at other factors like return and liquidity. While analyzing LIC New Jeevan Shanti, it is clear that in terms of return and liquidity, it is not beneficial to other investors.

Don’t fall prey to the word “Guaranteed Annuity”. In order to accumulate your retirement corpus, instead of searching social media sites like Quora, Facebook, Twitter, etc.. Consult a Certified financial planner. He will aid you in building your retirement corpus and planning your post-retirement period.

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View Comments

Shitangshu Chakraborty says:

January 26, 2024 at 7:16 pm

I have purchased Jeevan Shanthi Policy (Table 850) with differed 3 years on 13/01/2020
Can I surrender this after completion of 5 years. i.e. after 13/01/2025.
How surrender value is calculated.
Please let me know.