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LIC’s Jeevan Akshay 6 (Immediate Annuity Plan) Review

By   /   December 28, 2012  /   2 Comments

 

240;240

 

 

 

UIN: 512N234V04

Plan No. 810

Loads of buzz all around about LIC Jeevan Akshay 6. Turn on any FM channel in Kanpur (my place) & you will get across it’s advertisement. Have a look at my analysis on this plan before investing.

This is what Jeevan Akshay 6 offers to you:

“It is an Immediate Annuity plan, which can be purchased by paying a lump sum amount. The plan provides for annuity payments of a stated amount throughout the life time of the annuitant. Various options are available for the type and mode of payment of annuities” –

Here, Annuity means a fixed amount paid to your on a regular interval ( be it monthly, quarterly, half yearly or annually) on paying a lump sum amount to LIC.

 

The following options are available under the plan:

  1. Annuity payable for life at a uniform rate.
  2. Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive.
  3. Annuity for life with return of purchase price on death of the annuitant.
  4. Annuity payable for life increasing at a simple rate of 3% p.a.
  5. Annuity for life with a provision of 50% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
  6. Annuity for life with a provision of 100% of the annuity payable to spouse during his/her lifetime on death of the annuitant.
  7. Annuity for life with a provision of 100% of the annuity payable to spouse during his/ her life time on death of annuitant. The purchase price will be returned on the death of last survivor.

 

What happens if the annuitant dies?

Option 1: Under option (1) annuity ceases

Option2:

  1. On death during the guaranteed period – annuity is paid to the nominee till the end  of the guaranteed period after which the same ceases.
  2. On death after the guaranteed period – annuity ceases.

Option 3: Under option (3) annuity ceases and the purchase price is paid to the nominee.

Option 4: Under option (4) annuity ceases.

Option 5: Under option (5) annuity ceases and 50% of the annuity is payable to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, the annuity ceases.

Option 6: Under option (6) annuity ceases and full annuity is payable to the surviving named spouse during his/her life time. If the spouse predeceases the annuitant, the annuity ceases.

Option 7: Under option (7) annuity ceases. Full annuity is payable to the surviving named spouse during his/ her life time and purchase price is paid to the nominee after the death of the spouse. If the spouse predeceases the annuitant, the annuity ceases and purchase price will be paid to the nominee.

 

Amount:

Minimum:

Offline (Through a LIC agent ): Rs.1,00,000

Online: Rs.1,50,000

Maximum: No Limit

 

Amount you will get per annum if you invest Rs. One lakh through an AGENT:

ANNUITY AMOUNT PAYABLE YEARLY UNDER 7 OPTIONS

AGE

1

2

3

4

5

6

7

30

7190

7160

6890

5250

7080

6970

6860

40

7510

7440

6930

5610

7310

7120

6890

50

8140

7950

7000

6280

7760

7420

6930

60

9350

8790

7110

7530

8640

8030

7010

70

12080

9830

7260

10220

10560

9370

7130

80

17880

10440

7480

15890

14600

12340

7290

 

Amount you will get per annum if you invest Rs. One lakh through Online mode

 

ANNUITY AMOUNT PAYABLE YEARLY UNDER 7 OPTIONS

AGE

1

2

3

4

5

6

7

30

8190

8160

7890

6250

8080

7970

7860

40

8510

8440

7930

6610

8310

8120

7890

50

9140

8950

8000

7280

8760

8420

7930

60

10350

9790

8110

8530

9640

9030

8010

70

13080

10830

8260

11220

11560

10370

8130

80

18880

11440

8480

16890

15600

13340

8290

 

Note:

  1. Minimum amount for online mode is Rs.1,50,0000. Here we are taking Rs.1,00,000 minimum deposit for online mode  for ease of compairing it with off line mode.
  2. Interest rate will be 1% higher in case you deposit the money through online mode.

It’s clearly visible that anytime it’s better to invest online due to 1% extra return.

Since it’s not possible to write about each option here, let’s talk about Option 1 in detail:

Option 1Annuity payable for life at a uniform rate.

CASE 1: Entry at Age 30 yr’s.

So if your age is 30 years & you are planning to invest Rs.1,00,000 online, you will get Rs.8,190 per annum at the end of each year till you are alive.

Suggestion: How about Investing Rs.1,00,000 in Post Office Monthly Income Scheme (POMIS). You will get Rs.708 per month or Rs.8,500 per annum.

In case of demise, family members will get the full amount back in case of investment in POMIS whereas if you invest in LIC Jeevan Akshay 6, your family members will get nothing in case of your death.

Also you can withdraw the money from POMIS in between by paying a small penalty, whereas one cannot withdraw money from LIC Jeevan Akshay 6.

 

Comparison: 

LIC Jeevan Akshay 6 POMIS
Amount Per Annum Rs.8,190 Rs.8,500
Withdrawal No Yes
Amount Family members will get on demise of holder. Nil Full Principal Amount.

 

From the above analysis, it’s clearly visible that one should go for Post Office Monthly Income Scheme rather than going for LIC Jeevan Akshay 6.

CASE 2Entry at age 50 seems to be a good bet (actually it is not) because if your age is 50 years & you are planning to invest Rs.1,00,000 online, you will get Rs.9,140 per annum till you are alive.

Catch: If you invest Rs.1,00,000 @ 8 % (say in bank Fixed Deposit), you will get Rs.9,145 for 27 years. In case of your demise, your dear ones will get Rs.9,145 per annum till the completion of 27 years. Also the amount can be withdrawal anytime in between by you or your dear ones on your demise.

Conclusion: It’s better to invest in Bank FD’s rather than investing at age 50 yr’s. If you are sure ( which is next to impossible) that you will live beyond 50+27 = 77 years, go for LIC Jeevan Akshay 6 else stay away.

 

Fact:

Life expectancy at birth: This is what official data has to say about life expectancy
Male: 66.08 years
Female: 68.33 years (2011 est.)

(Source: http://www.indexmundi.com/india/demographics_profile.html )

 

Incentives:

If your purchase price is Rs. 2.50 lakh or more, you will receive higher amount of annuity due to available incentives.

All i can say about Incentives is that they are too less.

 

Final words:

With so many options to confuse the investors, zero liquidity & such complicated calculations, TRUST me, LIC Jeevan Akshay 6  is not the place to invest in. Investing in Post Office Monthly Income Scheme is far more better.

 

If somehow your agent is still able to convince you to invest in any of the seven options under this plan, please feel free to drop a comment or write to me at financialkundali@gmail.com  & all for your good I will make sure that you do not invest in it. ( Mention your age and option you are planning to purchase )

 

www.financialkundali.com

www.financialkundali.com

 

 

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About the author

Hi My name is Hari Om Tripathi. I am an engineer by chance & a Personal Financial Planner by choice. Currently residing in Kanpur & writing full time for Financial Kundali. In case you have any query about Personal Financial Planning such a buying a MF or ULIP, going for a life insurance plan or a term plan, to surrender your policy or not or any other questions related to your Personal Financial Planning, write to me at financialkundali@gmail.com

2 Comments

  1. yajnesh says:

    respected sir,
    myself yajnesh . i want to purchase jeevan akshay 6. please clear my following queries
    * if i pay 3lakhs on online mode as a single payment, how much amount will i get as a pension?
    *for how many years should i want to pay the premium?
    * i’m doing this for mother who is aged 57 yrs., what is annuity?suppose if my mother dies how much amount will the nominee will get?
    * for how many years will my mother will be getting her pension?
    *plz explain about all this.
    * plz calculate the amount and tell me

  2. @ Yajnesh: Have a look at what lic have to say about the plan. Out of 7 plans, choose a plan which best suits you & then i will tell you why not to purchase this plan. Have a look: http://www.licindia.in/jeevan_akshay_plan_009_features.htm

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