LIC New Jeevan Shanti (No. 858) | Review + Benefits (2023)

LIC New Jeevan Shanti (Plan 858) is a deferred annuity plan by LIC, where you need to pay the one-time lumpsum premium at once, but you need to pick a deferment period (up to 12 years), only after which the annuity payment starts. This plan was first launched in 2021 and replaced the earlier LIC Jeevan Shanti (Table 850).

This is a guaranteed pension product by LIC and the annuity rate, is decided upfront and guaranteed at the end of deferral period. So there will never be any doubts about how much you will get every year in annuity pension from LIC New Jeevan Shanti, after the end of the deferral period.

If you want to know more about this LIC New Jeevan Shanti Review (2023) article, then you will get to know all the LIC New Jeevan Shanti Plan Details and LIC New Jeevan Shanti Policy Benefits here. We will also see how to arrive at New Jeevan Shanti annuity rates using LIC New Jeevan Shanti Plan Calculator.

LIC had launched this non-linked, non-participating, policy named New Jeevan Shanti (LIC Table No. 858) first time in 2021, and then had revised the plan a total of 4 times across following versions – Plan UIN 512N338V01 was available from Oct-2021 to Feb-2022. The UIN 512N338V02 was available from Feb-2022 to Aug-2022. The third UIN 512N338V03 was available from Aug-2022 to Jan-2023.

And finally the latest New Jeevan Shanti product UIN 512N338V04 has been available for investment since 05-January-2023 after some revision in LIC New Jeevan Shanti Interest Rate in 2023.

LIC Website link to Policy page – Link

Many investors buy annuity products to generate an income stream during retirement years or whenever they get some lumpsum money and wish to replace their salary income (generally post retirement). LIC New Jeevan Shanti is one such annuity product which allows you to buy a policy with one time payment today itself, so that few years down the line, you can start getting regular guaranteed pension income for the rest of your life.

Let’s take an example. Assume that you are 42 years old who wants to retire around 55. In addition to other retirement oriented investments, you may want to have a annuity income as well. So you may decide to buy LIC New Jeevan Shanti Plan today at age 42, with a deferment period of say 12 years, so that you start getting pension income from age 54 (42 years +12 years of deferral).

Let’s see the features now.

Features of LIC New Jeevan Shanti Plan (858)

Let’s see what are the LIC New Jeevan Shanti Benefits. Here are the plan details and prominent features:

  • This is a Deferred Annuity product that comes under LIC Table No. 858
  • What this means simply is that you need to pay a lumpsum amount one-time now, but LIC will start paying you regular pension after the deferral period. The payment of pension does not start immediately on the purchase of the policy and instead, after the deferral period is complete. Once it starts, the insurer will pay this pension to you for rest of your life. So even if you become a tortoise and live for 200 years, even then you will keep getting the same pension assuming LIC exists at that time.
  • If you are not sure about the difference between Immediate Annuity and Deferred Annuity Plan, then here is a short explainer. In immediate annuity, the annuity payment starts immediately after payment of the lumpsum investment. On the other hand, in a deferred annuity product, you defer the annuity payments for a few years and the payments start at the end of the deferment period.
  • The minimum investment in LIC Plan 858 is Rs 1.5 lakh.
  • There is no upper limit for the maximum investment amount.
  • One can purchase this plan at Minimum Entry Age of 30 years and up to a Maximum Entry Age of 79 years. The minimum and maximum vesting ages are 31 and 80 years respectively.
  • The Minimum and Maximum Deferment period is 1 year and 12 years respectively.
  • This is a deferred annuity plan but still, the premiums (or purchase prices) has to be paid in full and upfront; and the Premium Payment Frequency therefore is One-Time Single Premium Payment as you pay the premium just once. So it is Pay-Once-Enjoy-Forever kind of an annuity plan.
  • LIC New Jeevan Shanti is available in 2 options: Deferred Annuity for Single Life, Deferred Annuity for Joint Life. The Joint life annuity plan can be taken between two lineal ascendants/descendants of a family (Grandparent, parent, children, grandchildren) or spouse or siblings. In case of joint life, the age limits shall apply for both lives (annuitants).
  • How often will you get the annuity (pension) income? The annuity payment frequency can be chosen from options – Monthly, Quarterly, Half-yearly, Annual.
  • All the annuity income is fully taxable and taxed as per policyholder’s income tax slab rates.
  • At the time of purchase initially, you are eligible for tax benefit on the investment amount, but only up to Rs 1.5 lakh the under the Section 80CCC (and within the overall limit of Rs 1.5 lakh of Section 80C).
  • The plan can be purchased offline via LIC office/agent as well as online on LIC website. Unsurprisingly and to push digital mode, there is a 2% rebate for online purchases of the policy. This means that for the same investment amount you will get a slightly higher annuity income.
  • You don’t need to undergo any medical tests to purchase this plan.
  • You can also buy more than one LIC New Jeevan Shanti policies in your name if you want.

Do remember that the option chosen (Deferred Annuity for single life vs Deferred Annuity for joint life) at the start of the LIC Table No. 858 policy is final and binding and cannot be changed later on. In the same way, the Annuity rates are decided and fixed and guaranteed at the beginning of the policy and remain the same. The annuity plan will then provide regular annuity payments of the calculated amount throughout the life time of the annuitant.

Let’s say you buy a LIC New Jeevan Shanti Deferred annuity plan for Rs 25 lakh that offers annuity rate is 7% per annum. In this case, you will get an annuity income of Rs 1.75 lakh per year or Rs 14,854 per month for life. The annuity rate for your plan is fixed at 7% for life irrespective of whether it increases or decreases in later years for new buyers.

The annuity can be paid either at monthly, quarterly, half yearly or yearly intervals.

Now let’s discuss the 2 options available in this plan.

LIC New Jeevan Shanti Option 1 vs 2 (Deferred Annuity for Single Life vs. Joint Life)

The LIC Plan 858 or New Jeevan Shanti has 2 options to choose from.

  • Option 1 is the Deferred annuity for SINGLE life. In this, the annuity payments (after the completion of deferment period) are made to the single investor during his lifetime alone. After him/her, the death benefits are paid to the nominee.
  • Option 2 is the Deferred annuity for JOINT life. In this, the annuity payments (after the completion of deferment period) are made to the joint investors during their lifetime. So even if one annuitant expires early, the second one will continue to receive the payments. After both of them, the death benefits are paid to the nominee.

So the only actual difference between Option 1 and Option 2 of LIC New Jeevan Shanti plan, is that unlike in 1st option, the annuity pension is paid to the second annuitant (of joint life) as well. This second annuitant may not necessarily be a spouse. It can also be a sibling or any other lineal ascendant or descendant like grandparents, parents, children, grandchildren, etc.

And there is obviously a difference in premium or purchase price of both the options. The plan brochure provides the following illustration:

In the illustration provided by LIC, if a 45-year old person chooses the SINGLE LIFE option and invests Rs 10 lakh and chooses deferment period of 12 years, then he will get an annual pension of Rs 1.39 lakh per year. He will not get anything for the first 12 years. But after that, he will keep getting Rs 1.39 lakh yearly for as long as he lives on.

On the other hand if the 45-year old person chooses the JOINT LIFE option with a 35-year old person, invests Rs 10 lakh and chooses deferment period of 12 years, then he will get an annual pension of Rs 1.32 lakh per year. He will not get anything for the first 12 years. But after that, he will keep getting Rs 1.32 lakh yearly for as long as he lives on. And after him, the second annuitant will keep getting the same pension for rest of his/her life.

So the annuity rates also take into account the age of the second annuitant and not just the primary first annuitant when deciding the premium for LIC New Jeevan Shanti plans.

LIC New Jeevan Shanti Interest Rates (Annuity Rates 2023)

The interest rate (annuity rate) depends on your age and the annuity variant. In case of joint life plans (where the spouse or any other family member), the annuity rate will also depend on the age of the second annuitant.

Annuity rate usually increases with the entry age of the investor but this may not always be true for deferred annuity plans like LIC New Jeevan Shanti. Here instead the annuity rates tent to increase with the increase in deferral period.

The major LIC New Jeevan Shanti Policy Benefits or the annuity rate of LIC New Jeevan Shanti plan you buy will depend on the policyholder’s age at the time of purchase and the and chosen annuity variant from the 2 available options.

To find out the LIC New Jeevan Shanti Interest Rate 2023 or the latest annuity rates of LIC’s LIC New Jeevan Shanti (Plan No. 858, UIN : 512N338V04), I decided to use the LIC Online Premium Calculator on the website’s sales page (link) as the latest annuity rates are not available elsewhere on the LIC website.

Data from LIC Website as of 29-May-2023

Here is what the calculator shows as sample, i.e., annual amount of annuity payable at yearly intervals which can be purchased for Rs 10 lakh under different deferment periods.

  • If you are a 30-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 5 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 86,784 per year for the rest of your life.
  • If you are a 30-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 8 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,04,706 per year for the rest of your life.
  • If you are a 30-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 10 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,18,150 per year for the rest of your life.
  • If you are a 30-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 12 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,32,920 per year for the rest of your life.
  • If you are a 40-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 5 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 89,028 per year for the rest of your life.
  • If you are a 40-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 8 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,08,480 per year for the rest of your life.
  • If you are a 40-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 10 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,23,148 per year for the rest of your life.
  • If you are a 40-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 12 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,39,142 per year for the rest of your life.
  • If you are a 50-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 5 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 92,190 per year for the rest of your life.
  • If you are a 50-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 8 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,13,784 per year for the rest of your life.
  • If you are a 50-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 10 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,29,574 per year for the rest of your life.
  • If you are a 50-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 12 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,45,874 per year for the rest of your life.
  • If you are a 60-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 5 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 97,086 per year for the rest of your life.
  • If you are a 60-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 8 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,20,924 per year for the rest of your life.
  • If you are a 60-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 10 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,36,306 per year for the rest of your life.
  • If you are a 60-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 12 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,48,934 per year for the rest of your life.
  • If you are a 70-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 5 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,04,022 per year for the rest of your life.
  • If you are a 70-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 8 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,24,800 per year for the rest of your life.
  • If you are a 70-year old who invest Rs 10 lakh in LIC New Jeevan Shanti plan, and choose to defer the annuity by 10 years, then from age 35-36, you will start getting an annual pension or annuity of Rs 1,30,900 per year for the rest of your life.
  • For a 70-year old, LIC does not offer the option available to defer the annuity by 12 yearsgiven actuarial-based life expectancy calculations that LIC may have used to design the policy.

So that are the deferred annuity rates for LIC’s New Jeevan Shanti Plan Table 858 for different ages and different deferral tenures.

Also, if we consider the taxation of annuity income, then obviously the effective annuity rates or returns will be much lower. These and annuity plans are best for those who are looking for constant stream of risk-free stable income and belong to comparatively lower tax slabs.

LIC New Jeevan Shanti Death Benefits

This policy offers the following payout benefits for the nominee in case of the demise of the policyholder or annuitant(s)

The payout is the higher of:

  • Purchase price + accrued additional benefits – total annuity payable
  • 105% of purchase price

Where additional benefits per month = (purchase price * annuity rate p.a. payable monthly) / 12

Additional benefits are accrued till the end of deferment period.

You can opt for your nominee to receive Death Benefit in the following 3 ways:

  • As a lumpsum
  • Annuitisation: In this case, an annuity will be paid using the death benefit as purchase price. 
  • In instalments: In this case, the death benefit will be paid over a period of 5 years. 

How to purchase LIC New Jeevan Shanti Plan online?

Step-by-step process to buy LIC’s New Jeevan Shanti Plan Online:

  • Log-on to LIC website (www.licindia.in) for buying this online product. Click on ‘Buy Policies Online’. Select plan LIC New Jeevan Shanti Plan.
  • Click on ‘Buy Online’. Choose your desired Purchase Price, Policy option, Annuity Payout Mode (Monthly/Quarterly/Half-yearly/Yearly), Date of Birth, Gender, Smoking status, etc.
  • Enter other details such as Name, Address, Occupation, Qualification etc. displayed on the screen and complete the proposal form online.
  • Pay premium online and fulfil the underwriting requirements, if any.

That’s how you can buy LIC Plan 858 online with rebates of about 2% on purchase amount.

Should You Buy LIC New Jeevan Shanti Plan (858)?

That is the key question obviously after all the discussion, review of LIC New Jeevan Shanti Plan Review, and analysis of plan and policy benefits.

While there is no doubt about LIC being synonymous with trust in India, should you invest in LIC New Jeevan Shanti (858)?

Annuity plans have a very specific use case and that is to provide regular, reliable and stable income to the annuity buyer.

So for those who are looking for regular income after a few years (of deferring), and generally during retirement years, LIC New Jeevan Shanti Plan is definitely one of the most popular deferred annuity plans that offer regular pension income. But if you are in accumulation phase of life and don’t need pension or regular income as you are still actively working and getting salary/business income, then this is not for you.

Everybody doesn’t need to purchase an annuity plan.

So first, you need to establish whether LIC New Jeevan Shanti Plan does fit in your product suitability factor or not. And if it does, at what age should you purchase it (as annuity rates differ with entry age) and which variant (from single vs joint life) ones to choose from.

As an alternative to buying a deferred annuity plan (like LIC New Jeevan Shanti) immediately, you can choose to invest elsewhere and after say 8-12 years of investing (and which would be equal to the deferment period had you chosen that option), you can use the proceeds to purchase an immediate annuity plan (like a comprehensive LIC Jeevan Akshay VII Plan with multple options, and a comparatively simpler LIC Saral Pension Plan which offers just two options to choose from). Both approaches can be used and have their own pros and cons. So the investors needs to decide what suits him/her best and how long before he needs the annuity income.

If you are looking for regular income post-retirement and are fine with deferring the payouts by a few years, then LIC New Jeevan Shanti Plan (Table 858) can be one of the components of your income-generation bucket along with other options like SCSS, PMVVY, POMIS, or doing SWP from debt funds, regular interest income from FD, etc. You can also stagger your annuity purchases (instead of buying it in one go) to better optimize the overall annuity rate on your overall portfolio.

But let’s not forget one thing. All annuities help you fix up a regular flow of income for the rest of your life. But the payout is decided and fixed for life and then the annuity payout remains the same. But there is still inflation monster that you need to account for. Annuity pension will not increase but your expenses will due to inflation. So you need to make sure you have a plan in place to meet the rising expenses in the future as well. So don’t just depend on fixed annuities.

Reference – LIC New Jeevan Shanti Policy Brochure – Link

Hopefully, you would have found this LIC New Jeevan Shanti Review of LIC’s popular Deferred Annuity plan (UIN – 512N338V04) useful and the policy details and LIC New Jeevan Shanti Policy Benefits would be clear by now. You can use LIC’s New Jeevan Shanti to generate annuity income throughout the life of annuitant in India (2023). But make sure you understand and assess the suitability first.

1 comment

Leave a Reply