LIC Jeevan Shanti – Review | Should you invest in New Guaranteed Pension Policy?

LIC has recently launched their new single Premium Pension plan called ‘ LIC Jeevan Shanti’ (LIC Plan No. 850). It offers the guaranteed pension to the policyholder, with options like an immediate pension or deferred pension.

What is a Single Premium Plan? – It is the insurance policy where you pay insurance only in the first year but continue to enjoy the life cover and other plan related benefits throughout the term of the policy.

With ‘Financial Year end’ fast approaching; most of the investors look out for investment avenues during Dec to March, to save Taxes.

I have observed that LIC’s Jeevan Shanti plan is being aggressively marketed/promoted by Advisors/Agents. The features of this plan that are being highlighted in marketing materials are as below;

  • Life Long Guaranteed & Regular Income
  • Guaranteed Annuity Rates
  • Guaranteed Additions during Deferment Period
  • Make one time investment and get Guaranteed life long income….and so on..

The above features are really enticing for you to invest in Jeevan Shanti, am I right? So is it worth investing a lump sum money as a single premium, in this new pension plan? Is LIC Jeevan Shanti a best pension plan? Let’s discuss..

LIC Jeevan Shanti – Key Features & Plan Illustration

Let’s first understand how this kind of pension plan works with two main concepts – i) What is Deferred Pension? & ii) What is Immediate Annuity (pension)?

Under a deferred annuity pension plan, you make payment to the insurance company (in form of a single premium or regular premium). The money gets invested as per the investment mandate of the plan. After the end of the deferment period, you (policyholder) will start receiving the Annuities (periodic pension).

For example : A policyholder (aged 40 years) pays Rs 10 lakh as a Single premium and opts a deferment period of 20 years (tenure). The Insurer (LIC) invests this lump sum amount and guaranteed additions (like bonuses) gets accrued during this deferment period. Once the policyholder attains 60 years, the pension payment period starts and continues for his/her life-long.

Death benefit is available during Deferment period as well as Annuity payment period under ‘Deferred Annuity options’ of Jeevan Shanti.

Death Benefit: Death Benefit (applicable only in case of Deferred Annuity) shall be, Higher of :

  • Purchase Price (single premium) plus Accrued Guaranteed Additions minus Total annuity payments made till date of death, if any (Or)
  •  110% of Purchase Price.

Under an immediate annuity plan, you pay a lump sum amount once and the insurance company pays you a pension for life. The pension payment starts immediately on purchase of insurance policy. The insurer will pay you a pension for life.

LIC's latest new Jeevan Shanti Immediate Annuity plan option Illustration example

For example : A policyholder (aged 40 years) pays Rs 10 lakh as Single premium and opts an immediate annuity payment plan/option. The Insurer (LIC) pays you Pension immediately.

 Kindly note that GA and death benefit are not available under the Immediate Annuity plan options.

Latest Update : LIC is soon planning to stop offering the ‘immediate pension’ option under ‘Jeevan Shanti’ plan. LIC launches single premium plan with immediate annuity option ‘LIC Jeevan Akshay VII Pension Plan (857) on 25th August 2020. Read more @ LIC Jeevan Akshay VII Pension Plan (857) – Details & Review

LIC Jeevan Shanti offers different kind of annuity variants under Immediate and Deferred Plans. You may kindly download the product brochure (for detailed features & plan options) by clicking on the below image.

LIC Jeevan Shanti – Illustration & Returns Calculation

Let’s analyze the returns part with an Illustration.

LIC Jeevan Shanti Guaranteed Pension Plan Return Calculator Calculation example ROI IRR Best Pension plan Premium Calculator pic

Let me now explain the above calculation with an illustration. Mr Shantiram (aged 53 years) invests LIC Jeevan Shanti for a single Premium of Rs 10 lakh. He opts for 7 years as a deferment period and wishes to receive the annuity (pension) when he completes 60 years of age.

The Guaranteed Additions gets accrued till 7th year of policy and he starts receiving Pension amount of Rs 1,07,600 p.a. from 8th policy year onwards.

Unfortunately, he gets expired after attaining 71 years of age and his nominee receives a death benefit of Rs 11 lakh.

In this scenario, if we calculate the Internal Rate of Return on his investment then it comes around 5.21%.

LIC Jeevan Akshay Pension Plan Vs LIC Jeevan Shanti – LIC already offers a Pension plan called ‘Jeevan Akshay’. Jeevan Shanti provides both immediate and deferred annuity option, while Jeevan Akshay provides only immediate annuity. So, a person who needs immediate pension may choose any of the two plans. But the annuity rate can be slightly higher in Jeevan Akshay.

Should you invest in LIC’s Single premium pension plan – Jeevan Shanti?

Why (not) to invest in LIC Jeevan Shanti?

I am assuming that you now have a fair idea on how this new pension plan from LIC works and let’s discuss if this is the right pension plan for you ;

  • Age & Tenure : The quantum of your pension is highly dependent on factors like Age, deferment period, type of plan (annuity variant) etc.,
    • Higher Age : For immediate annuity variants, the interest rate (annuity rate) depends on your age and the annuity variant. The Annuity rate will increase with the age of the Policyholder.
      • A  30 year old person is likely to receive pension for many more years (as compared to a 60 year old). Therefore, the annuity rate will be lower for a 30 year old and higher for a 60 year old. The insurance company pays a higher rate when its liability is lower.
    • Deferment Period : For the deferred annuity variant, the annuity rate shall mainly depend on age and also the quantum of deferral period and the age of the second annuitant (in case of joint life policies). So, Annuity rate will increase with the increase in the deferral period.
    • If you are young and/or have a time horizon of say 10+ years, advisable not to consider investing in a Pension plan. There are better investment alternatives.
  • Annuity Rate : Kindly remember that the pension amount is dependent on the annuity rates. The current prevailing annuity rates are very low (can be in the range of 5% to 7%).
    • (What is annuity rate? – In return for a lump sum; the money you have saved in your pension pot, an annuity provider (insurance company) will give you an annual income for the rest of your life).
    • I personally believe that it is like you accumulate wealth and lose all the wealth to Annuity Plan Provider.
  • Guaranteed Additions :  The term guaranteed additions has been coined by the Insurer just to explain the interest that is earned on the initial investment over the years that a policyholder defers annuities. Kindly don’t get too excited by looking at the term ‘Guaranteed’. The annuity rate can be very nominal.
  • Return on Investment : The marketing materials shown by most of the Agents/ financial intermediaries just ignore the Time Value of money concept. According to the numerous illustrations/flyers being used by agents to sell the plan, show rates as high as 10%-20% are achievable on the initial lump-sum investment. However, a closer inspection of the available data reveals these rates to be nothing but ploys used to lure the investor.
    • For example, below is one such illustration (agent’s training material) that I have found on Social media. As per this image, the policy holder can get double digit return (annuity rates) under most of the scenarios, which is very mis-leading.
LIC Jeevan Shanti Promotion material
  • Real Rate of Return : Annuity (pension) payments are not adjusted to Inflation rate. (Just because you have retired does not mean that Inflation also retires. In a growing economy like India, we can expect positive Inflation rate for the next 20 to 30 years.) So, when you are withdrawing money or taking pension you need to factor-in the Inflation rate. You got to consider Real Rate of Return and not just Annuity rate during Withdrawal stage (Retirement or Consumption phase).
  • Liquidity : Kindly note that you can not exit from this Product very easily (except in few options). The Surrender benefit is available only in very few annuity variant options. But, I have noticed that most of the Agents are mis-leading the prospective investors in this regard. Also, Surrendering the pension plan before maturity has serious tax implications.
  • Tax Benefit u/s 80c : Investment under LIC Jeevan Shanti plan is eligible for tax benefit under Section 80CCC. Benefit under Section 80CCC comes under the overall limit of Rs 1.5 lacs (only) under Section 80C.
  • Death Benefit : Kindly note that Death Benefit is available under ‘Deferred’ annuity variants only.
  • Investment objective : If your investment objective is to get adequate life cover then LIC Jeevan Shanti is not a right choice for you. You can consider buying a pure Term Life Insurance Plan.
  • Last but not the least, Annuity Income is taxable as per your applicable tax slab rate.

Who can invest in LIC’s new Single premium pension plan – Jeevan Shanti?

I believe that we have gone through enough reasons for not to invest in LIC Jeevan Shanti. But, who actually can consider investing in this type of pension plan, let’s discuss ;

  • If you want a fixed pension for life-long and do not want to take any ‘interest rate’ risk, you can consider this plan.
  • If you are OK with annuity rates of around 4 to 6% then this plan is for you.
  • If you are an NPS Tier-1 investor then you need to mandatorily invest 40% of your retirement withdrawal corpus in an Annuity product. In such a scenario, can consider investing in LIC Jeevan Shanti.
  • If you have lump sum corpus (can be your retirement corpus) and would like to pick an annuity (especially immediate annuity option) then you can consider investing a portion of your lump sum corpus in LIC Jeevan Shanti. But, kindly do not invest entire corpus in this product alone. There are better alternatives as well, like;

There is no doubt that you need to plan for your retirement. But, you may do it with investment products which are more flexible, transparent, simple and easy to understand. If I have to invest for my Retirement, I will give it a miss.

I hope you find this post informative. Do share your views on LIC Jeevan Shanti Pension Plan. Cheers!

Continue reading :

  1. Why (NOT) to invest in LIC Dhan Vriddhi Plan?
  2. List of all Popular Investment Options in India – Features & Snapshot
  3. How much Term Life Insurance Cover do I need? | Online Insurance coverage Calculator
  4. Retirement Planning in 3 simple steps
  5. Importance of Time Value of Money
  6. What is Real Rate of Return?
  7. Best Lump sum Investment options for Retirees

Post first published on : 21-December-2018

About The Author

  • P Srinivas says:

    Any annuity scheme with deferred is not advisable because Jeevan Shanti is giving pension on basic amount and cumulative amount accrued during these deferred period is not getting added while calculation of annuity. Therefore immediate one year deferred is okay

  • Nisha says:

    Hellow Sreekanth,
    LIC Jeevan Shanti not only ensures a consistent flow of income for retirees but also offers the peace of mind that comes with LIC’s reputable track record in the insurance sector.
    Thank you for explaining.

  • Dinesh Kartik says:

    India’s best and number one insurance company.
    There is no better insurance company in India There is no better insurance company not only in India but also in Asia I am proud of Life Insurance Corporation of India

  • D.C. Baria says:

    I invested Rs.10
    Lakh in this policy and pid 1,18,000 including GST,no I want to surrender this policy, how many money I will receive.

  • Raj says:

    Hi Sreekanth,
    I’m 34 and I did invest in this plan -deferred annuity plan. My thought was incase mutual fund or any equity crash happen, atleast this would give me 6 % return for life.(trying to diversify my Corpus)

    Anyway to back out? I do have return on purchase price option or maybe just need to ride it out 🙁

    Can you suggest ways apart from Mutual funds to build a retirement corpus . Was wondering if you do financial planning/Advising?

  • GNB says:

    Hello, I am 40 years old NRI and planned to come back to India. I planned to start some business and I am expecting some regular income to maintain my family. Someone suggested about Jeevan Shanti. Could you please suggest me your opinion as per my requirement? I may need around Rs.40,000 per month. Thanks in advance

  • Hari on gaur says:

    Sir please not misguide to people. FD rates 4% in current time.share market down except some share.who give you 18 to 20%

    • Sreekanth Reddy says:

      Dear Hari,
      Misguide? – That would be the last thing to expect from us (ReLakhs).

      • HARI OM GAUR says:

        Sir,your advice for term plan cannot fulfil social responsibilities like marriage, retirement, this is my objection…

        • Sreekanth Reddy says:

          Dear Hari,
          May I know what a person who is a bread-winner of a family (or anyone who is an earning person for that matter) should first need to think of? – An adequate life insurance cover (or) an investment plan?

  • Shriram says:

    You have mentioned interest rate of annuity comes between 5 to 6%. If we refer to downward trend of interest over past 20 odd years we will find rates have come down from 18%to 6 to 7 %. In next 10 years if we go by previous trends then we may go downwards like developed world. If we are able to lock money now at 5 to 6 % for entire life what is wrong in it. Senior citizen scheme has life span of just 8 years including extension Those who had invested 8 years back were getting interest @9.6% .Now when they renew it now they will get 7.4%. Those who invested in Jeevan Shanti are still getting same interest. Same is case with other fixed income options. Even NCDs. I feel one has to have diversified strategy . Jeevan Shanti can be one of the options. I would suggest that one can buy NSC every month.Complete one 5 year cycle. Reinvest maturity again. Here you get effect of compounding. It is safe also it is better than bank FD.

    • Sreekanth Reddy says:

      Dear Shriram,
      Hence I suggested my views under the section – Who can invest in LIC’s new Single premium pension plan – Jeevan Shanti?

      May I know, what do you mean by – Senior citizen scheme has life span of just 8 years including extension …

  • D Kulkarni says:

    Dear Sreekanth
    Excellent article, very informative. Thank a lot. My query is you are only recommending investment for immediate annuity payout, why? why not differed plans? In my case, I am 53 left the job got PF money portion of it 10 lcs, I want to invest in 7-10 year deferred annuity for joint life. Why I should not invest in this? Thanks

    • Sreekanth Reddy says:

      Dear Mr Kulkarni,
      If it meets your requirements then you may go ahead!
      But, may I know the expected ‘annuity rate’ on your shortlisted (if any) plan(s) ??

  • Arun says:

    This plan will be good if interest rate goes down in future .

  • Jitendra Kumar Chhajed says:

    I think this is not a good plan

  • Sri harsha says:

    You probably work for some private financial firm and are misleading people with deliberate misinterpretation….isn’t it true that any bank be it private or public sector…only 1 lakh is insured irrespective of your deposit above 1 lakh and will “YOU” guarantee for investments in mutual funds or any private investments….people like you lure innocent citizens into investing money in institutions such as PMC and probably share the “LOOT” later…pathetic

    • Sreekanth Reddy says:

      Dear Sri Harsha,
      Thank you for sharing your views & frustration!..

      • Anish says:

        Dear Sreekanth Reddy,

        I could not understand at last you mentioned:
        There are better alternatives as well, like;
        Senior Citizen Savings Scheme
        Pradhan Mantri Vaya Vandana Yojana (PMVVY)
        Bank Fixed Deposits
        NCDs & Bonds
        Debt or Hybrid Mutual Funds (relatively riskier options) etc.,

        But except Mutual Funds none of the above can be termed as better than this Pension Plan. How can a Bank Fixed Deposit better than a Life Time Pension paying plan on some fixed rate?
        The Interest Rate is not the only thing to consider for.
        You have also not given solid reasons as how its not a good investment option. The only example you gave is just one example only.
        Can you tell the illustration for a person aged 40Yrs opt for Immediate Annuity option for Joint Life (Second Person aged 30 Yrs) with Return of purchase Price. Assuming that both persons live for 71 Yrs only and finally after the death of second person Nominee will get back the Invested money. Please tell the illustration by comparing it with other alternative options you have mentioned.

        Also in this example if the person Invests the pension amount being received back to Mutual Fund (through SIP or any other regular interval Investment option of higher return), will it still be bad because I understood from various sources every expert advises not to invest Lumpsum money in Equity/Shares/Mutual Fund but no one tells how to invest a Lumpsum money (except Debt Mutual fund which is also Risky and depends on market and there is always a fear of loosing money)?

        I have (means my mother) invested in SCSS and PMVVY plans. I am investing in FDs also. I have small SIP in ELSS mutual fund as well.
        But all the above plans have some or other drawbacks. SCSS is only for 5 Years (can be extended again), PMVVY is only for 10 Years (and we do not know when Govt will close this scheme). For common people its very hard to understand and choose the Equity/Shares and same goes with Mutual Funds as well. Its very hard to choose in which Mutual Fund should a person invest. Its equally hard to Trust on the Financial Advisors as well because simply we do not know who can advise us better.

        So can you explain please categorically and in detail explain how exactly this Pension plan is not a good option. I think whatever details you have mentioned in your article is not fully qualifying in categorising this pension plan a bad option at all specially in front of alternatives you have given.



        • Sreekanth Reddy says:

          Dear Anish,
          Thank you for sharing your views and apologies for my late reply.

          1 – ‘Life Time Pension paying plan on some fixed rate?’ Are you aware of the current (avg) annuity rates and inflation rates in India.
          2 – The Interest Rate is not the only thing to consider for. Why is interest rate not a factor?
          3 – Dont you think products like Senior Citizen Savings Scheme can be used for lump sum investment which can give better rate of return than an annuity. PPF is a better product if one is looking to long term savings (not for an immediate pay out though).
          4 – I am not sure if you have gone through my above article completely;
          I have not only provided theoritical explanation but also provided the calculation on expected returns.
          Also, clearly mentioned who can give this plan a miss and who can consider.

          “If you have lump sum corpus (can be your retirement corpus) and would like to pick an annuity (especially immediate annuity option) then you can consider investing a portion of your lump sum corpus in LIC Jeevan Shanti. “

  • GUEST says:

    GUD ART. which is better LIC JEEVAN akshay or LIC Jeevan shanti or

  • Raghavan alias Saravanan Muthu says:

    Certainly a good article explaining the nuances of the policy with a good set of FAQs helps us decide. Thank you Sreekanth for the good efforts and knowledge sharing.

  • Jeyaram G says:


    a. This is a good analysis. In the illustration of 53 years age, what is the basis of the annuity amount you have considered INR 107600 and GA of 101280 . How did you get these amounts ? is it an assumption or as per the plan design ?

    b. Keeping aside the Life insurance value , how do you compare this plan (with 7 years deferred annuity plan) against 7.75 % RBI bonds

    Kindly respond

    • Sreekanth Reddy says:

      Dear Jeyaram,
      It is as per the plan design.. The calculations were done based on the initial available information before the launch of the product. The actual premium quote/annuity can be slightly different.

      The GoI bonds have a lock-in period of 7 years, interest rate is fixed at 7.75%, interest amt is payable half-yearly or on cumulative basis. Like annuity, interest amt here is also taxable.

      You may go through this article @ 7.75% Govt Savings Bond Scheme (RBI Bonds) : Features & Tax implications

  • Sagar Nagvekar says:

    I Am Development Officer in L.I.C .The only good reason I think is after spending all your life behind money do you still want to do the same thing after your better you invest some part of your investment as it guarantee you same rate for another 40 years if your 60 right some
    options it continues to your wife also and whole amount is given to nominee after wife. In present scenario the other Countries have rate as much low as 2 is right time to investin this product. The NRI are taken this as good option as they are not getting enough return on their money.

  • Deep says:

    Hello sir. Very prudent and detailed analysis. I have a query. Like is it not beneficial if it provides annuity to husband wife with same rate and then invested amount will be returned to nominee. Even if this goes 20 years can’t we assume the then bank rate to be lesser. I am following your blog and I am confused when you suggest buying an FD because in some of your blogs you considered FD as bad investemnet.
    Coming to PMVVY its nice product with handsome return but then after 10 yrs what will be the value of initial investment considering inflation?
    In financial markets everything is subject to market risk and inflation gallop but every solution depends on the type of problem.
    Thank you.

    • Sreekanth Reddy says:

      Dear Deep,
      Kindly note that I did not recommend only FD for lump sum investment for regular income. I have mentioned that for immediate annuity payout, this plan can be considered but along with other investment avenues which includes FDs.

      Is n’t it inflation affects annuity payouts as well? Note that these annuity payments are not inflation adjusted.

      So, a young investor has to build an investment plan that can generate a corpus which can give him/her an inflation adjusted income during retirement phase.

      Yes, markets are subject to risk,hence diversification across different asset classes and investment avenues is the need of the hour..

      Related articles :
      * List of all Popular Investment Options in India – Features & Snapshot
      * Lump sum Investment options for Retirees/Senior Citizens | Where to invest my Retiral benefits to get Regular Income?

      • Sumit says:

        Dear sir
        Please need your advise on LIC jeevan shanti.
        I am 33 years old working on merchant navy.Presently I want to invest 20 lakh on jeevan shanti so that at age of 53 I will get 35k pension per month shall I go for it.I have term insurance ,mediclaim and already invested in mutual funds.
        Please advise shall go for jeevan shanti or some other investments security after 20 years is my priority

        • Sreekanth Reddy says:

          Dear Sumit,
          Kindly refer to the points mentioned under the section – ‘Who can invest in LIC’s new Single premium pension plan – Jeevan Shanti?’

          Is this 20 lakh your entire investible surplus of of today? Do you foresee any

  • BIKAS BISWAS says:

    I am now 60. I want to purchase a joint life deferred (5years) Jeevan Shanti (Plan 850) annuity plan with my wife. My question is 1) if any one of the two dies in the period of deferment can the surviving one continue the plan or surrender it?
    2) Can the policy be surrendered at any time after 3 months of purchase. If it is true then whether both the survivors have to sign the surrender form?
    3) What is this “SURRENDER VALUE”? Is there any deduction from the original purchase price? OR there are some additions to it?

    • Sreekanth Reddy says:

      Dear BIKAS ji,
      The annuity options can vary Plan to plan..

      1 – In LIC Jeevan Shanti, below options are available ;

      Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on death of the Primary Annuitant.

      Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives.

      Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the Annuitant survives and return of Purchase Price on death of last survivor.

      2 – The Proposer can sign the surrender form.

      Under LIC Jeevan Shanti –

      Surrender Allowed: The policy can be surrendered at anytime after three months from the completion of policy when Annuity Option is with return of purchase price.

      3 – The surrender value payable shall depend on the age (last
      birthday) of the Annuitant at the time of surrender/date of
      vesting of the policy.

      Kindly go through this LIC Portal link to know about the Surrender Value..

  • Harikrishna Mandali MANDALI says:

    The author Srikanth Reddy reviewed about investment in Jeevan Shanthi plan. My suggestion to him is to go through the official circular and then he can conclude his comments.

  • Nirmal kumar Nath says:

    Dear Mr Reddy, can u help me for some investment related suggestions in LIC ‘s new Jeevan shanti pension plan. I’m 36 now. If I invest 10 lakh in Jeevan Shanti pension plan in single premium for 15 years i will get started rs 1.32 lakh annuity. I think it’s very poor rate but guaranteed. I think it is not adjusted with the India ‘s upcoming inflation. Please give me some suggestions about this investment. Thank you. Nirmal.

    • Sreekanth Reddy says:

      Dear Nirmal,
      Kindly ask yourself the questions listed under the sub-heading – ‘Who can invest in LIC’s new Single premium pension plan – Jeevan Shanti?’ mentioned in the article..

      Kindly note that the Annuity (pension) payments are not adjusted to Inflation rate.

  • Milan says:

    Thank you Sreekanth for pros and cons. Agreed to inflation adjusted return, but what about volatility of Equity and Constant Decrease in Rate of Interest in Fixed Income Product. Getting 12 to 20 percent guaranteed sounds good compared to constant decrease in Debt Market

    • Sreekanth Reddy says:

      Dear Milan,
      May I know what do you mean by ‘Constant Decrease in Rate of Interest in Fixed Income Product’?

      Which investment product gives us 12 to 20% guaranteed return?

  • Yogesh says:

    Perfect point to answer. No user will feel it as time waste reading this. Thanks for the detailed straight forward answer.

  • Dk gupta says:

    Your article is really very nice and informative. I come across a blog that’s both equally educative and amusing, and let me tell you, you’ve hit the nail on the head.
    Now i’m very happy I came across this in my search for something relating to this. You can refer for more articles like this.

  • pranita deshpande says:

    Very nice plan . thanks for it.

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