On this article, we have a look at how LIC’s rapid annuity plan Jeevan Akshay’s annuity charges have during the last 20 years. This examine was triggered whereas getting ready a retirement planning illustration based mostly on laddered annuities.
Annuity charges are inclined to comply with rates of interest and inflation actions over the long run*. The primary model of Jeevan Akshay (Product UIN 512N089V01) was launched in Feb 1988 and was out there till June 2000. Annuity charges for this product couldn’t be discovered on-line however one can think about that they might have been terribly excessive. In line with this report, these within the mid-50s would have gotten 10%-plus.
* The repo fee is an in a single day fee whereas annuity charges symbolize long run charges. Usually, a decrease coverage fee slowly permeates to the longer length finish of the speed spectrum. Nonetheless, a one-to-one correspondence between the REPO fee motion and annuity fee motion won’t be seen.
The REPO fee was 13.5% (!) in Sep 200 and dropped dramatically all the way down to 9% a 12 months later and eight% one other 12 months later!. LIC eliminated the above plan and launched one other variant with solely 8% charges for 50-somethings (see information under). Additionally see: RBI Repo Fee Historical past
If something the only essential takeaway from this information is, that as the speed of borrowing goes down with our financial system step by step turning into stronger, annuity charges would fall down. Due to this fact it’s essential whereas planning for one thing like this – Methods to beat inflation after retirement together with assured pension – to maintain annuity expectations low and revise them yearly earlier than retirement.
The next insurance policies had been thought of. This isn’t an exhaustive record and there are some gaps in between.
- Jeevan Akshay I, Product UIN 512N204V01, Launched 14-Dec-01, Withdrawn 16-Oct-03.
- Jeevan Akshay II, Product UIN 512N221V01, Launched 1 Oct 2003, Withdrawn 20 Dec 2004.
- Jeevan Akshay III, Product UIN 512N227V01, Launched 13 Dec 2004, Withdrawn 17 Mar 2006
- Jeevan Akshay IV, Product UIN 512N234V01, Launched 7 March 2006, Withdrawn 20 Sep 2006
- Jeevan Akshay V, Product UIN 512N234V02, Launched 10 Aug 2006, Withdrawn 10 Sep 2007
- Jeevan Akshay VI (outdated), Product UIN 512N234V03, Launched 7 Aug 2007, Withdrawn 15 Might 2012
- Jeevan Akshay VI (new), Product UIN 512N234V04, Launched 15 Might 2012, Withdrawn FY 2016-17
- Jeevan Akshay VI (newer!) Product UIN 512N234V06, Launched Dec 2017, Withdrawn Aug 2019
- Jeevan Akshay VII (outdated), Product 512N337V01, Launched twenty fifth Aug 2020, Withdrawn 1st Feb 2022
- Jeevan Akshay VII (new), Product 512N337V02, Launched1st Feb 2020.
Discovering the annuity charges for the eighth coverage was exhausting so we determined to search out out for ourselves utilizing LIC’s on-line calculator: What are the annuity charges of LIC Jeevan Akshay VII from Feb 2022?
Historic LIC Jeevan Akshay annuity charges
Roman numerals symbolize the model variety of Jeevan Akshay. Choose information can also be introduced within the tables under. We will take into account the annual payout choice for “annuity for all times” solely.
Discover the massive drop in charges from Jeevak Akshay I to II. They correspond to a fall in REPO fee from about 8.5% to 7% The small enhance from Jeevan Akshay III, IV and V additionally symbolize a rise in rates of interest. The lower in annuity charges from VI (newer!) to VII (outdated) additionally corresponds to a fall within the REPO fee. The annuity has marginally elevated from 2020 to 2022 probably because of a rise in inflation. Now RBI has adopted go well with with a increased repo fee!
The charges have dropped essentially the most for senior residents. During the last 20 years, the change in fee (level to level) is -14% for 70-year olds, -12% for 60-years, -11% for 50-year olds and -9% for 40-year olds.
Historic Jeevan Akshay Annuity Charges (for all times) for 40-year olds
| Years | Age 40 |
| 2002 | 7.2 |
| 2003 | 5.7 |
| 2005 | 6.6 |
| 2006 | 6.8 |
| 2007 | 7.3 |
| 2008 | 7.5 |
| 2012 | 7.5 |
| 2018 | 6.8 |
| 2020 | 6.2 |
| 2022 | 6.5 |
Historic Jeevan Akshay Annuity Charges (for all times) for 50-year olds
| Years | Age 50 |
| 2002 | 8.1 |
| 2003 | 6.5 |
| 2005 | 7.3 |
| 2006 | 7.5 |
| 2007 | 8.0 |
| 2008 | 8.1 |
| 2012 | 8.1 |
| 2018 | 7.5 |
| 2020 | 6.9 |
| 2022 | 7.2 |
Historic Jeevan Akshay Annuity Charges (for all times) for 60-year olds
| Years | Age 60 |
| 2002 | 9.5 |
| 2003 | 7.8 |
| 2005 | 8.6 |
| 2006 | 8.7 |
| 2007 | 9.2 |
| 2008 | 9.4 |
| 2012 | 9.4 |
| 2018 | 8.7 |
| 2020 | 8.1 |
| 2022 | 8.3 |
Historic Jeevan Akshay Annuity Charges (for all times) for 70-year olds
| Years | Age 70 |
| 2002 | 12.4 |
| 2003 | 10.9 |
| 2005 | 11.2 |
| 2006 | 11.4 |
| 2007 | 12.0 |
| 2008 | 12.1 |
| 2012 | 12.1 |
| 2018 | 11.4 |
| 2020 | 10.5 |
| 2022 | 10.7 |
With LIC altering the annuity charges usually, future retirees ought to count on present charges to move south. Non-public insurers have a tendency to supply a better fee however that is extra because of a smaller market share. Additionally by way of purchaser belief, it’s exhausting to look previous LIC.
References
- US Annuity fee and US rates of interest
- LIC insurance policies that had been launched since 1956
- LIC withdrawn plans
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