Saral Pension Yojana- An Immediate Insurance Coverage Scheme

Intending to reduce the complications concerning insurance product choice for lay investors, the Insurance Regulatory Development Authority of India is coming up with standard products with uniform features in the domains of life & non-life insurance. In recent time, a new product has been included in the list — Saral Pension Yojana, the immediate annuity plan all life insurers would have to offer from April 1, 2021.

The product Saral Pension Yojana has been announced to smoothen the insurance product choice for lay investors; the Insurance Regulatory and Development Authority (IRDAI) will be launching uniform features-based products in both life insurance and non-life insurance. If in case the annuitant, the spouse, or the child of the annuitant is diagnosed with some serious health issue or illness, this yojana can be waived-off any time after six months from its commencement period.

Introduction

Numerous immediate annuity products are offered by various insurance companies. These products come with different terms and conditions, annuity options, and variant features. To meet all the needs of the customers, IRDAI has introduced a standard individual immediate annuity product which is the Saral Pension. The target of the Saral Pension Yojana is to create uniformity across all the insurers as well as make a product that should be available at all the life insurance companies. The standard immediate annuity product Saral Pension will be having simple standards and features with easy to accept terms and conditions.

Guide to the Article

1.      Saral Pension Yojana- Boon for the Nation

2.      Background

3.      Introduction

4.      Highlights of Saral Pension Yojana

5.      Reasons to Buy the Saral Pension Plan

6.      Key Features of this Plan

7.      Pension Granted under the Saral Pension Yojana

Highlights of Saral Pension Yojana

• Insurance Regulatory and Development Authority (IRDAI) is all set to launch this scheme in the month of April 01, 2021.
• This Saral Pension Yojana has been launched with the return of purchase price and one- lump-sum purchase.

Annuity Options

Only two annuity options are there:-

• Single life annuity
• Joint life annuity
  • A loan can be availed of only after the completing 6 months of the policy.
  • In case of emergency, the policy can be surrendered.
  • There is no restriction on the maximum annuity amount.

Reasons to Buy the Saral Pension Plan

Listed below are a few reasons to buy this plan:-

• Simple to understand.
• As all the life insurance companies offer the same product, Saral Pension makes it easy for the customers to make an informed choice.
• Normalized wordings.

Key Features of this Plan

Stated below are the features of this plan:-

• This plan will be a non-participating, single-premium, and non-linked immediate annuity plan.
• Saral Pension Yojana will be offering two annuity options.
• These two options are:-
  • Joint life annuity– This comes with a 100% annuity to the secondary annuitant. This is possible only in case of the demise of the primary holder. Return of 100% purchase price is also granted in case of the death of the last survivor.
  • Life Annuity– 100% return of price purchase is given.
• Being an immediate annuity policy, the Saral pension yojana offers a single premium payment option.
• The mode of annuity payment will be based on- monthly, quarterly, half-yearly, and yearly basis.

Pension Granted under the Saral Pension Yojana

The below-given table shows the granted pension along with its duration-

PENSION	DURATION
₹1,000	Per month
₹3,000	Quarterly
₹6,000	Half-yearly
₹12,000	Annually

People planning to secure their retirement should invest in this scheme as it will be a beneficial choice for them. The major advantage of the Saral pension yojana is that it will be giving two annuities.

This means that the amount which a company promises to pay annually in exchange for the deposit in the respective pension plan.

Eligibility Criteria of this Plan

The table given below exhibits the eligibility criteria of the Saral Pension Plan:-

CRITERIA	MINIMUM	MAXIMUM
Entry Age	40 years (from the last birthday)	80 years (from the last birthday)
The Purchase Price	The purchase price depends on the annuity amount.
Policy Term Period	Saral Pension Plan is a lifetime policy.
Annuity Amount	Monthly- ₹1,000 Quarterly- ₹3,000       Half-yearly- ₹6,000     Annually- ₹12,000	There is no limit.

Pricing of the Saral Pension Yojana

The pricing will be chosen by the insurance companies themselves. Nevertheless, the annuity rates should be based upon the actuarial principle and should ensure that the annuity rates are nominal, fair, and reasonable to all the customers.

The band wise annuity rates should be attained in the respect to the following bands:-

BAND	PURCHASE PRICE RANGE
Band- 1	Less than ₹2,00,000
Band- 2	Between ₹2,00,000 & ₹5,00,000
Band- 3	Between ₹5,00,000 & ₹10,00,000
Band- 4	Between ₹10,00,000 & ₹25,00,000
Band- 5	₹25,00,000 & above

Benefits of the Saral Pension Yojana

The Saral Pension Plan comes with a bunch of benefits, and these benefits are as mentioned below:-

• Loan Facility –
  • After the completion of 6 months (from the date of commencement of the policy), a loan can be availed of by the life assured at any time.
  • The maximum loan amount granted under the policy should not exceed 50% of the annual annuity amount payable.
  • Under the joint-life option, a loan can be availed of by the primary annuitant. In the matter of death of the primary annuitant, the secondary annuitant can avail of the loan in the name of the primary annuitant.
  • Under the policy, the insurer will recover the loan interest from the annuity amount payable on the loan.

• Maturity benefit–
  • This product has no maturity benefit.

• Survival Benefit–
  • The annuity is payable during the survival of the annuity.

• Death Benefit–
  • In case of death of the spouse prior to the annuitant, the annuitant will continue to receive the annuity tills his/her demise. Eventually, on the death of the annuitant, 100% of the purchase price will be provided to the beneficiary of the policy.
  • In the case of the single life annuity, 100% of the purchase price is offered to the legal heir or the nominee on the death of the annuitant.
  • In the case of a join-life annuity, the purchase price is offered to the nominee after the demise of the annuitant.
  • In case the spouse is alive then, the spouse will continue to receive the annuity, i.e. the same amount till his/her death. 

• Policy surrender–
  • In case the annuitant or the spouse, or the children of the annuitant is diagnosed with any kind of serious illness, then the annuitant can surrender the policy any time after six months from its commencement.
  • The list of serious illness diseases can be revised by authority anytime.

Role of Aatmnirbhar Sena

Aatmnirbhar Sena is working for the welfare and development of the country. We are a unit of people who work tirelessly to support the children, youth and women of our country. Our volunteers work to create and spread awareness amongst the youth and grant them support to be able to earn a better livelihood. We also promote government schemes and work in accordance with them. 

Conclusion

While the standard immediate product, Saral Pension Yojana, is useful and simple, you will be able to decide its worth only after its successful implementation. This plan has been formed to target the people who want to purchase the annuity and also to ensure a regular flow of income after their retirement.