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Calculators LIC plans Pension

LIC Immediate Annuity

Pay a lump sum once. Receive guaranteed income for life. Compare Saral Pension (Plan 862) — IRDAI-standardised, available at every insurer — Smart Pension — LIC's proprietary plan with 10+ options — and Jeevan Akshay-VII (Plan 857) — LIC's flagship immediate annuity with the widest age range (30–85).

Read our take ↓
Illustrative rates. Annuity rates depend on your exact age at purchase. Verify the rate for your age directly with LIC before committing.
yrs
Annuity type
₹
Monthly income (for life)
₹6,333
₹76,000 per year
Annuity rate
7.60% p.a.
Break-even (corpus recovered)
Age 73 (13 years of payments)
Cumulative income received
After 10 years ₹7,60,000
After 20 years ₹15,20,000
After 30 years ₹22,80,000
+ corpus of ₹10,00,000 returned to nominee on death (Return of Purchase Price option)
Illustrative rates. Annuity rates depend on your exact age at purchase. Verify the rate for your age directly with LIC before committing.
yrs
Annuity type
₹
Monthly income (for life)
₹6,433
₹77,200 per year
Annuity rate
7.72% p.a.
Break-even (corpus recovered)
Age 73 (13 years of payments)
Cumulative income received
After 10 years ₹7,72,000
After 20 years ₹15,44,000
After 30 years ₹23,16,000
+ corpus of ₹10,00,000 returned to nominee on death (Return of Purchase Price option)
Illustrative rates. Annuity rates depend on your exact age at purchase. Verify the rate for your age directly with LIC before committing.
yrs
Annuity type
₹
Monthly income (for life)
₹6,583
₹79,000 per year
Annuity rate
7.90% p.a.
Break-even (corpus recovered)
Age 73 (13 years of payments)
Cumulative income received
After 10 years ₹7,90,000
After 20 years ₹15,80,000
After 30 years ₹23,70,000
+ corpus of ₹10,00,000 returned to nominee on death (Return of Purchase Price option)
Indicative annuity rates at representative ages (illustrative)

Rates below show annual income per ₹10,00,000 purchase price for the "Single life + Return of Purchase Price" option. Based on illustrative rate tables — verify the exact rate for your age with LIC at purchase. Last updated: 1 May 2026.

Age at entry Saral (annual) Saral (monthly) Smart (annual) Smart (monthly) Akshay-VII (annual) Akshay-VII (monthly)
40 years ₹59,000 ₹4,917 ₹59,500 ₹4,958 ₹59,500 ₹4,958
50 years ₹65,000 ₹5,417 ₹65,800 ₹5,483 ₹66,800 ₹5,567
60 years ₹76,000 ₹6,333 ₹77,200 ₹6,433 ₹79,000 ₹6,583
65 years ₹85,000 ₹7,083 ₹86,500 ₹7,208 ₹88,500 ₹7,375
70 years ₹97,000 ₹8,083 ₹99,000 ₹8,250 ₹1,01,500 ₹8,458
75 years ₹1,13,000 ₹9,417 ₹1,15,500 ₹9,625 ₹1,18,500 ₹9,875
80 years ₹1,35,000 ₹11,250 ₹1,38,000 ₹11,500 ₹1,41,500 ₹11,792

All figures assume Return of Purchase Price option. Joint-life rates are approximately 5–8% lower. Source: LIC CIS documents (licindia.in), annuity rates as at date of purchase.

Our Take

Saral Pension (Plan 862)

Editorial rating:  3.4/5  — Solid income-floor tool for retirees with NPS/EPF corpus. Rate mid-pack; tax treatment is the main gotcha.

Saral Pension is the bluntest instrument in LIC's pension drawer — one lump sum in, guaranteed income for life out. Because IRDAI has mandated identical terms across all insurers for this product, the only variable is the annuity rate, and LIC's rates currently sit mid-pack. The real catch most agents don't volunteer: every rupee of that pension income is fully taxable as 'income from other sources.' At the 30% slab, a ₹6,900/yr gross becomes ₹4,830/yr net — which makes the implied real rate look less impressive than the brochure suggests. The return-of-purchase-price feature is frequently pitched as a bonus; it isn't — it's a contractual obligation to your nominee, and it's priced into the (lower) annuity rate. You're implicitly lending LIC your corpus at the annuity rate, and getting your principal back when you die.

  • Best used to convert a lumpy NPS/EPF corpus into a predictable income floor — not as an investment vehicle.
  • The annuity rate is locked at purchase. If rates rise after you buy, you're stuck. Consider laddering: buy 50% now and 50% in 3–5 years rather than committing everything at once.
  • Joint life costs roughly ₹300–500/month less per ₹50L purchase — that reduction is the price of survivor protection. Run the comparison in the calculator before deciding.
  • Return of Purchase Price is not a 'bonus' — it is a feature that reduces your annuity rate relative to a life-only option. You are trading higher monthly income for a legacy payment.
  • Income is fully taxable. A ₹50L corpus at age 60 (single life) yields roughly ₹3.8L/yr gross; at the 30% slab, that's ₹2.66L net — an effective after-tax rate of ~5.3%. Factor this into your needs assessment.
  • Minimum annuity is ₹12,000/year — this implies a minimum purchase price of roughly ₹1.6L at age 60. No upper limit.

Smart Pension

Editorial rating:  3.7/5  — More flexible than Saral; the wider age range and richer option set justify the extra complexity for the right buyer.

Smart Pension is Saral Pension with the training wheels off. It targets the same core need — guaranteed lifetime income from a lump sum — but gives buyers the option to customise how that income is structured, when it starts, and who else it covers. The wider 30–85 entry age means younger professionals returning NPS corpus from Tier I after age 60 are also eligible, as are octogenarians who want to convert an inheritance into a pension. The partial-withdrawal liquidity option is unusual: you can withdraw a portion of the corpus in an emergency after the first policy anniversary, at the cost of a permanently reduced annuity. Like all immediate annuities, the income is fully taxable — the Smart plan does not fix that structural problem. The comparison to Saral is straightforward: if you need only the two standard options and are aged 40–80, Saral will do at a simpler price point. If you need joint life for a sibling or parent, or want to defer the first payment, or are outside Saral's age range, Smart is the right plan.

  • The 10+ option menu is the primary reason to choose Smart over Saral — for the two standard options (single life + RoPP and joint life + RoPP), the rates are comparable and either plan works.
  • Entry age 30–85 covers younger NPS Tier I holders and older buyers from families with longevity; Saral's 40–80 excludes both extremes.
  • Joint life eligibility is wider — spouse, lineal descendants, or siblings. Saral only allows spouse as the joint-life annuitant.
  • Liquidity option: partial corpus withdrawal after year 1 at the cost of a permanently lower annuity. Use only in genuine emergencies; the annuity reduction is permanent and usually uneconomic.
  • Annuity Accumulation option lets you defer the first annuity payment and earn a guaranteed interim rate on the corpus — useful for buyers who don't need income immediately at purchase.
  • Income remains fully taxable as 'income from other sources' — identical tax treatment to Saral Pension. Smart Plan does not have a tax advantage over Saral.

Jeevan Akshay-VII (Plan 857)

Editorial rating:  4.0/5  — More options than Saral; similar rates to Smart; best for complex requirements

Jeevan Akshay-VII (Plan 857) is LIC's premium immediate annuity — it begins income immediately after purchase and is available from age 30 to 85, making it suitable for early retirees and seniors alike. With 10 distinct annuity options (including liquidity features, critical illness cover, and joint-life variants for non-spouse family members), it offers more flexibility than the IRDAI-standardised Saral Pension. The rates are broadly similar to Smart Pension but the option set is more comprehensive.

  • Age range 30–85 — the widest among LIC pension plans
  • 10+ annuity options including Return of PP, annuity only, joint life for lineal kin
  • Option VII: liquidity — partial withdrawal of future annuity as lump sum
  • Option VIII/IX/X: critical illness triggers enhanced benefits
  • Min purchase price ₹1 lakh; no upper limit
  • Annuity income is fully taxable — factor in slab rate before comparing net yield

Eligibility & Limits

Parameter Saral Pension (862) Smart Pension
Min entry age40 years30 years
Max entry age80 years85 years
Premium structureSingle premiumSingle premium
Min annuity (yearly)₹12,000₹12,000
Max purchase priceNo limitNo limit
Annuity options2 (IRDAI-mandated)10+ (proprietary)
Joint lifeSpouse onlySpouse / lineal kin / sibling
Online purchaseYesYes
IRDAI standardisedYes — same terms at every insurerNo — LIC proprietary

Annuity Options

Saral Pension (2 options only)

  • Option I: Life annuity + return of 100% purchase price on death
  • Option II: Joint life last survivor + return of 100% purchase price on death of last survivor

Annuity option is irrevocable once chosen.

Smart Pension (10+ options)

  • Single life: annuity only (no corpus return)
  • Single life + return of 100% PP on death
  • Single life + return on critical illness or death
  • Joint life variants (spouse / lineal / sibling)
  • Liquidity option — partial withdrawal after policy anniversary
  • Advanced Annuity option — lump sum of future payments upfront
  • Annuity Accumulation option — defer first payment, earn interest

Exact option list and rates vary by age. Verify from CIS before purchase.

⚠ Tax Treatment — Important Catch

Immediate annuity income is fully taxable as "income from other sources" at your marginal slab rate. This is the single most important thing most buyers miss.

Purchase price paid Sec 80CCC deduction — up to ₹1.5L per year within the Sec 80C ceiling. Single-premium plans qualify only in the year of payment.
Annuity received (every year) Fully taxable as income. At the 30% slab: ₹1,00,000 gross annuity → ₹70,000 net. Factor this into your corpus-vs-income comparison.
On death — corpus returned Taxable in nominee's hands as "income from other sources" in the year received.
Unlike endowment maturity Endowment/whole-life maturity is typically tax-free under Sec 10(10D). Annuity income has no equivalent shield.

Effective yield check: if you buy a ₹50L annuity at age 60 (Saral, single life) you receive roughly ₹3.8L/yr gross. At the 30% slab that's ₹2.66L net — an effective after-tax rate of ~5.3% vs the headline 7.6%. A 6.5% bank FD in the 30% slab gives ~4.55% net. The annuity still wins, but the margin is much narrower than the brochure suggests.

Sources

  • Saral Pension (Plan 862): licindia.in official page — CIS, policy document, and sales brochure downloaded 2026-04-26.
  • Smart Pension: licindia.in official page — CIS, policy document, and sales brochure downloaded 2026-04-26.
  • IRDAI standardisation guidelines for Saral Pension products (circular IRDAI/LIFE/CIR/MISC/155/07/2021).
  • Annuity rates are illustrative, derived from CIS documents. The exact rate at your age is determined by LIC at the time of purchase and is guaranteed for life once the policy is issued.

This page is an independent analysis. Asymmetrica is not affiliated with or endorsed by LIC of India. Annuity rates change over time — verify the current rate directly with LIC before purchasing.

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