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Recently I came across LIC’s Jeevan Shanti pension plan – With one time investment, get Guaranteed life long income. As per LIC’s illustration, if I go with one time investment of Rs 1,000,000 then after 20 years, I would starting getting a pension of Rs 206,600 per year, which is Rs 17,216 per month. Death benefit would be 110% of the purchase price i.e. Rs 1,100,000.
If today I am 40, as I turn 60, if I get a pension of Rs 17,216 per month, the primary questions are?
- How good is this pension amount? i.e. Will I be able to live a financially independent life?
- What would be the impact of inflation on Rs 17,216?
- If I can maintain today’s life style in Rs 17,216 per month, as I age, how much pension would I need to maintain the same lifestyle as today?
- What is the impact of inflation on the sum insured on Death Benefit of 11,00,000?
Try the pension evaluator below…
Current Age:
Death Cover:
Yearly Pension:
Monthly Pension:
Pension Starts After: years
Average Inflation : %
Though the pension amount is guaranteed, as I age, the actual value of the pension amount that the pension plan provides, starts diminishing; Which means that I will not be able to maintain my current lifestyle as I age.
Conclusion: Since the pension plan does not account for inflation, the pension plan is not useful for me.
Awsome explanation 🙂