Need Expert Advice?Our Gurus Can Help

Ans: You have given the important policy details, and the vesting date is quite close. This is a useful time to review the available options carefully.

Your policy appears to be the old deferred annuity plan, Plan 122, issued in 2001. The plan provides for a deferred annuity and includes provision for a terminal bonus.

» Will you get SRB in addition to Rs. 12 lakh NCO?

The important point is that the benefit in your policy should not be assumed to be a normal Simple Reversionary Bonus (SRB), like in a traditional participating endowment policy.

For this particular plan, the benefit structure refers to a Final Additional Bonus / Terminal Bonus payable at vesting, subject to LICs declaration and the terms applicable to your policy.

Therefore:

– Your Rs. 12 lakh NCO is the important base figure.

– A terminal/final additional bonus may be payable in addition to this amount.

– The bonus cannot be safely estimated merely by applying the current LIC bonus rates.

– The final amount will depend on the bonus actually declared by LIC for your particular policy at vesting.

So, I would not advise you to assume a particular bonus amount before LIC confirms it.

» Approximate corpus at vesting

Since your vesting date is 30.03.2028, there is still some time left.

For planning purposes, I would treat Rs. 12 lakh as the presently known NCO and consider the terminal bonus as an additional amount, rather than building your retirement decision around an assumed bonus.

A reasonable planning approach is:

– Base amount: Rs. 12 lakh NCO.

– Plus: terminal/final additional bonus, if declared and applicable.

– Final vesting value: to be confirmed by LIC before you exercise the annuity option.

I would be cautious about giving you a speculative corpus figure. It may look useful today, but it can create the wrong expectation.

» One important point about your Rs. 9,990 monthly annuity

You have mentioned:

– NCO: Rs. 12 lakh

– Monthly annuity: Rs. 9,990

– Annual premium: Rs. 9,918

– Policy term: 27 years

– Vesting: 30.03.2028

At vesting, you should obtain a written quotation from LIC showing the NCO after applicable bonus and the annuity payable under each available option.

The choice exercised at vesting is important because it determines your future pension structure and other benefits.

» What I suggest you do before 30.03.2028

About 6–12 months before vesting, ask LIC for a written statement showing:

– Present NCO.

– Terminal/final additional bonus credited or payable.

– Final amount available at vesting.

– Monthly annuity under each available option.

– Whether any commutation option is available to you.

– Death-benefit provisions under each option.

– Whether the Rs. 9,990 monthly annuity mentioned in your policy document remains applicable.

This is much safer than relying on an old policy document or verbal information.

» 360-degree retirement assessment

The bigger question is not only whether the corpus becomes Rs. 12 lakh or somewhat higher.

You should compare:

– The final LIC vesting amount.

– Pension available under each option.

– Whether you need regular income after 2028.

– Whether preserving capital for your family is important.

– Your other retirement assets and monthly income.

– Tax treatment of the income, where applicable.

– Liquidity required for medical and other emergencies.

Since this is an old policy and you have already paid premiums for many years, I would not suggest surrendering it at this stage without first checking the exact vesting benefits.

» Final Insights

Yes, your policy may have a terminal/final additional bonus in addition to the NCO, but I would not treat it as a guaranteed SRB or assume a fixed bonus amount.

For your decision-making, Rs. 12 lakh should presently be treated as the known base. The additional terminal bonus should be confirmed by LIC closer to the vesting date.

Most importantly, please obtain the official vesting quotation from LIC before choosing the annuity option. Once you have that quotation, the different options can be compared properly from an income, liquidity and family-benefit perspective.

Best Regards,

K. Ramalingam, MBA, CFP,

AMFI-Registered MFD – ARN 4188

www.holisticinvestment.in

https://www.linkedin.com/in/ramalingamcfp/