SBI vs LIC: Know particulars sooner than investing in annuity deposit scheme

SBI vs LIC: A assured widespread income includes most people’s minds when planning for his or her retirement years. For these folks, an annuity scheme is often a helpful selection. They current assured widespread income, along with a tax revenue. Under an annuity plan, you pay a lump sum throughout the accumulation interval and get widespread funds as long as you reside. In this textual content, we’re going to talk about SBI Annuity Deposit Scheme, and LIC annuity schemes. 

For these searching for a month-to-month income, notably senior residents, the SBI Annuity Deposit Scheme (ADS) has change into a preferred, secure, and dependable selection.

When it includes insurance coverage protection, practically all of parents perception LIC with their money. Even now, when people contemplate retirement planning, the first determine that includes their ideas is the insurance coverage protection behemoth LIC. 

SBI annuity deposit scheme good for senior residents

The majority of regular income merchandise solely continuously current curiosity and, on the end of the time interval, return the investor’s preliminary funding. However, SBI ADS provides month-to-month principal refunds together with widespread curiosity funds, very just like the EMI of a mortgage. Customers can deposit a one-time lump sum amount with SBI ADS and get compensation in month-to-month annuity funds that embrace every the principal and curiosity as part of the payout, said Vinit Khandare, CEO and Founder, MyFundBazaar.

SBI Annuity Deposit Scheme vs LIC annuity scheme

SBI Annuity Deposit Scheme has a ten-year size, making it a medium-term funding from the angle of regular retirement income. Khandare said that the life annuity from LIC will proceed to pay as long as the annuitant is alive, SCSS and POMIS present a far shorter size of solely 5 years.

SBI Annuity Deposit Scheme vs LIC annuity scheme. Where to invest?

Each selection has advantages and disadvantages, lastly counting on the investor’s selection.

According to Nirav Karkera, Head of Research, Fisdom, the LIC whole-life annuity plan is especially designed for pensions. Most pension annuity schemes, along with LIC whole-life annuity, present a lifelong price selection. It means that you’d have the ability to acquire funds for as long as you reside. 

SBI annuity deposit is completely completely different from the pension annuity scheme. It lasts for below ten years. “Here, timing is necessary because of do you have to plan to start the scheme whilst you’re near your retirement or after 60 years, there’s a chance that the money you get from the scheme might not be enough to cowl your rising residing and medical payments ensuing from inflation & the reinvestment menace then could be bigger there,” said Nirav Karkera.

If you want a fixed income, opt for LIC annuity scheme

If you want a fixed income that will last throughout your life, consider the life insurance company’s life annuity scheme. “Just ensure the scheme covers a significant portion of your regular income needs. That way, you’ll have a steady source of income for a more extended time,” added Nirav.

SBI annuity scores over LIC

From a pure return and liquidity perspective, an SBI annuity may be a larger selection for these not relying on it as the primary provide of income and wishing to diversify their retirement money.

Nirav Karkera said that there are a collection of completely different gadgets which is able to present to be additional surroundings pleasant and environment friendly in fixing for retirement and periodic income.

Customers can get a set amount every month after depositing a one-time lump sum price throughout the SBI annuity deposit scheme. As per SBI official website online, a set amount is equipped to the account holder in equated month-to-month instalments (EMIs). The EMIs comprise a part of the principal amount along with curiosity on the reducing principal amount, compounded at quarterly rests and discounted to the month-to-month value. You can spend cash on the annuity scheme for a interval of three years, 5 years, 7 years, and 10 years.The worth of curiosity as related to theSBI annuity scheme is equivalent as SBI mounted deposits (FD). At present, SBI provides an charge of curiosity ranging from 3% to 7.10% p.a. to most individuals on FD maturing in 7 days to 10 years. Senior residents get 50 bps additional than most individuals on these deposits.

LIC annuity plans

LIC provides three annuity plans: Jeevan Akshay – VII, New Jeevan Shanti, and Saral Pension.

Disclaimer: The views and options made above are these of specific particular person analysts, and by no means of Mint. We advise patrons to look at with licensed consultants sooner than taking any funding choices.

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Updated: 26 May 2023, 03:15 PM IST

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