Which are Popular Annuity Pension Plans in India?
The biggest benefit of government job is that they enjoy the pension lifelong. This is not the case with private sector employees. After retirement, he or she is no longer entitled to salary and other benefits. They have to lead the rest of his life on the savings and investments made earlier. Here comes the Annuity Pension Plans. What are Annuity Pension Schemes in India? What are the Popular Annuity Pension Plans in India? Which are the top Annuity Pension schemes to invest?
What is an Annuity Pension plan?
An annuity is a long term contract between an individual and the insurance company. It helps you to accumulate wealth to provide you with the regular income at the time you stand out without any income after retirement. Through annuitization, your contributions are converted into regular periodic payments that can last for long. The holder of the annuity plan can decide the frequency, in which the payment has to be received like monthly, quarterly, half-yearly or annually.
Govt employees would get a pension as per Govt rules.
So, it becomes the sole priority of the private employees to invest wisely in his early age so as to avoid any shortage of funds in his later stage. To cater the need of regular income in one’s golden age, the annuity pension plans have been designed. In India, the annuity plans are offered by insurance companies only.
The sum insured under annuity plans is eligible for the income tax rebate under section 80CCC of the Income Tax Act, 1961.
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What are various Annuity Pension Plans available in India?
1) Immediate annuity
As the name suggests, in an immediate annuity, an individual starts receiving payments immediately from the insurance company. The premium is to be paid in a lump sum in one installment only. Some of the well-known immediate annuity plans are SBI life annuity plan, Jeevan Akshay, HDFC Life New Immediate Annuity Plan, ICICI Pru Immediate Annuity etc.
2) Deferred Annuity
In deferred annuity policy, an individual pays regular contributions to the insurance company till the vesting age or limit. He can also exercise the option of lump sum payment. The funds go on accumulating along with the interest till the vesting date. At the time of vesting date or age, the policyholder has the option of encashing the 1/3 of the funds and the balance 2/3 is utilized for the purchase of annuity pension. Some of the renowned deferred annuity plans include Bajaj Allianz Swarna Raksha, LIC Jeevan Tarang, LIC Jeevan Nidhi etc.
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What are various options available under the annuity plan?
There are five segments available, but the range of options change from person to person.
1) Annuity payable for life
Throughout the insured’s life, a fixed annuity is paid at regular intervals and the payment is stopped after his death. If an individual doesn’t have any responsibilities post his death, he should opt for this option. Higher amount of pension is paid in this type of policy as compared to other options.
2) An annuity payable for life with a guaranteed period
The annuity is paid for a certain period and thereafter till the insured is alive. The shorter the guarantee period, the higher is the pension. The annuity stops at the death of the annuitant. If one has children who can take care of them after a certain period can opt for this policy.
3) Life annuity with purchase price return
If an individual has dependents for whom he wants to leave something, then look for such plan. In this type of plan, the annuitant will get pension till he dies and after his death the purchase price will be given to the nominee.
4) Increasing annuity at a fixed rate
The annuity paid increases each year with this option.
5) Joint life and last survivor annuity
The annuitant will get the pension till he survives. Then, if his spouse survives, she is also entitled to receive the pension.
Which are the popular annuity pension plans in India?
Almost all the insurance companies offer annuity plans to their customers.
1) SBI Life – Annuity Plus
Here are the key features of this plan.
- One can receive regular income from the age of 40 and can choose for the frequency of the payments.
- SBI Life – Accidental Death Benefit Rider available.
- There are many options available under this plan- Single Life Annuity, Lifetime income with Balance Capital Refund, Lifetime income with annual increases of 3-5%, Two Lives Life Annuity, Lifetime income for 5, 10, 15 or 20 years.
- You can read review of SBI Life Annuity Plus Pension plan here.
2) HDFC Life New Immediate Annuity Plan
Here are the main features of this plan.
- One can get guaranteed return for him and his spouse as long as they live.
- One can choose from the wide variety of annuity options.
- Death benefit on certain annuity options is available.
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3) LIC Jeevan Akshay
Here are some of the main features of this plan.
- The premium is to be paid in a lump sum.
- There are many options and variants available to the policy. The variant once chosen cannot be altered.
- No medical examination is required under the plan.
- There is no maximum limit for purchase price, annuity etc.
- The minimum age to enter the policy is 30 years and maximum is 85 years.
Conclusion: The annuity pension plans are the plans that look into your future and try to provide a financial stability in your olden days. There are a whole lot of options available to these policies. One must comprehend all the pros and cons of the policy and choose the one which suits him best.
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Popular Annuity Pension Plans in India
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Thanks for sharing this nice article. I would like to add that Kotak Mutual fund is providing “Kotak Premier Pension Plan” which is one of the best pension plan. Through this, investor can get guaranteed Additions, earn bonus and can enjoy Assured Benefits. The eligibility age for this pension plan is Minimum 30 Years to Maximum 55 Years. In case of single 60 Years.
What is the entry age for immediate annuity?
Nice article. Can you share the same with a an example.
For eg. A 50 year old retired private employee wants to opt for Annuity.
What amount he would have to go for and how much returns he can expect?
Or would it make sense for him to invest the same in a liquid/debt fund and opt for monthly STP.
Hi next year I am receiving my policy mature 10 lacs. Should I go with immediate annuity plan or go with STP of mutual fund .I am 38 yr old private sector service man with 7 yr child.
What will best way to invest this lumsum 10lacs amount
Hi Sanjay, since you are in middle age, you need not for annuity plans as of now. You can invest in debt funds and if required you can opt for STP
I am looking for how much amount for annuity plan on a monthly basis for a 10 year old girl, if lump sum amount of 500,000/=paid.