Annuity Plan: If interest rates on fixed deposits are falling, then the trend of investors is decreasing towards it and they are looking for some other option. However, if they want to avoid the risk of market fluctuations, then it is better to have an Annuity Plan to ensure regular fixed income in future as it can ensure your fixed income even when you have regular income. There is no source of income.
Under the annuity plan, an income can be ensured as a pension for a lifetime by depositing an amount. Insurance companies also provide pension facility to the spouse after the death of the policyholder. Some insurance companies stop all future annuity payments after the death of the subscriber and the contract ends. Preparation should be made from now on for a fixed income at regular intervals in the future, although the minimum age for purchasing annuity plans from some insurance companies should be 30-40 years.
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Annuity income can be ensured in two ways
Insurance companies offer two types of annuity plans. Out of this, under an Immediate Annuity Plan, investors immediately start getting a fixed amount on a monthly, quarterly, half-yearly or yearly basis for a limited period or for a lifetime.
Under the Deferred Annuity Plan, investors get a fixed amount of life on a monthly, quarterly, half-yearly or yearly basis, after some time or after retirement.
Understand the annuity plan with an example
- If at the age of 30, invests 50 lakh rupees in the annuity plan of ICICI Prudential, then you can ensure a pension of 3 lakh rupees annually for life. However, if you choose a pension plan for yourself and the nominee, then you can get an annuity amount of up to Rs 2.95 lakh with many conditions and in such case, the nominee will get the purchase price after the death of the subscriber. While purchasing the annuity plan for the subscriber and the nominee, all the options should be carefully looked into.
- If SBI takes a Rs 45 lakh plan for Life-Annuity Plus at the age of 50, then a pension of 3 lakh rupees per annum will be life-long, but after the death of the subscriber all future annuity payments will be stopped and the contract will end. However, if 46-year-old nominee is also added to this plan, then to get an annual amount of Rs 3 lakh, a plan of Rs 48-49 lakh will have to be taken and it will continue to get Rs 3 lakh annually till the subscriber survives. After the death of the subscriber, half of its nominee will continue to get life. After the death of the nominee, the annuity payments will stop and the contract will end. If the nominee dies before the subscriber, then the annuity payments will stop after the subscriber’s death.
(Source: ICICI Prudential Life Insurance and SBI Life)