Annuity Plan: An Annuity Plan is a contract between the insurer and you the insured person. Annuity Plan provides the guaranteed returns over your investment during the sunset years of your life, when really you will need money to live the life according to you as you live today. Annuity Plan provides fixed and regular income on monthly / quarterly / half yearly / annual basis as opted by you.
You can opt for single life annuity or two life annuity plan at the time of purchase the product;
- Single Life Annuity Plan: In Single Life Annuity Plan, pension provided to insured person till he is alive, after his/her death the annuity will be ceased. And the purchase price will be returned to nominee as per the T&C of the annuity plan you have purchased.
- Two Life Annuity Plan: In Two Life Annuity Plan, pension will continue to the spouse after the death of insured person and annuity will be continued till the life of spouse, then-after the purchase price will be returned to nominee as per T&C of the annuity plan you have purchased.
Types of Annuity Plans;
- Immediate Annuity Plan: In immediate annuity plan, annuity get started from immediate effect, and you will receive the pension right now. It’s best plan to the people who about to retire or retired. Here, you have to invest huge money in one go, according to the pension required.
- Deferred Annuity Plan: In deferred annuity plan, you don’t have to invest huge money in one go, you can plan and invest wisely per the retirement needs. If any person who get start investing since he is earning, there will be a huge pool with him, to contribute for annuity plan.For example, if Mr X starts earning at age of 25 and start to save Rs 12,500 /- per month (Rs 1,50,000/- per year, limit of 80C), then he will have around Rs 2 crore (Tax Free u/s 10(10D) ) with him at the age of 60 for annuity plan (according to my guidelines), and at 6%, he will get Rs 1 Lakh per month, as pension for whole life of own and his spouse, then-after Rs 2 crore for his children as monetary assets.
Benefits of MWPA can be enjoyed in annuity plans, it means this policy can’t be attached legally to clear the outstanding loans of yours, if you have taken the policy under MWPA act.