What is an Annuity/Pension Plan?
Retirement is a phase of life most of us look forward to, working for a good number of years in order to rest and relax when we retire. While this period is meant to be one without tension, financial issues could dampen this time. Lack of adequate planning could see one working even after retirement to make ends meet.
This is where an Annuity/Pension plan comes into play. Just like a traditional life insurance policy provides financial support to the family of an insured after his/her demise, a pension plan provides the insured a regular source of income even after retirement. In essence, it is a plan which covers the risk of losing your income post retirement, compensating for any drop in earnings by providing annuity.
It is ideal for individuals looking to supplement their retirement corpus, wherein insurers offer plans which typically require a single premium to be paid upfront, with the policy providing returns after one retires. One can choose the age at which they wish to receive this amount, thereby having solace in the fact that the policy will cover their financial needs as long as they live.
The frequency of payments can be chosen according to the needs of an insured individual, with certain plans offering a gradual increase in the amount paid, doubling as an investment.
Best Pension Plans in India:
There are over 20 insurance companies which offer pension plans in India, with a number of options available. These plans cater to different requirements, ensuring that one finds a plan which meets their retirement goals. Listed below are the top 5 pension plans in India as of 2017.
|Pension Plan||About the plan||Entry Age||Vesting Age||Policy Term||Annual Premium Amount||Sum Assured|
|LIC Jeevan Nidhi Plan||A deferred annuity plan which provides additional bonus, it offers multiple pension options. Bonus is accrued after the 6th year, with the premium paid eligible for tax exemption under the Income Tax Act.||Minimum: 20 years Maximum: 58 years (regular premium), 60 years (single premium)||Minimum: 55 years Maximum: 65 years||Minimum: 5 years Maximum: 35 years||Minimum: Rs.10,000 for single premium, Rs.3,000 for regular premium||Minimum: Rs.1 lakh (regular premium), Rs.1.5 lakh (single premium)|
|SBI Life Saral Pension Plan||A plan which offers guaranteed bonus ranging between 2.50% and 2.75%, it also provides an option for life cover through riders.||Minimum: 18 years Maximum: 60 years (regular premium), 65 years (single premium)||Minimum: 40 years Maximum: 70 years||Minimum: 5 years (single premium), 10 years (regular premium) Maximum: 40 years||Minimum: Rs.7,500 Maximum: No upper limit||Minimum: Rs.1 lakh Maximum: No upper limit|
|HDFC Life – Click2Retire Plan||An online pension plan which secures the retirement of an individual through assured vesting benefit. Being a unit linked plan it invests in funds which meet certain growth requirements||Minimum: 18 years Maximum: 65 years||Minimum: 45 years Maximum: 75 years||Minimum: 10 years Maximum: 35 years||Minimum: Rs.24,000 Maximum: No upper limit||Based on premium|
|LIC Jeevan Akshay VI Plan||An immediate annuity plan which provides pension immediately after paying the single premium.||Minimum: 30 years Maximum: 85 years||Pension is paid immediately, depending on the option chosen by the buyer||NA||Minimum: Rs.1 lakh Maximum: No upper limit||Based on premium|
|ICICI Pru-Easy Retirement Plan||A unit linked plan which provides an assured benefit to help meet financial requirements after retirement.||Minimum: 35 years Maximum: 70 years||Minimum: 45 years Maximum: 80 years||Minimum: 10 years Maximum: 30 years||Minimum: Rs.48,000 Maximum: No upper limit||Based on premium|
|HDFC Life Assured Pension Plan||This is a unit linked plan which is suited to those looking at an investment cum protection plan.||Minimum: 18 years Maximum: 65 years||Minimum: 45 years Maximum: 75 years||Minimum: 10 years Maximum: 35 years||Minimum: Rs.24,000 Maximum: No upper limit||Based on premium|
Types of Pension Plans in India:
Insurance companies offer a range of pension plans in India, and while each is unique in itself, one can classify pension plans into these 7 broad categories:
- Immediate Annuity Plans– These are plans which provide immediate pension payouts, with no waiting period to receive the pension. Most plans under this category require the premium to be paid as a single lumpsum amount, with the option to choose the time from which the annuity payout begins. Example: LIC Jeevan Akshay VI.
- Deferred Annuity Plans – These are plans wherein the policyholder receives a pension after a specified period of time. He/she is expected to pay premiums for the policy term, with the payment beginning once the premiums are paid. One can also choose to make a single premium payment. One can choose the frequency of annuity payout, with insurers providing the option to pay it monthly, quarterly, half-yearly, or yearly. Example: LIC Jeevan Nidhi Plan.
- Life Annuity Plans – These plans pay pension to the insured individual until his/her death, thereby ensuring that one has a regular source of income throughout his/her life. One can also choose to include their spouse under the plan, in which case the spouse continues to receive the pension after the policyholder passes away. Example: SBI Life Annuity Plus.
- Guaranteed Period Annuity Plans – These are plans akin to life annuity plans, with the only difference being that they pay assured pension for a specific period of time, even if the policyholder passes away before this period.
- Traditional Pension Plans – These are plans which invest the premium in safe options like government securities. These are generally risk-free, but offer lower returns. Example: SBI Life Saral Pension.
- Unit Linked Pension Plans – These are plans which invest in market units such as stocks, securities, or bonds. They have a degree of risk associated with them but typically offer better returns. Example: HDFC Life Assured Pension Plan.
- With/Without Cover Pension Plans – A with cover pension plan provides life cover in addition to annuity. These plans offer a death benefit in the event of demise of policyholder. A without cover plan does not offer life insurance, providing just annuity. Most plans can be enhanced to include life cover by adding riders.
Why do I need a Pension Plan?
It is easy for one to overlook the fact that retirement brings with it financial strain. We work for a majority of our life hoping to lead a stress-free retired life, but lack of money could see one coming out of retirement to make ends meet. A good pension plan ensures that one is financially secure during retirement, with the plan providing a steady inflow of funds.
Old age is often associated with increased medical expenses, which can be a strain on financial resources, especially when one is retired. While those with a government job would receive regular pension, this might not be sufficient for the daily needs. A pension plan can enhance this income, ensuring that one doesn’t have to make changes in their lifestyle.
Additionally, pension plans can offer decent returns on investment, ensuring that inflation doesn’t reduce the value of one’s money. Certain pension plans also provide life cover, wherein the family of the insured is protected in the event of his/her demise.
The biggest factor which warrants the need of a pension plan is the peace of mind which it provides, ensuring that we can have a peaceful and fulfilling retired life without the strain of finances on our head.
Features of Pension Plans:
Some of the popular features of pension plans are highlighted below:
- Annuity options – Most pension plans come with a range of annuity options. One can choose an option which best suits their retirement needs.
- Early payouts – One can opt to receive the payout at an age of their choosing. Certain plans provide regular payouts from the age of 40 years, providing an option for early retirement.
- Flexible payments – One can choose the frequency at which they receive their pension. Most policies offer the option to choose between annual, monthly, half-yearly, or quarterly payout.
- High pension – One can choose the amount of pension they wish to receive. Most insurers do not have an upper limit on the sum assured, thereby enabling one to plan their retired life according to their lifestyle.
- Additional security – One can opt for riders to enhance the protection offered by a basic annuity plan. These riders can be purchased at affordable rates and are ideal for those looking for additional benefits.
- Rebates/Incentives – Most insurance companies offer rebates/incentives on premiums which exceed a certain limit. This helps in getting more pension at cheaper rates.
- Financial independence – Retired individuals with a good pension plan need not depend on others to meet their financial requirements.
- Protection for family – One can choose to enhance a plan by opting for life cover, wherein a death benefit will be paid to the nominee after the policyholder dies. Additionally, they can also choose to cover their spouse under a plan.
Benefits/Advantages of Annuity/Pension Plans:
Listed below are the benefits/advantages which pension plans provide:
- Tax benefits – The premiums paid towards a pension plan are eligible for tax benefits under Section 80CC and Section 10(10A) of the Income Tax Act. These can help one save a considerable amount on tax each year.
- Investment – Certain unit linked retirement plans provide one the opportunity to grow their money through strategic investments. These offer dual benefits of an investment plus insurance.
- Assured benefits – A number of pension plans offer bonuses/assured benefits, helping one meet any additional financial obligations post-retirement.
- Death benefit – One can supplement the basic pension plan by opting for a life cover wherein a death benefit will be provided to the nominee of the insured after his/her demise.
- Regular income – Pension plans provide a regular source of income to policyholders, ensuring that they can lead a hassle-free retired life.
एन्युइटी / पेंशन लाइफ इंश्योरेंस प्लान:
एन्युइटी लाइफ इंश्योरेंस पॉलिसी लंबी अवधि के अनुबंध हैं जिन्हें बीमा प्रदाताओं से खरीदा जा सकता है। एन्युटी इस तरह से डिजाइन की गई हैं कि वे सेवानिवृत्ति के लिए आय एकत्रित करने के लिए संपत्तियों को जमा करने में सहायता करें। हालांकि, उनके पास उनकी सीमाएं हैं। शुरुआती निकासी के मामले में, ग्राहकों को दंड का भुगतान करना होगा और एन्युटी आय के समान कमाई कर योग्य होगी।
एन्युटी यह सुनिश्चित करने के लिए डिज़ाइन की गई हैं कि ग्राहक अपनी आय को आगे बढ़ाने के जोखिम से बच सकें। Annuitisation योजना के प्रति आपके प्रीमियम भुगतान आवधिक भुगतान में परिवर्तित करने की अनुमति देता है जिसका उपयोग आप अपने शेष जीवन के लिए कर सकते हैं। वार्षिकियां भी लचीली होती हैं और ग्राहकों को एकमुश्त राशि निवेश करने या समय के साथ छोटे भुगतान करने में सक्षम बनाती हैं। ग्राहकों के पास यह तय करने का विकल्प भी होता है कि वे तुरंत अपने वेतन बहिष्कार या बाद की तारीख में प्राप्त करना चाहते हैं। हालांकि, क्या आपकी आवश्यकताओं लंबी अवधि या अल्पकालिक हैं, आपको अपनी स्थिति के अनुरूप सर्वोत्तम प्रकार की एन्युटी एन्युटी चुनने की स्वतंत्रता है। विकल्प निम्नानुसार हैं:
परिवर्तनीय एन्युटी: परिवर्तनीय एन्युटी ग्राहक को इन निवेशों के प्रदर्शन के आधार पर निवेश का चयन करने और रिटर्न कमाने की अनुमति देती है। आप उन निवेशों का चयन कर सकते हैं जो जोखिम जोखिम सहनशीलता और निवेश उद्देश्यों के आधार पर विभिन्न जोखिम स्तर और संभावित विकास के विभिन्न स्तर प्रदान करते हैं।
तत्काल एन्युटी: तत्काल एन्युटी नीतियों को आम तौर पर एकमुश्त राशि के भुगतान के साथ खरीदा जाता है। पॉलिसी खरीदी जाने के बाद कंपनी द्वारा गारंटीकृत आय लगभग तुरंत शुरू हो जाती है। निवेश आय के एक गारंटीकृत स्रोत में परिवर्तित होता है जिसे भुगतान शुरू होने के बाद निरस्त नहीं किया जाएगा। जबकि कुछ फंड ग्राहकों द्वारा पहुंचा जा सकता है, अन्य के पास कुछ प्रतिबंध हो सकते हैं।
फिक्स्ड एन्युइटी: फिक्स्ड एन्युइटी प्लान दोनों कमाई के साथ-साथ प्रमुख निवेश की गारंटी देता है और पॉलिसीधारक पॉलिसी अवधि की पूरी तरह से बीमा कंपनी से निश्चित भुगतान प्राप्त करेगा।