Investment Plans 454 views September 1, 2021

As retirement brings regular income to a halt, life can be challenging in your sunset years if you don’t do financial planning while you’re working. An annuity plan is one of the ways by which you can ensure regular income (pension) to live those days comfortably. To get such income, you need to pay a predetermined amount periodically towards this plan till the time you want the payout to begin. Some plans may require a single lump sum payment too. These plans come in several variants – fixed, variable, immediate and deferred – meeting the requirements of different customers. And this precisely decides the best plan for you. So, you need to know in detail about different types of annuity plans and other critical aspects. We’ll let you do so by explaining to you all that in this post. Let’s get started!


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Things to Consider Before Choosing the Annuity Plan

The safety and security of investments should be your top priority when building a corpus for retirement. This is where choosing the right annuity type becomes critical. Now that RIGHT type could be different for different individuals. We’ll introspect more on it and help you pick the right one for yourself. Also, do check the annuity rates offered by the insurance companies. Although most insurers remain conservative on this front, comparing them and finding the one with a relatively higher annuity rate may not be bad for you! A higher rate will only help you deal with inflationary pressures. Let’s check these aspects and figure out the best annuity plan for you.

Investment Safety

One should keep money in an annuity plan that assures payout during retirement days. The payout will depend on the type of life annuity you choose. Annuities are of various types – Immediate, Deferred, Fixed and Variable – as told above. Immediate annuities mean the pension payout will happen immediately. Whereas, in the case of deferred annuities, the payout will happen after a specified period. So, if you are far from touching the retirement age and don’t require a pension now, choosing the deferred annuity plan will be better. You can use your salary to maintain your ongoing lifestyle. Also, a longer accumulation of premiums boosts the scope for more surplus money during retirement.

In the case of fixed annuities, the payout remains fixed and varies based on the performance of underlying investments when choosing a variable annuity plan. So, if you have a low-risk appetite, fixed annuities would suit you despite less returns expected from the same. But if you can afford risks at the expense of greater returns, choose a variable annuity plan.

Joint Annuity Plan vs Individual Annuity Plan – Which Should You Choose?

Annuity plans can be further classified into individual and joint plans that vary from each other. In an individual plan, the annuity payment will stop once you die. So, your spouse won’t receive the payout upon your death. Whereas, in a joint plan, the payment is first made to the primary annuitant. Upon the death of the same, the secondary annuitant (spouse) will continue to get an annuity. So, a joint life annuity sounds better than an individual plan due to continued payment to your spouse even after your death. But you should also note that an individual plan will lead to greater income. So, consider all these before choosing a suitable plan for you.

Check Premiums and Payout of Different Plans

So far, we’ve understood the working of annuity plans. It’s time we check the premium and payout of these plans for more comparison. You could pay the premium either periodically or in a lump sum as told above. Whereas the payout could be a flat amount or a certain percentage of the sum assured.

Here’s a list of top annuity plans with their respective premiums and payouts.

Annuity PlansMinimum Premium (In INR)Annuity Payout
HDFC Life Guaranteed Pension Plan (Deferred Plan)

Monthly - 2,000

Quarterly - 6,000

Half-yearly - 12,000

Annual - 24,000
Guaranteed additions of 3% of sum assured on vesting. These additions accrue upon the completion of each policy year
Max Life Guaranteed Lifetime Income Plan

1,000 per MonthMonthly Accrual of Guaranteed Additions equaling 1/12th of annual annuity
SBI Life Annuity Plus

Not Specified by the InsurerMinimum Payout

Monthly - INR 1,000

Quarterly - INR 3,000

Half-yearly - INR 6,000

Annual - INR 12,000
Aegon Life Insta Pension Insurance Plan

2,50,000 (Single Premium)Minimum Payout

Monthly - INR 1,044

Quarterly - INR 3,165

Half-yearly - INR 6,395

Annual - INR 13,051
Canara HSBC OBC Pension4Life Plan

2,00,000Minimum Annuity - INR 1,000 per month

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