Investment Plans September 3, 2021

You can plan your retirement with an annuity plan, a life insurance product by which you can get regular income in your golden years. Unlike any other investment plan, an annuity plan provides you the option to receive fixed or variable interest during the payout period. You can choose to get the annuity payout in a lump sum or for a fixed period in installments. That said, it comes with a set of terminologies, which you need to understand thoroughly for selecting the best annuity plan. We can help you ensure the same by elaborating on the terminologies of annuity plans. Read this post and learn more about it.


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Let’s Check the Terminologies of Annuity Plans

Let’s know about the following terminologies of annuity plans before purchasing the one for you.

Annuity – An amount payable to the insured as per his/her chosen vesting date. You will receive an annuity after the set vesting date as chosen at the time of inception.

Annuity Certain – A series of payments made to the insured for a specific period.

Annuity Consideration – The amount you’ll receive during the payout period is known as the annuity consideration.

Purchase Price – The amount you pay to the insurer to fund the annuity is known as the purchase price. You can pay the premium in a lump sum or at regular intervals.

Annuitant – This is the insured person who will receive the guaranteed payout during retirement.

Annuity Rates – This is the percentage by which your annuity grows each year till the date of vesting. Your insurer will allow you to choose the annuity rate at the time of policy purchase. The annuity rates for top plans are as follows:

Policy NamePurchase Price (In INR)Minimum Annuity for Male LifeMinimum Annuity Rate for Female Life
Max Life Guaranteed Lifetime Income Plan1 Lakh to 20 Lakh and aboveINR 2,086 - 6,086INR 2,086 - 5,904
ICICI Pru Guaranteed Pension Plan< 3 Lakh to >= 25 Lakh0.00-4.00% of the Purchase Price
Reliance Immediate Annuity Plan1000INR 58.30 - 93.06
HDFC Life Saral Pension PlanFor Single Life - 2,23,048
For Joint Life - 2,22,635
INR 12,000
Edelweiss Tokio Life Immediate Annuity Plan1 - 5 Lakh and aboveNil - 0.10% of the Purchase Price
Tata AIA Life Insurance Smart Annuity Plan85,527 - 1,08,03INR 1,33,313 - 2,25,775
ABSLI Guaranteed Annuity Plus1.5 LakhINR 12,000
Aviva AnnuityPlus25000INR 6,258 - 8,232
Future Generali Immediate Annuity Plan60,000 - 1.5 Lakh and above1.6-2.5% of the Purchase Price
Kotak Lifetime Income PlanAny amount that ensures minimum monthly annuity of 1,000 INR 12,000

Accrued Interest – The total interest earned on an annuity that is not paid out. Your accrued interest is tax-deferred until it is withdrawn.

Accumulation Phase – The accumulation phase refers to the premium payment term.

Annuitization – The conversion of annuity to a fixed or variable income stream for a specified period is called annuitization.

Deferred Annuity – A deferred annuity plan with an accumulation and payout phase. Here, annuity payments begin at a specified date in the future.

Fixed Annuity – In this, the annuity amount and the payout period are fixed.

Immediate Annuity – In an immediate annuity plan, you need to make a one-time lump sum contribution. And later, you’ll start receiving a guaranteed stream of income for a specific period or lifetime.

Variable Annuity – A variable annuity provides the income based on the performance of the market. This doesn’t provide you a specific guaranteed return.

Guaranteed Period Annuity – The period, which is chosen by the annuitant at inception. is the time during which he/she will receive the annuity amount.

Single Life Annuity – The annuity is payable to you after retirement, provided you are alive.

Joint-Life Annuity – The annuity will continue until either of the annuitants is alive during the payout period.

Vesting Date – This is the date from which you’ll start receiving the annuity.

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