Investment Plans 287 views August 21, 2020

What are the Benefits of Deferred Annuity Plan?

Annuity plans are the investment plans that help you to enjoy a luxurious life after your retirement. These plans are meant to multiply your funds so that you can use it in your future. There are many individuals who prefer the Deferred Annuity Plan in which the individual starts receiving the income after his retirement. In this plan, you will have to invest your money regularly for a specified period of time and after your retirement, you’ll start receiving the payouts. On the other hand, you are free to decide the time period of the payouts. Let’s explore all the benefits of the deferred annuity plan.

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Advantages of Deferred Annuity Plan

Now, you can see the benefits of this plan how it will help you in the accumulation of funds.

  1. Income after Retirement
  2. Multiple Payout Modes
  3. Tax Benefits
  4. Free Look Period
  5. Various types of Annuities

Income after Retirement

There are many individuals who are worried about their future. Their major concern is how they will manage their life after retirement. So, if you are in the thirties then it is the best time to invest in the deferred annuity plan. In this plan, you can pay a lump sum money or in instalments to buy the annuity. Once the accumulation phase is over then the company will start giving you payouts. So, if you want to live a life without depending on anyone after your retirement then it is the best plan for you.

Multiple Payout Modes

The insurance companies give you to the facility to receive the payouts on a monthly basis, quarterly basis, yearly basis, and lump sum. You will have to choose the payout mode at the time of the inception of the policy. Most of the individuals prefer a monthly payout because it helps to manage the monthly expenses.

Tax Benefits

You can also enjoy tax benefits in this plan. The premiums of the plan will help you get deductions while you are computing tax. You will get a deduction under section 80C of the Income Tax Act 1961.

Free Look Period

Most of the insurance companies give a free-look period of 15 days during which you can return the policy if you don’t find it interesting. The company will return the money invested if you return the policy within 15 days from the date of purchase.

Various types of Annuities

There two options available in the Deferred Annuity Plan and you can see them below:-

  1. Life Annuity- In this option, the company will give you a regular payout and after your death, all the money will be taken by the company
  2. Life Annuity with Return of Purchase Price- In this option, you will receive a regular payout and after your death, the purchase price will be returned to the nominee. You will have to mention the nominee at the time of the inception of the policy.

How does the Deferred Annuity Work

In this plan, you will have to invest your money in an annuity. You can either invest a lump sum amount or in installments for a limited period of time known as the accumulation period. Once the accumulation period is over then you can take the payout as per your requirement. The payout will always be paid on a future date and not immediately.

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