Annuity Plans

Under a life annuity, you will be able to receive a payout of the benefits until your demise. In the event of your death, these annuity payouts will cease to be paid. However, while you receive the benefits, you can choose the payout mode – annually, quarterly or monthly.

Till the time you are alive, you will be able to receive the annuity payouts as per the income frequency chosen by you. The purchase price will be returned to your nominee after your demise.

Till the time you are alive, you will be able to receive the annuity payouts as per the income frequency chosen by you . On death of the primary annuitant, the annuity will be paid out o the surviving annuitant. The purchase price will be returned to your nominee on the second annuitants’ death.

As each year goes by, the annuity rate will increase by 2-5%. However, even if the annuity rate may not exactly match the inflation rate, it is adequate enough to ensure that your family’s financial commitments can be met and you and your loved ones can enjoy a stress-free post-retirement life. Hence, a lot of pensioners consider annuity plans for their retirement planning.

Under this type of annuity, the annuity benefits will be paid out for a fixed period of 5, 10 or 15 years as chosen. The annuity reduced post the guaranteed period and continues till the annuitant’s demise.

In an immediate annuity plan, you can start receiving the payouts soon after the initial investment is made. If you are nearing the retirement age, you can choose this type of annuity..

Under a deferred annuity plan, your money will be invested for a fixed period before the payout begins. It can be chosen by individuals who are working and are about to retire after 10-15 years. It may also come with a life insurance cover, which will pay out a sum assured to your nominees in case of your untimely demise.

As the term suggests, within the variable annuity plans, the payout is not fixed and will vary from company to company. This is because the payout is completely based on the market performance of the insurance company. Besides, the plan is market-linked and is better suited for high-risk investors. If the market returns are good, the payouts will also be lucrative.

In the case of a fixed or guaranteed retirement income plan, the amount of the payout is fixed for the whole period of the annuity plan.  

It is important to know how much money you will need to stay comfortable in your retirement year. This is how you will be able to set the goals for your future. The needs of your other family members and all their aspirations will have to be considered, and that is how you will be able to plan the finances.  

Understand how much you earn, what you can save, and how much you should invest in an annuity plan. Your current income is important as it helps you determine how much you can save for the future. If your current income is sufficient for your family’s present needs, remember that their future needs will also have to be accounted for, and your savings should grow accordingly.

When saving or investing your money, know that all investment options are not suitable for you. How much risk you can take on will decide if certain investments are better for you. For instance, a retirement plan or an annuity plan will be more suited to the needs of low-risk investors who want to avoid volatile investments such as the stock market.

Once you have decided how much you plan to save, what you need to save for, and what your options are, it is finally time to allocate the funds to different avenues. Generally, pushing all your funds into a single investment or savings option may not yield the best results. Therefore, while a guaranteed retirement plan should have most of the investment, consider other options too.

It is essential to review your investments and savings from time to time. As the years pass, the inflation rate fluctuates, and it may be necessary to allocate your funds to more reliable and guaranteed income options such as retirement plans. You can accordingly stop or continue your investments.