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Annuity Plans
Your professional life may be full of stress due to multiple responsibilities and a hectic schedule. Many people who have thoroughly made the most of their professional lives look forward to a relaxing retirement. But an important component that goes missing in retirement is the monthly salary that you have been earning all your life. After retiring, while some of your expenses may come down, there will still be other financial responsibilities.
Annuity Plans
Your professional life may be full of stress due to multiple responsibilities and a hectic schedule. Many people who have thoroughly made the most of their professional lives look forward to a relaxing retirement. But an important component that goes missing in retirement is the monthly salary that you have been earning all your life. After retiring, while some of your expenses may come down, there will still be other financial responsibilities.
To take care of these financial obligations and to ensure your family’s financial security, you need to have a stable annuity plan or a pension plan. A flexible, robust and well-planned annuity plan can help you with a regular income or a lump sum payment so that you can face life after retirement with solid financial support.
What are Annuity Plans?
Annuity plans are retirement plans that enable you to receive a regular income during your retirement years after you invest in the plan over the years or in the form of a lump sum. The invested amount is then used to generate the returns on the annuity plan, which is paid out to the policyholder during their retirement years.
Annuity plans come with flexible investment options as well as payout options to ensure that you can accumulate your retirement funds at your convenience and receive the payouts for fulfilling your financial goals.
Why Do I Need a Pension Plan?
When you are about to retire, a new phase of your life awaits you. However, one of the major challenges during this phase is the lack of a stable income that you enjoyed during your professional years. But if you plan well in advance, you can choose a pension plan of your choice and invest the premiums over the years to accumulate enough funds until your retirement.
You can also choose how you would like to receive your payouts so that you can plan your expenses accordingly. Most annuity plans or pension plans come with the option of a monthly income so that you can plan your essential expenses and also set aside some money for your other major goals.
A pension plan is necessary to ensure the complete financial protection of your family and all their needs. And if your pension plan also has a life insurance cover, then they can be covered against financial emergencies even in your absence.
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How Does Annuity Work?
To understand how an annuity works, let’s take a look at the example below:
Suresh, a 45-year-old professional, would like to plan his retirement such that he is able to receive a regular income in the absence of his salary. Therefore, he invests ₹20 Lakh in an annuity plan (2 Lakh for 10 years) of his choice. This annuity plan will gather returns on the investment for the next 15 years or until Suresh turns 60 years old and retires.
After this, the current annuity rates will be locked in, and after he retires, he will be able to receive anywhere between ₹2 Lakh to ₹2.5 Lakh per year as a regular income for the rest of his life.
These are some of the ways in which annuity plans work:
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Life Annuity
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.
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Life Annuity with Return of Purchase Price
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.
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Joint Life Annuity with Return of Purchase Price
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.
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![Longer policy tenure or whole life coverage - How is Your Life Insurance Premium Calculated?]( "Longer policy tenure or whole life coverage - How is Your Life Insurance Premium Calculated?")
Inflation-indexed Annuity
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.
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![Pre-existing health conditions as diagnosed - How is Your Life Insurance Premium Calculated?]( "Pre-existing health conditions as diagnosed - How is Your Life Insurance Premium Calculated?")
Annuity for a Guaranteed Period
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.
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What are the Eligibility Criteria for Annuity Plan?
The eligibility criteria for buying an annuity plan in India are quite simple. However, depending on the choice of the plan and your insurance provider, the age criteria for being eligible for an annuity plan may differ.
In most annuity plans, the minimum age limit for purchasing a retirement plan or an annuity plan ranges from 35 to 45 years. This gives you, the policyholder, about 15-20 years, depending on your goals, to build a robust retirement plan over the years.
However, there is also a maximum age limit after which you cannot purchase an annuity plan. This age limit may differ from insurer to insurer and can be as high as 85 years.
What are the Features of Annuity Plans in India?
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![Lump-Sum Benefits - Payout Options Available for Life Insurance Plans]( "Lump-Sum Benefits - Payout Options Available for Life Insurance Plans")
Low-risk
Annuity plans are meant to be low-risk investment options so that you do not lose any money that you are saving up for your retirement years. This ensures that you can save the funds needed for your golden years and support your family and their financial goals in the best possible way.
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![Lump-Sum Plus Regular Income - Payout Options Available for Life Insurance Plans]( "Lump-Sum Plus Regular Income - Payout Options Available for Life Insurance Plans")
Flexible Plans
You can choose an annuity plan of your choice, and pay a single lumpsum or pay over a limited period of time to accumulate a desired corpus that suits you and your retirement planning. You can choose to receive your annuity immediately or defer the commencement of annuity to a later date based on your needs
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![Whole Life Income Benefit - Payout Options Available for Life Insurance Plans]( "Whole Life Income Benefit - Payout Options Available for Life Insurance Plans")
Financial Security
The regular payouts from the annuity plan as well as the life insurance cover are meant to provide complete financial security to you and your family. The payouts help you and your family live a carefree life, while the death benefits can help your family continue fulfilling their financial obligations in your absence.
What are the Benefits of Annuity Plans?
Prepare for Uncertainties
Prepare for Uncertainties
In annuity planning, your accumulated funds should not only be adequate enough for your essential needs but also for contingencies that can eat into your savings. The guaranteed and inflation-beating returns of your retirement plan help you prepare for any kind of emergency with ease.
A Stable Income
A Stable Income
Annuity planning secures your future so that you are able to get a regular income to sustain your lifestyle. Plan well in advance so that you can enjoy the benefits of a stable income in your retirement years and enjoy your time with your family, fulfil your goals and pursue your hobbies.
Financial Independence
Financial Independence
You need not be dependent on loans and credit in your retirement years if you have a retirement plan in place. Not only your daily expenses but also your major life goals can be taken care of, and you can be free from worrying about an adequate regular income for you and your family.
Death Benefits
Death Benefits
In case of your untimely demise during the policy term, the life insurance cover of your retirement plan will ensure that your loved ones are well looked after.
Fulfilment of Goals
Fulfilment of Goals
With the help of a regular income from your annuity plan, you can focus on your long-term and short-term goals. This will help you set aside some funds in case you have some major expenses coming up while helping you and your family out with a regular income for essential expenses as well.
Tax Benefits^
Tax Benefits^
The tax benefits of your annuity plan can aid in further savings. With tax deductions under Section 80C of the Income Tax Act, you can claim deductions on the premiums paid towards the policy.
Guaranteed Returns
Guaranteed Returns
The returns on your annuity plan are guaranteed, and since it is a low-risk investment, you will not lose out on any money. Over the years, your wealth will accumulate and grow, which also helps in beating the inflation so that you are not burdened with the effects of the inflation rate during retirement.
What are the Different Types of Annuity Plans?
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Immediate Annuity
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..
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Deferred 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.
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Variable Annuity
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.
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Fixed Annuity
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.
Why Choose an Annuity Plan from Tata AIA?
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Flexible annuity options
Tata AIA Life Insurance offers flexible annuity options under deferred annuity as well as immediate annuity. You can choose from the given annuity options as per your needs for your retirement planning goals.
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Single/Joint Life
Choose your annuity option for a Single Life with one annuitant or Joint Life with a primary and secondary annuitant as per your retirement planning requirement.
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Competitive annuity rates
We offer competitive annuity rates for your retirement planning which is guaranteed at the time of annuity purchase. These annuity rates may be subject to reviews by the company.
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Choose annuity mode
Pay your premiums at your convenience, and opt to receive annuity as per your choice – on a monthly, quarterly, half-yearly or yearly basis.
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Receive annuity payouts
Based on the selected mode of your annuity payout, you will be able to receive the annuity benefits on a monthly, quarterly, half-yearly or annual basis.
What are the Steps to Retirement Planning?
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![Secure and protective cover for family - Benefits of Life Insurance plans]( "Secure and protective cover for family - Benefits of Life Insurance plans")
Financial goal-setting
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.
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![Covered against critical illnesses - Benefits of Life Insurance plans]( "Covered against critical illnesses - Benefits of Life Insurance plans")
Knowing your current situation
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.
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![Tax Savings Under Section 80C of the Income Tax Act - Benefits of Life Insurance plans]( "Tax Savings Under Section 80C of the Income Tax Act - Benefits of Life Insurance plans")
Examine your risk-appetite
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.
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![Protect your family against life’s uncertainties - Benefits of Life Insurance plans]( "Protect your family against life’s uncertainties - Benefits of Life Insurance plans")
Allocate the funds
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.
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![Higher Coverage at Low Cost - Benefits of Life Insurance plans]( "Higher Coverage at Low Cost - Benefits of Life Insurance plans")
Monitor and reassess
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.
When Should you Start Planning for Retirement?
You can always choose the age at which you want to retire and plan for it accordingly. This will also depend on which age you start the annuity planning. In most cases, people choose to retire between the age of 60 to 65 years as there may be physical and mental limitations that may not suit one’s profession anymore.
If you are in your 30s, then retirement at the age of 55 years will give you about 20 years of retirement planning. During these 20 years, you can invest in a retirement plan regularly that will give you guaranteed returns that beats inflation.
Even if you start planning your retirement in your early 40s, it is safe to say that you will have at least 15 years of retirement planning. Since these years are most important for accumulating your wealth, ensure that you save and invest enough so that your retirement years are not spent worrying about your finances.
Though there is no harm in starting your annuity planning closer to your retirement, starting early has its own benefits. Firstly, it is easier to invest an affordable premium in your annuity plan each month or year, so that you can accumulate a greater amount over the years. Secondly, by paying affordable premiums, you can also manage your other investments and essential expenses without feeling the burden of planning your retirement.
As you grow older, or if you start planning later, you can opt for a more aggressive investment method where you will have to invest a greater amount in a short span of time. While this may be possible for some people, it can put a burden on others. Hence, it is advisable to start your retirement planning between the age of 30 and 40 years.
How to Choose the Right Pension Plan?
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Returns
Your choice of annuity plan should mainly be based on the type of returns you can expect from the plan. Always ensure that the returns are guaranteed so that you don’t have to worry about financial stability during retirement. Guaranteed income also ensures complete peace of mind for you and your family.
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Liquidity
You should be able to access your funds as and when you need them in case of an emergency. So if you have an annuity plan that offers guaranteed regular income, then you can easily plan how to use your regular income for your long-term and short-term goals since you already have the financial resources and you are at peace knowing that the funds are accessible in case of an emergency.
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Tax Benefits
During your retirement years, paying taxes can take a toll on your accumulated retirement funds. Hence, look out for tax benefits under the relevant sections of the Income Tax Act that can help you save on your taxes and enjoy your retirement years with fewer worries of losing money on taxes.
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Maximum Investment Amount
Depending on the annuity plan you choose and your insurance provider, you can check the maximum investment amount in your retirement plan. If the plan allows, you can opt for the maximum savings so that you need not have to worry if your funds will be adequate enough for your retirement years.
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Additional Benefits
Look out for additional benefits in retirement plans like a life insurance cover or top up benefits on your annuity plan. Features like this ensure that in case of your death, your family will be able to support themselves financially and also take care of their future expenses without breaking the bank.
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Frequently Asked Questions about Annuity Plan
What is annuity planning?
Annuity or retirement planning means creating a financial plan over a period of time so that you can enjoy financial stability during your retirement years. You can opt for guaranteed regular income during your retirement that will help you and your family with daily expenses, as well as emergencies.
Why should you choose an annuity plan?
An annuity plan is a low-risk retirement planning option that provides guaranteed returns to you. In addition, you can also enjoy a life insurance cover under an annuity plan that will protect your family in the event of your death. Hence, as compared to other high-risk options, an annuity plan can provide complete financial support to your family.
How to buy an annuity plan?
If you want to buy an annuity plan, you can make an online or offline purchase, as per your choice. To purchase the Tata AIA Life Insurance Fortune Guarantee Pension Plan, head to our website and get in touch with us to purchase the plan online. Likewise, you can locate any of our office branches and visit us to purchase your policy online.
What are the documents needed to file a claim under my annuity plan?
Please click here to know the list of documents needed for the claim intimation and settlement process for your Annuity Plan.
What are the types of annuity plans?
There are two types of annuity or retirement plans available – deferred annuity plan and immediate annuity plan. Under a deferred annuity plan, you can pay the premiums over the policy term or for a limited period during the policy term and then receive the guaranteed benefits on maturity. In the case of an immediate annuity plan, you can invest a lumpsum amount and receive the benefits soon after.
How to calculate my retirement funds?
You will need to consider all the major and minor expenses after retirement, as well as your needs and your family’s financial requirement when calculating your retirement funds. Be sure to also consider any medical emergencies that will take up a chunk of your funds in case of an unfortunate occurrence.
What is the Top-Up Option in Tata AIA Annuity Plan?
The Top-Up option of the Tata AIA Annuity Plans allows you to pay an extra annuity amount, subject to the existing annuity rates and your top-up amount so that you can increase the payout benefits under your plan.
How do I file a claim on my annuity plan?
To file a claim with us, you can choose any of the following channels to reach out to us.
Email us at: customercare@tataaia.com
Call our helpline number - 1860-266-9966 (local charges apply)
Walk into any of the Tata AIA Life Insurance Company branch offices
Write directly to us at:
The Claims Department,
Tata AIA Life Insurance Company Limited
B- Wing, 9th Floor,
I-Think Techno Campus,
Behind TCS, Pokhran Road No.2,
Close to Eastern Express Highway,
Thane (West) 400 607.
IRDA Regn. No. 110
Can my nominee, who is not in India, file a claim?
Yes, your nominee can file the claim from outside of India. They can either upload the attested copies of their documents online or send them to us through email. If they wish to file the claim offline, they can courier all the relevant documents to their representative in India, who can visit our office to initiate the process.
When should I file a death claim?
A death claim needs to be filed soon after the death of the policyholder, though there is no restriction on delayed claims. However, do ensure that all the required documents are in place and that the correct information is available to you for filing the claim.
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Disclaimers
- The full name of Tata AIA Fortune Guarantee Pension is Tata AIA Life Insurance Fortune Guarantee Pension - A Non-Linked, Non-Participating, Annuity Plan (UIN:110N161V04)
- The full name of Tata AIA Smart Annuity Plan is Tata AIA Life Insurance Smart Annuity Plan - Single Premium, Non-Linked Non-Participating, Individual Annuity Plan (UIN: 110N150V05)
- ^Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfillment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere on this site. Please consult your own tax consultant to know the tax benefits available to you.
- $The word Guaranteed and Guarantee means the annuity payout is fixed at inception of the policy and will be payable for whole of life or till death of the Annuitant(s).
- +Tax benefits of up to ₹46,800 u/s 80C is calculated at highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium paid of ₹1,50,000. Tax benefits under the policy are subject to conditions laid under Section 80C, 80D,10(10D), 115BAC and other applicable provisions of the Income Tax Act,1961. Good and Service tax and Cess, if any will be charged extra as per prevailing rates. The Tax Free income is subject to conditions specified under section 10(10D) and other applicable provisions of the Income Tax Act,1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
- *The Guaranteed Additions are accumulated at the end of every policy month during the Deferment Period and become part of the death benefit, considering all premiums are paid. These additions cannot accrue if the policy lapses or becomes a Reduced Paid-Up policy
- #Allowed only where the product is bought through Tata AIA Life Insurance company website without any intermediary being involved and as per preference of the prospect
- Insurance cover is available under this product. For more details on risk factors, terms and conditions please read Sales Brochure carefully before concluding a sale.
- This product is underwritten by Tata AIA Life Insurance Company Ltd. This plan is not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
- L&C/Advt/2022/Nov/2908
