{"id":20535,"date":"2022-04-06T12:08:15","date_gmt":"2022-04-06T12:08:15","guid":{"rendered":"https:\/\/demo.munark.in\/sinhasi\/?p=20535"},"modified":"2025-02-18T12:39:07","modified_gmt":"2025-02-18T12:39:07","slug":"select-right-annuity-plan","status":"publish","type":"post","link":"https:\/\/demo.munark.in\/sinhasi\/retirement-planning-with-sinhasi\/select-right-annuity-plan\/","title":{"rendered":"How to Select the Right Annuity Plan"},"content":{"rendered":"\t\t
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A woman from Kolar was denied over Rs 3.6 lakhs which her late husband had invested in a life annuity scheme, despite her being the nominee, The insurance company had cited the \u2018No Death Benefit\u2019 clause and while she took the matter to a Bangalore consumer court, the case was dismissed. The consumer forum noted that although the annuity option was life annuity, there was no death benefit attached to the policy.\u00a0Read More<\/a><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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So How Do Annuities Work?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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An annuity is an investment product sold by insurance companies or other financial institutions to hold and grow funds. The annuity is essentially a written contract between you and the firm. When you annuitize, you invest a certain amount with the company and then accept a payout stream that can either begin immediately OR in the future. The payouts can be for life or a certain number of years. Annuities are mainly used to provide steady income during retirement.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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It is important for annuitants to understand what they are availing in different types of annuities.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t

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1.<\/em><\/h3>

Annuity for life<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive. The annuity payments will cease on the death of the Annuitant.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– Nothing shall be payable<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t

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2.<\/em><\/h3>

Annuity guaranteed for X years and for life thereafter<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive or until the end of the Guaranteed Period of X years, whichever is later.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– If death occurs within X years, then annuity is payable to nominee till end of X years, After X years, nothing is payable.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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3.<\/em><\/h3>

Annuity for life with return of purchase price<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– The annuity payments will cease on the death of the annuitant and the Purchase Price will be payable to the Nominee.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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4.<\/em><\/h3>

Annuity for life increasing at a simple rate of Y % p.a.<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive. The annuity payment will be increased by a simple rate of Y% per annum for each completed policy year.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– The annuity payments will cease on the death of the Annuitant.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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5.<\/em><\/h3>

Annuity for life with a provision for X% of the annuity to the spouse on death of the annuitant<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– On death of the Annuitant, X% (can range from 50%-100%) of the annuity amount will be payable to the surviving named spouse as long as the spouse is alive. The annuity payments will cease on the subsequent death of the Spouse. If the Spouse predeceases the Annuitant, the annuity payments will cease upon the death of the Annuitant.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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6.<\/em><\/h3>

Annuity for life with a provision for 100% of the annuity to the spouse on death of the annuitant with return of purchase price on the death of last survivor.<\/strong><\/p>

Under this option, the annuity payments will be made in arrears for as long as the Annuitant is alive.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n

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Death benefit<\/strong>– On death of the Annuitant, 100% of the annuity amount will be payable to the surviving named spouse as long as the spouse is alive. The annuity payments will cease on the subsequent death of the Spouse and the Purchase Price will be payable to the Nominee. If the Spouse predeceases the Annuitant, the annuity payments will cease upon the death of the Annuitant and the Purchase Price will be payable to the Nominee.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t <\/div>\r\n <\/div>\r\n \t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Example of Annuity product<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Let us see a working example on some of the options mentioned above to get more clarity. Here, we have considered 45 years of Age of Annuitant at entry and the pay-out amount as per LIC\u2019s Jeevan Akshay policy, which is the most preferred annuity product in the market.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\n Options ---> <\/td>\n \n Immediate Annuity\u00a0for life\u00a0 <\/td>\n \n Immediate Annuity\u00a0guaranteed 10 years and life thereafter <\/td>\n \n Immediate Annuity for life with\u00a0Return of Purchase Price <\/td>\n <\/tr>\n
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\n Purchase Price <\/td>\n \n 10,00,000 <\/td>\n \n 10,00,000 <\/td>\n \n 10,00,000 <\/td>\n <\/tr>\n
\n Annuity Amount (Annual) <\/td>\n \n 67,950 <\/td>\n \n 67,550 <\/td>\n \n 57,950 <\/td>\n <\/tr>\n
\n Death Benefit <\/td>\n \n NIL <\/td>\n \n NIL <\/td>\n \n 10,00,000 <\/td>\n <\/tr>\n <\/table>\n<\/div>