Written by Vivek Jain
While we may not have control over our increasing age, we certainly have control over the way we plan for our future. After working hard all throughout life, peaceful and financially secured retirement sounds like a dream for many. With such a high inflation rate, increasing cost of healthcare and higher life expectancy, one needs a concrete plan to keep enjoying the same lifestyle, even after retirement. This plan can only be achieved by planning for your retirement in the most efficient manner. Planning your retirement right can help you transform your old age into the golden years of your life.
For financial security, choose the right retirement plans to maintain your standard of living without compromises. One such option is immediate annuity plans that give you the financial security to live life on your own terms post-retirement from work. An annuity plan assures a regular stream of income throughout your life with options to match your specific needs. Under an immediate annuity plan, the customer needs to make a single payment instead of periodic premiums. Once a single purchase price is paid, annuity payments start immediately thereafter. However, while choosing an immediate annuity plan, it is important to choose the right variant so that your specific needs and requirements are aptly met.
Joint Life Annuity with return of purchase price
Under the joint-life annuity with return of purchase price variant of immediate annuity plan, the customer receives a fixed annuity for life on the amount invested. Upon the death of the customer, the spouse starts receiving a pension. This pension remains active until the death of the spouse. Further, on the death of the spouse, the nominee/children receive the entire initially invested amount as a lump sum. This is the best variant of annuity plan available for people who want to protect their loved ones even when they are not around. Though, one must know that the pension received under this plan is comparatively lower than other variants.
Joint Life Annuity without return of purchase price
You must choose the joint-life annuity option to support your spouse through annuity proceeds even in your absence. This variant of annuity plans keeps paying till you or your spouse are alive. However, the purchase price is not returned to the nominee/dependents. Under this plan, the monthly pension received by the spouse and the customer is relatively higher.
Life Annuity with return of purchase price on Critical illness (CI) or Permanent Disability due to accident (PD) or Death
This option pays you annuity till earlier of the first occurrence of any of the specified Critical Illness after policy inception or Permanent Disability, before the age of 80 years, or death. Further, the Purchase Price is returned to you/nominee, in case of the first occurrence of any of the specified CI or PD before the age of 80 years, or death. The investment lump sum received by the customer can be used for the treatment of the illness.
Life Annuity with an annual increase
This option pays you an annuity for life and the annuity payout increases at a simple rate that varies from customer requirements. The annuity increases each complete policy year throughout the life of the annuitant. Every year, there will be a rise in the annuity payable at a certain rate. Though it may not be linked to the actual inflation rate, the rationale is that it would take care of the increase in expenses to some extent.
Before you buy an annuity plan, ensure that you have carried proper due diligence and chosen the right plan to meet your retirement goals. Make sure that you have a clear estimate of your future life goals and retirement pension requirement while taking your current income, inflation and risk profile into account.
The author is Head-Investments BU, Policybazaar.com. Views expressed are that of the author.
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