Insurance
oi-Sneha Kulkarni
Here is a great opportunity for those who want to make an early investment in their retirement funds. There are currently many individual immediate annuity plans sold by life insurers in the Indian life insurance industry, with each policy having its own requirements, terms and conditions, and annuity options.
In order to have uniformity across insurance providers, IRDA’s new offering would make it easy for consumers to make better decisions. It has launched a standard individual immediate annuity plan called Saral Pension.
The Insurance Regulatory and Development Authority of India (IRDAI) has asked life insurance companies to offer a standard immediate scheme called ‘Saral Pension’ in order to reduce the problems faced by policyholders. Insurance providers will launch the Saral Pension Scheme on 1 April 2021.
Pension is an essential source of income that helps you fulfill your post-retirement financial needs.
This product aims to make it easier for buyers to make an educated decision, boost the relationship between the insurers and the insured, and decrease all mis-selling and possible conflicts.
What is Saral Pension Plan?
Saral Pension Policy is a Standard Individual Immediate Annuity Plan with Single-Premium, Non-linked, Non-participating product. This instant annuity plan with defined procedures and some basic facilities would make it much simpler for consumers to make decisions.
Saral Pension policy offers only two annuity options:
a) Life annuity with 100% Return of Purchase Price
An annuity is compensated for an annuitant’s life. In addition, the nominee or legitimate heirs will be returned 100 % of the purchase price following the annuitant’s death.
b) Joint Life Last Survivor Annuity
An annuity is first paid for life to the annuitant. After the death of the annuitant, if the partner survives, the spouse continues to earn the same amount of annuity for life until his/her death. Subsequently, upon the death of the partner, the purchase price is payable to the nominee or legal heirs.
However, there is no maturity benefit available for this product.
Features of Saral Pension Plan
Mode of Annuity Payment
Monthly, quarterly, half-yearly and annual. Payments are rendered in arrears only, which ensures that the first annuity payout will begin after the modal term.
Benefits payable on Survival
An annuity is payable during the survival of the annuitant.
Surrender on a diagnosis of critical illness of the annuitant(s)
If the annuitant or the partner or one of the children of the annuitant is diagnosed with either of the critical diseases mentioned in the Policy Document, the policy can be surrendered at any point after six months from the date of commencement.
Upon acceptance of the surrender, 95% of the purchase price will be paid to the annuitant. Once the payment is made, the policy is terminated.
Loan
It is possible to avail loan at any point after six months from the start of the policy.
Minimum Annuity
The minimum annuity to be Rs 1000 monthly, Rs 3000 quarterly, Rs 6000 per half-yearly and Rs 12000 per annum.
Return Policy
If you disagree with any of the terms and conditions, you can return the policy within 15 days of the date of receipt of the policy or 30 days if the policy has been received through distance marketing.
Tax Benefits
A policyholder is entitled to tax benefits under the Income Tax Act, 1961, Section 80CCC and Section 10(10A)(iii).
Pricing of the Product
Annuity rates will be obtained in respect of the following bands:
Band Purchase Price range
Band 1- Less than Rs 200,000
Band 2- Rs 200,000 to less than 5,00,000
Band 3- Rs 5,00,000 to less than 10,00,000
Band 4- Rs 10,00,000o less than 2,500,000
Band 5- Rs 2,500,000 and above
IRDAI’s Saral Pension Plan could be beneficial for the people who are new to investing and want to secure their future. Experts agree that the latest IRDAI plan would make it much easier for customers to choose insurance policies.
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