An annuity is a financial investment retirement Which helps you to pay a fixed and regular income. However, before making a decision, you should carefully study all the options available.
1. Annuity with ROP on Death
What it is: ROP (Return of Premium) is an annuity option that guarantees the annuitant a fixed annuity payment throughout his life. On his death, the initial amount paid to buy the annuity is returned to the nominee of the annuitant.
Who should buy: An annuity with ROP would be a suitable option for those who are dependent and are concerned about the needs of their loved ones, said Bharat Kalsi, Chief Financial Officer, Bajaj Allianz Life.
2. Joint Life Annuity
What it is: This type of annuity option covers an annuitant and his or her spouse. Under this option, the annuity is paid till at least one of the insured is alive.
Who Should Buy It: Retirement is when one has little or zero earning potential yet continues to have living expenses, especially when you have dependents, including a spouse and children. This is where a joint life annuity option helps,” Kalsi said. In addition, the joint life annuity also comes with a return of purchase price option, which is again a very relevant feature as on the death of both the annuitants, the nominee gets the purchase price.
3. Raising Salary Annuity
What it is: In this type of annuity plan, the payout increases at a fixed rate annually where the plan holder gets a predetermined additional amount in the plan.
Who Should Buy It: “Those who want to keep their lifestyle abreast of rising expenses and market inflation, must take this to avoid any financial trouble. This gives an assurance to the plan holder that they will be able to manage their regular expenses and meet their responsibilities, although it is not directly linked to the inflation rate as it increases at a fixed rate and is pre-empted by the insurance company. -Determined.” , Naval Goel, Founder and CEO, PolicyX.com.
4. Level Annuity
What it is: A level annuity pays the same amount for life. This type of annuity is not indexed with inflation. Also, because of this, it can be classified as a “declining annuity” because inflation over time can destroy the real intrinsic value paid on regular payments.
Who should buy: Goyal said, “If a person has invested a substantial amount in his annuity plan, he feels that it will sustain his life and cover all his expenses irrespective of any rise in prices or inflation. He can opt for a level annuity.”
5. Annuity for Life
What is it: It is the simplest form of annuity where predetermined and regular payments are made to the annuitant for the rest of his life. The payments can be monthly, quarterly or annually depending on the needs of the annuitant. The annuity proceeds stop only on the death of the annuitant.
Who Should Buy It: Annuity plans are designed to provide guaranteed income during one’s retired life to achieve retirement goals. Kalsi said, “Annuity for life is the only financial product that can give a predetermined guaranteed income till one is alive (more than a hundred years).
A life annuity option enables the annuitant to receive a series of fixed future payments to maintain his lifestyle even after retirement, thereby ensuring that the risk of living long term is financially secured by the insurer. Is. This annuity option is suitable for every individual, irrespective of occupation, age or gender, as it gives high returns.
6. Annuity Payable for Guaranteed Time
What it is: In this, the annuity is paid out for a specified period, irrespective of whether the person dies during that specific period or not. And the annuity stops either on the death of the annuitant or on the completion of the guarantee period.
Who should buy: Those who are concerned with the risk of loss on annuity payments due to premature death can go for this option.
7. Annuity with ROP on Survival
What it is: This option provides both life and survival benefits to the annuitant. Here, the annuitant has the option to start receiving ROP at a predetermined age.
Who Should Buy It: Annuity on survival ensures that the annuitant gets guaranteed payouts for life. After the specified retirement age, the invested amount of the annuity continues with the annuity through withdrawal of purchase price facility. This annuity plan is also known as survival benefit and is popular for individuals who have crossed the retirement age. The survival benefit of this annuity option can help them manage any unforeseen medical expenses due to old age.
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