Pension/Annuity Plans
Ensuring a Steady Post-Retirement Income
Annuity plans are financial agreements between an insurance company and an individual, designed to provide regular payments at equal intervals. They are particularly popular among those seeking a steady income stream during their retirement years. These plans help retirees maintain their lifestyle and meet daily expenses without financial strain.
Types of Annuity Plans
- Deferred Annuity:
Features:
Investments are made for a set period before payouts begin.
Ideal for individuals still working and saving for future retirement.
May include a "life cover," ensuring a lump sum payout to the nominee in case of the insured’s demise.
Best For: People with a few years left before retirement.
- Immediate Annuity:
Features:
Payouts start immediately after the initial investment.
Offers financial support without delay for those nearing or at retirement.
Deferred annuities can be converted into immediate annuities for quick payouts.
- Sub-Types of Immediate Annuities:
Fixed Annuity: Provides a guaranteed fixed payout for a specific number of years.
Guaranteed Period Annuity: Ensures payments for a predetermined period. If the policyholder passes away, payouts continue to the nominee. Survivors receive lifetime payouts.
Variable Annuity: Payouts fluctuate based on investment performance. Higher market returns lead to higher payouts and vice versa.
- Variable Annuity:
Features:
Payouts are market-linked and not fixed.
Suitable for individuals with a higher risk tolerance.
Offers potential for higher returns during favorable market conditions.
Risk Level: High, as payouts depend on market performance.
- Fixed Annuity:
Features:
Payout amounts remain constant throughout the annuity term.
Provides financial security with predictable income.
Even after the insured’s demise, the nominee continues to receive fixed payouts.
Best For: Individuals preferring stability and predictability in payouts.
