Saving for retirement is an essential part of financial planning. Besides investing in equity and debt instruments, buying a pension plan is vital for a regular stream of income in the retirement life.
Although different insurers offer different kinds of plans, one of the key feature that defines them is whether it offers annuity or a lumpsum payment.
One of the retirement plans offering annuity plan has recently been launched by HDFC Life known as Smart Pension Plus. This plan offers annuity income for the entire life of policyholder after s/he pays premium for a single or limited payment term.
The plan has flexible pay-out option to receive annuity amount — monthly, quarterly, half-yearly or yearly.
The plan, in total, offers four annuity options to choose from. The first one is life annuity. The second one is life annuity with return of a percentage of total premiums paid. The third one is life annuity with early return. And finally, the last one is increasing annuity.
The plan also gives an option to defer annuity pay-outs by choosing the deferment period.
Survival benefits
Survival benefits are different for different options namely life annuity, life annuity with return of a percentage of total premiums paid, life annuity with early return and increasing annuity.
The plan, under life annuity with early returns variant, enables policy holder to opt for any of the options wherein annuity will be paid in arrears post deferment period.
Option 1: 50 percent of total premiums paid at age 75.
Option 2: 100 percent of total premiums paid at age 75
Option 3: 50 percent of total premiums paid at age 80.
Option 4: 100 percent of total premiums paid at age 80.
Option 5: 100 percent of total premiums paid between 76 to 95.
Death benefits
In the immediate annuity, there will be no benefits that are paid upon death under this option. In the deferred annuity, there will be 105 percent of total premium paid.
And after deferment period, no benefits will be paid upon death after the deferment period.
Miscellaneous benefits
There are a number of additional options and benefits available:
1. Annuitisation Provisions: In case a policy holder dies, the nominee can exercise any of the options: A. Use the proceeds of the policy or a part thereof for buying an immediate annuity or deferred annuity. B. Withdraw the entire proceeds of the policy.
2. Family income option: This annuity benefit is available only for National Pension System (NPS) subscribers only.
3. Liquidity option: In this, the policyholder has the option to receive a lumpsum in return of reduction in annuity payments and other benefits.
4. Advanced annuity option: This is the option to withdraw present value of annuities payable in the next 1 to 5 years in advance as a lumpsum.
