There are several investment options, such as ULIP and FD, available in the market to fulfil your financial goals. But what about your post-retirement life or when you do not have a salary or regular income?
In today’s volatile economy, it is wise to invest in such plans that secure your future and generate regular income for your living expenses.
Annuity plans are one option that you can consider securing your later life. But what are annuity plans, and what are their different types? This article will explain annuity and types of annuity plans.
Annuity plans are long-term investment agreements or plans between an insurance company and an individual. In these plans, the individual makes payments in series or lump-sum amounts, for which, in exchange, the individual gets periodic income either immediately or in the future.
Annuity plans are beneficial for maintaining a dignified and comfortable post-retirement life. That is why people also consider it as one of the best retirement plans that provides regular income in later life.
However, there are several types of annuities available which are fit for every individual as per their requirements. Let us know about annuity types in the next section.
Fixed annuity plans are types of annuities in which the investor gets paid a fixed interest amount on their investment for a specified period of time. This means an individual gets a fixed amount of money post-retirement until the end of the plan without any change.
Fixed annuity plans are considered the safest annuity plans, as they are not affected by market prices' ups and downs.
However, this can also be considered its downfall because fixed annuity plan investors will not benefit when market prices are at peak. Overall, it is the best annuity option for individuals who seek fixed income without any risk.
Variable annuity plans are annuity types in which the investor is not guaranteed a fixed payout for their investment. In these plans, the insurance company invests the investment amount in mutual funds or equities.
Then the investor gets the payout amounts depending on the performance of those funds throughout the investment period.
In these annuity plans, payouts depend on fund performance, and thus, they are suitable for individuals with a better risk tolerance.
Immediate annuity plan is an annuity type in which the investor pays the premium in one lump sum amount rather than in instalments. It is done so that the investor can get guaranteed immediate payouts as soon as they deposit the premium amount with the insurance company.
It is a beneficial annuity plan for people whose retirement age is near and who want to get a fixed source of income as soon as possible.
Deferred annuity plans are the types of annuities that have a fixed activation date. In such plans, the investor deposits the premium amount in instalments to the insurance company.
These instalments get accumulated, and the investor will get the payouts as pensions. That is why deferred annuity plans are also considered as retirement plans. These annuity plans are suitable for individuals who do not need immediate payouts and want to accumulate their premiums for higher payouts in future.
Post-retirement age is the time when every elderly person thinks of living their life with dignity and peace with their family. Having the financial safety of an annuity plan can help you live such a life. With the information provided here you must have gotten the idea about annuity and types of annuities. With PNB MetLife, you can get the annuity plan as per your requirements.
An annuity plan is an investment for retirement, so the earlier you start, the better returns you will get post-retirement.
A surrender period is the amount of time that an investor must wait to withdraw their funds from an annuity without facing any penalty.
Under Section 80C of the Income Tax Act, annuities are subject to tax benefits of up to ₹1.5 lakh per annum.
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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