What are the different types of annuity plans in India?


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Annuity Plans in India are very useful if you are looking at regular monthly income from your investment. These plans suit people after retirement who want to continue receiving a flow of money even after they retire.

With many options available, it is common for people to get confused while choosing the best annuity plan as per their needs. However, if you understand the various annuity plans well, you can easily make a choice to suit your purpose best. Hence, we are discussing the various annuity plans in this post to give you a better idea.

Annuity plans can be segregated into three main categories such as:

  • Plans based on the annuity payout starting time
  • Plans based on the amount of pension
  • Plans based on the pension scheme type

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Plans based on the annuity payout starting time 

Annuity Plans in India based on the annuity payout starting time include; Immediate annuity and Deferred annuity.

1. Immediate annuity

In case of immediate Annuity Plans in India, the scheme requires the account holder to pay a single premium amount in place of multiple payments. Such plans do not have huge gaps in terms of the phases of accumulation and disbursal. As you pay the premiums, it is called the accumulation phase, while the time when the insurance company starts paying the annuity amount to the investor is called the disbursal phase.

People on the verge of getting retired should choose such an annuity plan as the scheme offers guaranteed payout immediately after the fulfilment of the terms and conditions of the plan as defined at a pre-fixed interval.

2. Deferred annuity 

Deferred Annuity Plans in India is exactly the opposite of the immediate annuity plan. Contrary to immediate annuity policy, where the payout of annuity starts coming after the single lump sum premium payment is done by the investor, in the deferred annuity plan the investor collects the corpus over a certain time period.

People who are still serving their jobs and have a few years before getting retired should consider such plans to accumulate a corpus to use at retirement.

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Plans based on the amount of pension

Based on the pension amount, plans can be of two types such as Fixed annuity and Variable annuity Plans.

1. Fixed annuity

Under this scheme a fixed payment of a sum is made through the tenure of the annuity plan till the policyholder is alive. Being a constant payment, the sum may be low. Further, the value of money also reduces due to inflation. Hence, the value of the fixed annuity might reduce with time.  But the retired individuals get the benefit of lowering rates of interest because of the constant income.

2. Variable annuity

Similar to mutual funds, annuity plans also invest in different assets, such as traditional options of investment and riskier options of investment. Also, there are moderate risk options that invest in mixed plans including traditional no-risk options and high-risk investment options. Further, the option of switching from one fund to another is also there.

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Annuities based on the pension scheme type  

On the basis of type of pension scheme, the annuities can be of various types, such as;

  1. Life annuity – Here guaranteed pension is offered to the retired individual for the rest of their life.
  2. Life annuity with return of corpus – Here, the annuitant receives the annuity income, while the initial corpus amount is refunded to the beneficiary.
  3. Guaranteed annuity for a fixed period of time – Here again, the annuitant receives the annuity for a particular number of years, say 5, 10, or 15 years. In case of the demise of an annuitant, the nominee receives the remaining annuity/pension amount.
  4. Annuity assured for a certain number of years and life – This plan is similar to the above plan. The only difference is that if the annuitant survives the duration of the plan, he/she will receive the same pension for the rest of his/her life.
  5. Annuity for life with Joint life – Under such a scheme, the annuity income is provided to two joint holders of the plan till death.
  6. Annuity for life with a dependent as survivor – Under this plan, the key annuitant receives the annuity amount for life. Once the main annuitant dies, the spouse gets the amount for the rest of his/her life.

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To Conclude

Annuity plans are important if you want to have a stable income after retirement. There are different types of Annuity plans in India, which cater to various needs of people. You must understand each plan well before investing and before choosing the one suiting your requirement.

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FAQs: Different types of annuity plans

Which is the best annuity option in India in 2023?

Here are some top annuity plans:

Aditya Birla Sunlife Immediate Annuity Plan
Aviva Annuity Plus
Canara HSBC Pension 4Life Plan
Exide Life New Immediate Annuity Plan
Future Generali Immediate Annuity Plan

What is an annuity plan meaning?

An annuity plan is a policy where the investor makes a payment as lump-sum or in instalments to the insurer to receive regular payouts either immediately or after a certain time period in the future from the insurance company. 

What are the different types of annuities in India?

Immediate annuities, Deferred annuities, Fixed annuities and Variable annuities are among the different types of annuities in India.

What is an annuity plan?

An annuity plan is a policy where the insured pays a lump-sum amount or regular payments at intervals to the insurer and receives regular payouts either immediately or after a certain time period in the future.

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Mar 16, 2023
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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