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Annuity Rates In India


One of my friends father invested Rs 1Lac  in single premium pension plan before 10 yrs.The vesting date is about six months from today and fund value is near to 1.80 Lac.Now what options he have? We will take a look at it.

A)Complete the term & Take Pension:

First choice is to complete the term and take pension benefits as per your choice from different options.One may delight after hearing the word “Pension” and it will take care of retirement.But first take a look of what amount one can get as a pension.

Following are different choices and annuity received for purchase price of Rs. 1lakh…Rates are average and may slightly differ from one to another annuity provider.

1.Life annuity without return of purchase price:

In this option,policy holder will get pension benefit till he is alive and purchase amount (fund value) will not be refunded.

Purchase Price(Rs)                                    Annuity Payment Option
Monthly(Rs) Quarterly(Rs) Half-yearly(Rs) Yearly(Rs)
1 lac 635 1950 3990 8,150

 2.Life Annuity With Return Of purchase price:

Policy holder will get annuity for life and fund value will be returned to the nominee.

Purchase Price      Annuity Payment Option
Monthly Quarterly Half-yearly Yearly
1 lac 455 1450 2,975 6,050

 3.Joint Life survivor without return of purchase price:

Pension is purchased by couple and received till either one is alive.No refund of purchase price.

Purchase Price                           Annuity Payment Option
Monthly Quarterly Half-yearly Yearly
1 lac 475 1485 3,025 6,150

 4.Joint life survivor with return of purchase price:

Annuity is purchase jointly with spouse and is received till anyone is alive.Purchase price is refunded to nominee thereafter.

Purchase Price                           Annuity Payment Option
Monthly Quarterly Half-yearly Yearly
1 lac 450 1405 2855 5,800

Along with these options other options like annuity guaranteed for first 5,10 or 15 yrs and life thereafter is also available.

B)Surrender The Policy:

If anyone feel that annuity rates are low then he can surrender the policy before vesting or mature date.Its not possible to surrender the policy after vesting date and take fund value.Fund value remains invested to company till you provide annuity option to them.It is mandatory to take annuity thereafter.So if anyone wish to surrender, do it before policy mature date and invest this money in monthly income plan of posts with 8%,monthly interest schemes of  banks or senoir citizen saving scheme with quarterly interest payment with 9% p.a.If you think that market conditions are favorable then invest in mutual fund schemes and after enough appreciation go for MIPs etc.

In India,till banks or posts offering better rates it seems a bad idea to take annuity.so finally investor need to take decision depending upon his needs.

 

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Category: Insurance

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2 Responses

  1. Sundar says:

    Very informative. It is not easy to choose annuity or any other instrument of future return. Never know how this inflationary trends that time. It looks vast private sector employees without secure post-retirement, life seems risky

    • admin says:

      Sundar,
      You are true saying that its difficult to choose products for retirement.Answer is proper asset allocation and some risk taking.

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