Immediate Annuity Plan: Features and Benefits

• An Immediate Annuity Plan is an insurance scheme that offers guaranteed regular income almost immediately.
• The plan is ideal for those who have already retired or individuals who are nearing retirement age and want to start receiving pension income right away.
• You get fixed income payouts at regular intervals (monthly, quarterly, bi-annual, annual, etc.) based on the option chosen during purchase.
• You can customise the annuity plan to provide regular income to dependents as well as yourself by choosing the appropriate option.
• You can also opt for death benefits with your annuity plan subject to applicable terms and conditions.
• The annuity amount and payout frequency are fixed and do not change during the annuity term.
• Usually no medical examination is required in the case of most immediate annuity plans.

Below table briefly explains the different types of immediate annuity plans currently available in India:

To help you make an educated choice, let discuss some key benefits of immediate annuity plans below:

• Guaranteed Income: Once you invest in the plan, your income is assured for life or until both annuitants pass away (in the case of joint plans).
• Financial Independence: You get regular income from the plan so, do not need to rely on anyone for your post-retirement expenses.
• No Market Risk: Annuity income is fixed at the time of inception and not impacted by market fluctuations, providing a sense of predictability and stability.
• Customisation: Choose between different payout options and types of immediate annuity plans so that the benefits of the annuity plan are tailored to your unique needs.
• Legacy Protection: You can also choose to opt for an immediate annuity plan with death benefits to ensure that your loved ones receive financial support after your death.
• No Hassles of Reinvestment: With immediate annuity plans that offer guaranteed returns, you do not have to worry about reinvesting funds, managing withdrawals, or tracking market returns.
• Simplicity: Once the plan is purchased, no further intervention is needed from your end. You start receiving annuity payouts immediately without the need for ongoing management. However, you may need to fill out and submit proof of life documents such as Jeevan Pramaan Patra periodically to continue receiving payments.

Below is a short list of key factors that you should keep in mind before opting for an immediate annuity plan:

• 1. Your Age and Health: Check your current age, as the annuity payouts vary as per age. It is generally observed that older individuals receive higher annuity rates as the payout period tends to be shorter.
• 2. Annuity Type: The annuity offers a range of options to choose from. You can select between single life or joint life, and also decide if you add death benefit to your immediate annuity plan.
• 3. Payout Frequency: You get the freedom to choose a payout schedule such as monthly, quarterly, etc. that aligns with your post-retirement financial needs.
• 4. Inflation Impact: Always keep a note that your annuity amount is fixed and returns from an annuity plan may not keep pace with inflation over time if you opt for instant annuity plans.
• 5. Lump Sum Availability: Since the plan needs a one-time lump sum payment, the amount required in one go may be substantial. So, make sure you are ready to lock in the large corpus required.

Your retirement should be the time when you can enjoy life without financial stress. An immediate annuity plan helps you convert your lump sum savings into a guaranteed monthly income, giving you confidence and freedom to live your life the way you want. Moreover, you can customise your plan to suit your lifestyle, financial needs, and family considerations.

Take the time to assess your needs, compare plans, and choose what suits you best. Once you choose the right annuity plan, you will be on track to enjoy a financially secure and stress-free retirement.