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Best Annuity Plans in India (2023)

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annuity plans

Last Updated on Apr 17, 2023 by Anjali Chourasiya

Are you looking for a reliable source of income after retirement? Annuity plans might be the answer to your concerns. An annuity is a contract between an individual and an insurance company, where the insurer promises to pay a fixed amount of income to the policyholder for a specific period. In this article, let’s look at the best annuity plans in India, the features of annuity plans, their types, eligibility criteria, factors to consider before investing in annuity plans, and more.

What are annuity plans?

An annuity pension plan is a financial product that allows you to invest a lump sum of money. In return, you receive payments regularly for a specified period or for a lifetime. The income can be received monthly, quarterly, half-yearly, or yearly, depending on the plan you have chosen.

The investment you made is managed by the annuity provider, who invests the funds and pays you back with the returns generated from the investment in the form of regular income. Annuity plans help in covering your expenses in the sunset years of your life. Hence, consider investing in the best annuity plan that suits your needs. 


Best annuity plans in India

PlansEntry AgeFrequency of IncomePurchase Price
Canara HSBC Pension 4Life PlanMin – 30 yrs
Max – 80 yrs		Yearly, half-yearly, quarterly and monthlyMin – Rs. 2,00,000
Max – No limit
Future Generali Immediate Annuity PlanMin – 40 yrs
Max – 80 yrs		Yearly, monthlyMin – Rs. 30,000 
Max – no limit
Aditya Birla Sunlife Immediate Annuity PlanMin – 30 yrs
Max – 90 yrs		Yearly, half-yearly, quarterly and monthlyMin. regular income of Rs. 1,000, Rs. 3,000, Rs. 6,000, or Rs. 12,000 for annual, half-yearly, quarterly, and monthly. Yearly mode of the annuity payment.
Aviva Annuity PlusFor Aviva pension Policyholders, Min – 18 yrs Max – 80 yrs
Others – Min – 50 yrs, Max – 80 yrs		Yearly, half-yearly, quarterly and monthlyMin – Rs. 25,000
Max – No limit
Exide Life New Immediate Annuity PlanMin – 0 yrs age last birthday (for existing Exide Life deferred pension customers)45 yrs age last birthday (for new customers)75 yrs age last birthday (for existing Exide Life deferred pension customers)70 yrs (for new customers)Yearly, half-yearly, quarterly and monthlyMin – Rs. 50,000 
Max – No limit
ICICI Prudential Immediate Annuity PlanMin – 30 yrs
Max – 65, 70, 100 yrs		Yearly, half-yearly, quarterly and monthlyMin – Rs. 12,000 
Max – No limit
HDFC Life Pension Guaranteed PlanImmediate Life Annuity – Min – 30 yrs Max – 85 yrs
Immediate Life Annuity with Return of Purchase Price – Min- POSP Channel 40 yrsOther Channels:30 yrsMax – POSP Channel:70 yrs Other Channels:85 yrs
Deferred Life Annuity with Return of Purchase Price – Min – 45 yrs Max – 85 yrs		Yearly, half-yearly, quarterly and monthlyImmediate Life Annuity- Rs. 42,076
Immediate Life Annuity with Return of Purchase Price- Rs. 1,60,261
Deferred Life Annuity with Return of Purchase Price- Rs. 76,046
India First Immediate Annuity PlanMin – 40 yrs
Max – 80 yrs		Yearly, half-yearly, quarterly, and monthlyMin – Rs. 3,00,000 
Max – No limit
IDBI Federal Guaranteed Lifetime Income PlanMin- 45/ 50 yrs
Max- 85 yrs		Yearly, half-yearly, quarterly, and monthly Min – Rs. 1,50,000 
Max – No limit
Kotak Lifetime Income PlanMin- 18/35/45/ 55 yrs
Max-99 yrs		Yearly, half-yearly, quarterly, and monthlyMin – Rs. 1,000 
Max – No limit
Max Life Guaranteed Lifetime Income PlanMin – For immediate annuity – 0 yrs. For deferred annuity – 30 yrs

Max – 80 yrs		Half-yearly, quarterly, and monthlyMin – Rs. 1,000 per month 
Max – No limit
TATA AIA Life Insurance Smart Annuity PlanMin – 45 yrs
Max – 85 yrs		Yearly, half-yearly, quarterly, and monthlyImmediate annuity plan for Life Annuity- Rs. 87,527
Immediate life annuity with return of purchase price- Rs. 2,06,155
Deferred life annuity with return of purchase price-Rs. 1,08,303
Max-no limit
Reliance Nippon Life Immediate Annuity PlanMin – 20 yrs
Max – 80 yrs		Yearly, half-yearly, quarterly, and monthlyMin – Rs. 1,00,000 
Max – No limit
SBI Life Annuity PlusMin – 40 yrs
Max – 80 yrs		Yearly, half-yearly, quarterly, and monthlyMin – The minimum annuity
Instalments can be paid as per annuity payout mode.
Max – No limit
Star Union Dai-Ichi Life Immediate Annuity PlanMin – 50  yrs
Max – 80 yrs		Yearly, half-yearly, quarterly, and monthlyMin – Rs. 5,00,000 
Max – No limit
Shriram Life Immediate Annuity PlusMin-0 yrs, 18 yrs (age last birthday)
For joint life options
Max- 85 yrs		Yearly, half-yearly, quarterly, and monthlyMin – Rs. 2,00,000 
Max – No limit

Please note that the plans are mentioned in no order of preference.

Features

Here are some key features offered by the best annuity plans in India in 2023 that you should consider before investing:

  1. Safe: Annuity plans are considered to be one of the safest investment tools as they help you save for the future. 
  2. Flexible: There are a variety of plans available in the market. You can choose any plan based on your needs and requirements.
  3. Secure: Annuity plans help you secure your future needs. It also helps to save for emergency situations.

Analyse the fund you are interested in based on the above-mentioned factors. It is always worthwhile to consider a financial advisor before investing.

Types of annuity plans

There are various types of annuities available based on the features. For example, some annuitants (people who opted for an annuity plan) may prefer receiving annuity payments for their entire life, while others may opt for fixed payments for a limited period of time. Here’s a brief of different types of annuity plans:

Annuity plan typesVariants
Premium frequencySingle
Regular
Payout typeFixed
Variable
Time payouts startImmediate
Deferred
Payout DurationLife Annuity
Term Certain
No. of people benefittingSingle Life
Joint/Survivor
Nature of purchaserIndividual
Group

Annuitants can further customise their annuity plan by choosing from different payout options based on various factors, such as their retirement income goals. For instance, an inflation-linked annuity can provide protection against rising costs. In contrast, a life and survivor annuity can ensure a continuous income stream for a spouse after the annuitant’s demise. Listed below are some common annuity options:

  1. Life Annuity: Pays a uniform rate of pension as long as the annuitant survives.
  2. Life and Certain: Pays pension for a certain number of years (5, 10, 15, or 20) and then continues until the subscriber’s survival.
  3. Life and Repurchase: Pays for life and returns the purchase price to the nominee after the annuitant’s demise.
  4. Inflation-Linked: Pays for life with an increase in pension amount at a fixed rate (e.g., 3% per annum) to counter inflation.
  5. Life and Survivor: Covers the spouse as well, with a pension paid until the subscriber’s lifetime and continuing to the spouse after the annuitant’s death.

Advantages of annuity plans

  1. There are no investment caps in the annuity plans like in other schemes. For instance, the Senior Citizens Savings Scheme, a scheme for senior citizens of India,  has a maximum investment limit of Rs. 30 lakh. There is no such cap available for annuity plans.
  2. One of the key advantages of the best annuity plans is that they eliminate the risk of reinvestment. In India, where interest rates tend to be lower, there is a concern that when one needs to reinvest their principal, they may receive lower interest rates. However, with an annuity plan, you are guaranteed to receive payouts for your entire life without having to worry about reinvestment risks.
  3. An annuity plan gives you financial security as you receive payments every month. 

Disadvantages of annuity plans

  1. In annuity plans, simple interest is used, whereas in instruments like Senior Citizen Savings Scheme, compound interest is used every quarter.
  2. The returns of annuity plans are not as attractive as compared to other various schemes which offer similar low returns.
  3. When it comes to capital, annuity plans are not commonly seen as a lucrative investment option. Most citizens prefer an option that allows them to access their capital which is not possible with annuity plans. 
  4. Annuity plans do not offer premature withdrawals. 
  5. Most annuity plans do not combat inflation. Considering inflation’s impact on retirement, it’s prudent to plan accordingly, as most investment plans do not combat inflation.

Eligibility criteria 

To be eligible for an annuity plan, individuals must be under the age group of 35-75 yrs. The age bracket may differ with different insurance providers.

Factors to consider before investing in annuity plans

Listed below are the factors that one needs to consider before making a decision about investing in annuity plans.

  1. Category of the annuity plan: There are various categories of annuity plans available. Choosing the one that aligns with your financial objectives is a crucial factor to consider before investing.
  2. Financial commitment: Take into consideration the annuity plan’s fees and your ability to commit financially before investing. Evaluating your financial commitment is crucial because annuity plans may often require a sizable commitment.
  3. Fitness evaluation: Take into account your age and health requirements, as the annuity plans are intended to offer a consistent income after retirement. 
  4. Tax impact: Annuity plans have varying tax effects depending on their type and payment choice. Understand the tax impacts of the annuity plan and seek advice from financial professionals or tax experts.
  5. Payout option: There are several payout options available, such as fixed, variable, or inflation-adjusted. Check out various payout possibilities and select the one that best meets your demands and financial goals.
  6. Insurer: Consider the trustworthiness of the insurance provider offering the annuity plan, and check their ratings and reviews to ensure their authenticity.

Annuity options under NPS

The National Pension System (NPS) is a voluntary retirement scheme that allows you to create a retirement corpus or receive an old-age pension. Managed by PFRDA (Pension Fund Regulatory and Development Authority), it is available to all Indian citizens, whether resident or non-resident, aged between 18 and 65 yrs.

An annuity in the NPS allows you to receive continuous income in your golden years after retirement. With its regular income, it provides you with the peace of no survival troubles and helps you maintain a standard of living. There are two features of annuity under NPS that you must know:

  • 40% of the total NPS corpus remains invested in annuity.
  • In case of premature withdrawal, you have to invest 80% of the total corpus in the annuity.

Below-mentioned are the PFRDA-approved annuity service providers for NPS:

  1. Life Insurance Corporation of India (LIC)
  2. SBI Life Insurance
  3. ICICI Prudential Life Insurance
  4. HDFC Life Insurance 
  5. Kotak Mahindra Life Insurance
  6. Star Union Dai-ichi Life Insurance
  7. IndiaFirst Life Insurance

Please note that the list is not based on any preference. 

In a nutshell

In conclusion, annuity plans offer a guaranteed source of income during the retirement phase. However, it is crucial to choose the right annuity plan that suits your retirement needs. Understanding the features, types, advantages, disadvantages, eligibility criteria, and other factors associated with annuity plans can help you make sound financial decisions that align with your long-term financial goals.

FAQs

What is an annuity pension plan?

Annuity plans provide a way to receive regular payments for a lifetime after making a lump sum investment. These plans may have different options, such as providing payments to a spouse or nominee after the investor’s demise. It’s important to carefully review the terms and conditions, understand the options and rates, and seek advice from a financial advisor before investing in an annuity plan.

Can you take annuity plans without NPS (National Pension Scheme)?

Yes, you can get an annuity plan without NPS. There are various annuity plans available for you to choose from. It is always worthwhile to take the help of a financial advisor before investing.

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