How to Choose the Right Annuity Plan
Many financial advisors recommend investing in annuities. Such plans are designed to meet your long-term retirement needs and requirements.
Understanding annuity plans
Annuities require you to make a lump sum or regular payments till you reach the pre-determined vesting age. Upon retirement, you are entitled to receive regular payments for as long as you live or for a pre-determined fixed period. Such payouts may be used to meet financial obligations, thereby ensuring that you live a comfortable retired life. You may also enjoy capital appreciation due to the power of compounding. Besides, most plans offer tax deductions on the premiums paid, thus reducing your taxable amount to a great extent.
Features to look out for while choosing an annuity plan
Different types of annuityschemes come with varied features and benefits. You may consider the following five features while selecting an annuity scheme.
Given that annuities are long-term products, it is important to choose a plan that offers a high level of safety. Ensure that the company is in a good position to meet its liabilities. You may also take into consideration changing factors such as increasing rate of inflation and decreasing rate of interest, besides others.
The main aim of investing in annuities is to receive high returns to meet your financial needs after retirement. Some companies are skeptical of providing high returns to their customers in order to increase their earnings. You may, therefore, choose a plan that offers good returns and takes into consideration the possible increase in the rate of inflation in future.
During times of emergencies, it may become necessary to have funds available at your disposal. Though it is not advisable to use the accumulated amount, critical conditions may require withdrawals. Thus, you must select a pension policy that offers a certain degree of liquidity.
You may either opt for a fixed annuity or variable annuity schemes, based on your requirements. In a fixed annuity plan, you are entitled to receive fixed payouts regularly. Variable annuity schemes, on the other hand, offer variable returns based on the market conditions and performance of the assets. Based on your risk appetite, you may evaluate both options and make the right choice.
Another factor to take into consideration is the level of coverage. In order to maximize coverage, you may choose a plan that secures the life of both you and your partner. In case of your demise, your partner will receive annuity payouts. This will help your family members meet their financial needs even in your absence.
While selecting the best annuity plan, you may take the aforementioned features into consideration. You may also have a look at the past track record and the financial strength of the service provider before making a decision.
If you wish to live life on your own terms even after retirement, you may invest in HDFC Life New Immediate Annuity Plan. This scheme offers guaranteed income during your golden years, thus helping you attain financial independence.
The HDFC Life New Immediate Annuity Plan provides a wide range of annuity options to choose from. It also offers the flexibility to choose frequency of annuity as per your choice. You may, therefore, opt for this plan and enjoy the numerous benefits it has to offer.
- Understand Annuity, its types, taxation and calculation
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- Regular Annuity Payouts or Lump Sum Benefit - How to Choose?
- Things That Affect Your Annuity Income
- Annuity Plan - Meaning, Types, Taxation and Calculation
- Annuity Meaning, Definition and Types
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"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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