HDFC Life New Immediate Annuity Plan

• Annuity plans are pension products, they are opposite of a life insurance policy. If you want to invest your hard-earned money to meet long-term retirement needs, then an annuity product may be the answer.
• In an annuity plan, a person pays either a lump sum amount or regular instalments in the given period to get regular payments or payouts as long as he/she lives or for a pre-specified fixed period. 
• The insurance companies invest your money and pay back the income generated as payouts when you retire. The annuity plan covers your financial risk by helping you get a regular payment in your sunset years for a comfortable living.  

If you want the annuity payments to start immediately, you can opt for ‘immediate annuity plan’. But, if you need your regular pension payments to start after a specified period (usually after retirement), you can choose a ‘deferred annuity plan’ among other options but you can buy an annuity plan as early as the age of 45 or 50 years but the best age for starting an income annuity is between 70 and 75, which allows for the maximum payout.

The rate of return on annuities differ depending on the annuity plan you choose to invest in. One of the popular options is ‘life annuity’ whose return price works like an FD where the investor will earn an income for life, and the nominee gets the amount on the death his/her death. The annual payout on this variant turns out to 5.7-6.4% of the purchase price for someone who is 60 years old. You can also opt for the lifetime annuity, without the return of the initial investment. The interest rate is 7.6-8.1% per annum which is the highest among all variants as the investor does not need to return the funds to an appointed nominee.

There is no limit on the amount that you need to invest in an annuity. Whether you choose a deferred or immediate annuity, there are few things you need to consider: 

• Your actual financial needs
• Your long-term financial goals
• Your current savings/investment portfolio
• The impact of inflation.
• The alternatives available to you

For instance, If at the age of 60, Rs 30,000 is sufficient for your monthly expenses, then by the time you turn 80 you will need at least Rs 1,16,090 per month to maintain a similar standard of living at an average inflation rate of 7 per cent.