Saral Pension: Standardised annuity for retirement income, but taxation hurts returns
After the regulator IRDAI came out with regulations for a standardised non-linked, non-participating immediate annuity plan – Saral Pension – in January, some firms have rolled out their products. These include Max Life Insurance, Tata-AIA Life, IndiaFirst Life Insurance, Ageas Federal Life Insurance and Aegon Life.
Like other standardised products, the features, benefits, terms and conditions are identical across insurers. Currently, the returns being offered by these companies range from 4.6-6.2 percent, depending on the age at entry and amount invested.
Take for example, the case of a 55-year-old male who invests Rs 10 lakh (termed the purchase price) in Ageas Federal’s Saral Pension single life annuity with return of purchase price option. He will get an annual pension of Rs 53,460 during his lifetime, while the initial amount invested will be handed out to his spouse or legal heirs after his death.
Put simply, when you buy an immediate annuity plan, you hand over a lump-sum – termed purchase price – to the life insurer. Usually, it is the retirees who invest their accumulated corpus in these single premium …
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