What is an annuity?
An annuity is like a contract between you and your insurance company. In an annuity plan, you invest a lump sum amount or pay regular premiums during your earning years and receive guaranteed# regular payouts once you retire. Annuities can be of two types – immediate and deferred.
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What is an immediate annuity?
In an immediate annuity plan, you start receiving the regular income immediately after investing. You invest a lump sum amount and begin to receive the payout after 12 months from the start of your policy, depending on the frequency chosen. This option may be more suitable if you are nearing retirement and need an instant source of money.
What is a deferred annuity?
In a deferred annuity plan, the regular income or annuity starts after a certain date. This option may be more suitable if you still have a few years ahead of you for your retirement and do not need a retirement income immediately.
Difference between immediate annuity and deferred annuity
The main difference between immediate and deferred annuity is when you start receiving the payouts. In the case of an immediate annuity plan, you start receiving a regular income immediately after investing your money. However, in the case of a deferred annuity plan, the payouts begin after the deferment period comes to an end.
Both immediate and deferred annuity plans have their advantages. You can choose an annuity plan that best suits your needs. You may take into account your future goals and the amount of time you have in which you want to achieve them.
If you want to invest in an annuity plan, you can check the ICICI Pru Guaranteed Pension Plan that offers both immediate and deferred annuity options. This plan was voted as the Product of the Year 2021* in the “Life Insurance – Retirement and Pension Plans” category (2021-2022) by consumers. You can receive your annuity immediately or defer it by 1 to 10 years. The plan offers a critical illness` or permanent disability` benefit option. Under this option, the purchase price is paid out on diagnosis of any critical illness` covered under the plan or on permanent disability` due to an accident. In addition to this, the plan also offers loyalty boosters^ for staying invested. Moreover, the plan offers you flexibility in the form of a loan facility for emergencies and a top-up option to boost your savings anytime you want. The minimum annuity per annum is ₹ 12,000/- while having no cap on the maximum limit.
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* Product of the Year 2021: Winner Life Insurance - Retirement & Pension Plans Category. Survey of 2250 people by NielsenIQ across categories.
^ Annuity will increase by 1% for policies purchased by an existing ICICI Prudential Customer.
` This is applicable only with Return of Purchase Price (ROP) on Critical Illness (CI)/Permanent Disability (PD) or death option. Please refer to the product brochure for more details.
#Annuity will be payable in arrears. The frequency of annuity payments can be monthly, half-yearly, quarterly or annually as chosen by the annuitant at the time of purchasing the annuity. The annuity amount chosen at policy inception is guaranteed for life.
Tax benefits are subject to conditions and other provisions of the Income Tax Act, 1961. Goods and Service Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for more details.
ICICI Pru Guaranteed Pension Plan UIN
– the official handbook!