Invest Lumpsum for Lifetime Pension – Standard annuity plan to be launched soon!

Buying a pension or an annuity plan will become much easier now. IRDAI has asked all life insurance companies to offer Standard Individual Immediate Annuity Product, ‘Saral Pension’ with effect from 1st April 2021. The regulator has released the guidelines on Standard Individual Immediate Annuity Product, ‘Saral Pension’ by defining the benefits, features, terms and conditions and annuity options.

Anyone between 40 and 80 years can invest in Saral Pension which will be a Single Premium plan i.e. one will have to invest a lump sum amount to get regular pension on Monthly, Quarterly, Half-Yearly or Yearly basis. The minimum amount of pension will be Rs. 1000 per Month, Rs. 3000 per Quarter, Rs. 6000 Per half-year and Rs. 12000 per annum. The amount invested is called Purchase Price in annuity place.

There will only be only two annuity options:

a) Life annuity with 100% Return of Purchase Price – Under this option, Annuity is paid for the life of the annuitant. In addition, 100% Purchase Price will be returned to the nominee / legal heirs on the death of the annuitant.

b) Joint Life annuity with a provision of 100% annuity to the secondary annuitant on the death of the primary annuitant and Return of 100% Purchase Price on death of the last survivor. In this case, the annuity is first paid to the annuitant for life. After the death of the annuitant, if the spouse is surviving, the spouse continues to receive the same amount of annuity for life till his/her death. Subsequently, on the death of the spouse, Purchase Price shall be payable to nominee / legal heirs.  However, if the spouse has pre-deceased the annuitant, then on the death of the annuitant, the Purchase price shall be payable to the nominee / legal heirs.

Benefits payable

There is no Maturity Benefit under the product. In the case of a single life annuity, 100% of the Purchase price is paid on death. In the case of a joint-life annuity, after the death of the annuitant:

• If the spouse is surviving, the spouse continues to receive the same amount of annuity for life till his/her death. Subsequently, on the death of the spouse, 100% Purchase Price shall be payable to nominee / legal heirs.
• However, if the spouse has pre-deceased the annuitant, then on the death of the annuitant, the Purchase price shall be payable to the nominee /legal heirs.

Indian life insurance market currently has several individual immediate annuity products marketed by life insurers, with each product having its own features, terms and conditions and annuity options. With a view to having uniformity across Insurers, and to make available a product by all Life Insurers that will broadly meet the needs of an average customer, it is felt necessary to introduce a standard, individual immediate annuity product, with simple features and standard terms and conditions.