HDFC Life's new smart pension plus plan helps earn guaranteed income during retirement
3 min read . Updated: 26 Mar 2023, 07:06 PM IST
PremiumHDFC Life Smart Pension Plus is made available in multiple variants - the unique ones being annuity with a liquidity option, simple and compound increasing annuity to offset inflation, and early return of premium (i.e. survival benefit) to fulfil one's own life goals.
HDFC Life Insurance has launched the Smart Pension Plus plan which offers financial independence after retirement, in the form of a regular and guaranteed stream of income, similar to a ‘salary’. This new pension plan offers flexibility to cover oneself as well as one’s spouse, the ability to decide the premium payment term, frequency of pay-out, and a choice to take income immediately or after a few years.
The HDFC Life Smart Pension Plus is made available in multiple variants - the unique ones being annuity with a liquidity option, simple and compound increasing annuity to offset inflation, and early return of premium (i.e. survival benefit) to fulfil one's own life goals.
Notably, individuals can customize the plan by choosing the option that best fits their requirements - the idea is to enable them to live the way they want with complete financial independence.
Also, the pension plus plan has been designed to cater to individuals who want to save and create a financial safety net for themselves while they earn to be able to continue with their current lifestyle after retirement in their golden years. Simply put, this annuity product could enable customers to live their desired life after retirement.
Aneesh Khanna, Head – of Products & Segments, HDFC Life said, "Our latest offering, HDFC Life Smart Pension Plus is a unique annuity plan that can be customized to meet specific requirements for life after retirement. This plan offers multiple bespoke guaranteed income options and enables customers to save adequately for their retired life. We believe the option to make regular premium payments and take joint life cover will enable a larger section of our country’s population to plan for their golden years, well in advance. As a life insurer, we remain committed to protecting India from the risks of morbidity, mortality, and longevity with our innovative and flexible products."
There are four annuity options offered under this pension-plus plan. These are --- life annuity; life annuity with return of % of total premiums paid; life annuity with early return; and increasing annuity.
Furthermore, there are two options for premium payment. Single Pay offers a minimum ₹50,000 premium amount. While the second would be Limited Pay which offers a minimum ₹30,000 premium annually, ₹15,300 half-yearly, ₹7,800 quarterly, and ₹2,625 monthly basis. There is no maximum limit for the premium amount. The minimum premium will be such that the minimum annuity payouts can be made.
That being said, the minimum annuity amount is ₹12,000 annually; ₹6,000 half-yearly; ₹3,000 quarterly; and ₹1,000 on a monthly basis. There is no limit to the maximum annuity amount. The annuity payout mode is yearly, half-yearly, quarterly, and monthly.
Other benefits of the HDFC Pension Plus are:
- Customers can get their policies issued within twenty-four hours with no medicals and underwriting requirements
- The plan provides guaranteed income for the whole of life by paying a premium once (single premium) or for a limited payment term
- The annuity rate is guaranteed at inception and shall remain unchanged for the duration of the policy
- Existing customers of HDFC Life and retired employees/ spouses of retired employees of the HDFC group will get special rates
- The plan offers individuals the opportunity to defer income up to 15 years while locking in attractive annuity rates at the time of purchase
- It also provides the option to top-up/supplement the existing annuity pay-outs anytime during the policy term
Khanna added that the retirement savings gap in India is projected to reach $85 trillion by 2050. With rising inflation, increasing healthcare costs, and higher life expectancy, it is imperative for individuals to plan for regular income post their earning years.