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Annuity Plans: Eligibility, Features and Benefits Explained

Updated On Oct 17, 2021

Annuity plans are plans that allow one to receive regular payments for a lifetime after investing a lump sum. Annuity plans can be classified into five different types such as Immediate Annuity, Fixed Annuity, Deferred Annuity, Lump-sum Annuity and Variable Annuity. When it comes to choosing the right annuity plan, one must keep their current life phase and goals they have set to fulfill from annuity plan returns in mind.

Eligibility for Annuity Plans 

The eligibility criteria for annuity plans is as follows:

  • An individual must be 18 years of age. Note that the minimum age for annuity plan investment may vary based on the insurance provider.
  • The maximum age varies between 80-99 years.
  • Most insurance companies come with a predefined purchase price for annuity plans.

Features of Annuity Plan

Some of the key features of annuity plans include:

  • Financial Security - Annuity plans are a great way for generating income for a lifetime. An investor can easily welcome financial security by making an investment in annuity plans. An individual willing to invest in an annuity plan can choose how much risk they want to take and whether they want to take any risk at all. In annuity plans the investor’s money is handled the way they want and kept safe till the time they want to withdraw it. An amount like that that is kept aside for future purposes can easily grant one with massive financial security to handle emergencies and retirement periods.
  • Risk-Free Investment - Annuities are free from risk of any sort and this is one of the biggest reasons why they are so popular as an investment option among the investors. People looking forward to building a stable portfolio with long-term orientation find their ideal match with annuity plans since annuity plans help them keep their corpus in addition to adding more regular income.
  • Benefit Flexibility - One of the key reasons that make annuity plans extremely popular is that they allow the investors to choose how to receive the investment benefits. In simple words, while some prefer taking regular payouts starting immediately, others invest in the plan early, but prefer withdrawing the investment benefits at a later stage of life. What’s more is that investors can also select from receiving fixed or variable benefits out of the plans, based on their requirements.

Benefits of Annuity Plan

Choosing the best annuity plan option can lead you towards benefits like: 

  • Regular Income for Lifetime - If you want to invest for your post-retirement life annuity plans would be an ideal option to invest in. you can simply invest your lifelong earnings in an annuity plan and enjoy getting a regular income even after you have retired. By doing so, you can easily accumulate all your savings in a plan that would be helpful in managing day-to-day expenses seamlessly even after you are no longer working. 
  • Death Benefits - On choosing a joint annuity policy, one can also secure income for their spouse in the event of their unfortunate death. In cases like such, the insurance company continues to process the pay-outs of the annuities to the surviving spouse if the primary investor passes away during the period of investment. 
  • Tax Deferral on Income - Another significant benefit of annuity plans is that you don’t have to pay taxes on your investment, unless they start withdrawing pay-outs. Furthermore, the norms of taxation on annuities are similar to that of taxation on an individual’s  regular income, and are non-cumbersome on the corpus of the investor. 

Also read: Know Everything About Different Types Of Annuities Under A Retirement Plan?

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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