HDFC Life Pension Guaranteed Plan: A Detailed Guide
Updated On Oct 04, 2023
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If you purchase a policy with HDFC Life, you can get a lifetime income guarantee through their single-premium annuity plan. The plan not only helps you have a comfortable retirement, but it also offers life insurance for your family in the event that you pass away at an untimely age.
An Overview of the Company
One of the most successful companies in the UK's financial services industry, Standard Life plc, is a partner in HDFC Limited's insurance company, HDFC Life insurance, which is a partnership between the two companies. In order to cater to the wide variety of customers' financial requirements, the company provides a comprehensive selection of insurance options, both for individuals and for groups.
An Overview of the HDFC Life Pension Guaranteed Plan
This policy is a single premium instant annuity plan that may be purchased on a single or joint life with or without the return of the purchase amount.
The money can be invested now, and the pension or annuity payments can begin as late as ten years from the start of the deferment period.
The annuity rates are what are guaranteed in HDFC Life's pension guarantee plan. The insurer sets and guarantees the annuity rates, which are the rates at which a fixed pension will be paid. Even with the deferred annuity, this is still true.
Having a fixed and guaranteed rate is standard practice for immediate annuity products, but this is the first product of its kind to offer such a guarantee for deferred annuities before the time of investment.
How Does This Plan Work?
First, the person decides how much the annuity returns will be based on the benefits they want. It's a single premium plan, so you only have to pay it once. The annuity payout schedule is flexible and can be set on a monthly, quarterly, semiannual, or annual basis, at the individual's discretion.
With any of these choices, you have the flexibility to purchase a single life policy or a joint policy covering two people. The primary annuitant is the person who will get the most money. In the event that the primary annuitant passes away, the secondary annuitant is the one who will be entitled to collect the payments from the annuity.
There are no caps on premiums for this plan, which is available in three different flavors. There are, however, some minimums, as shown here:
- Payments on an immediate life annuity (Rs. 42,076 minimum premium) will stop in the event of the death of either the primary or secondary annuitant.
- In exchange for a minimum premium of Rs. 1,60,261, you can start receiving payments at the frequency of your choosing as soon as you become eligible for the annuity. Upon the annuitant's passing, the nominee will receive a lump sum payout based on the policy's conditions and the total amount of premiums paid.
- You can choose to delay your annuity payments for anything from one to ten years, with the minimum premium set at Rs. 76,046. The payments will start when the deferment period is over. It will keep going as long as the retiree is alive. When someone dies, the death benefit will be paid to the nominee in one lump sum, and the policy will end.
- Here are some additional things to keep in mind:
- The money from the primary annuitant's annuity will be sent straight to their bank account. The amount that will be paid out is calculated based on the applicable annuity rate in addition to the purchase price (which excludes any statutory levies and taxes).
- If you choose to receive your annuity payments once a year, you'll get paid for a full year beginning on the day of purchase.
- Half-yearly frequencies result in an annuity payout 6 months after the date of purchase.
- Quarterly frequencies result in an annuity payout 3 months after the date of purchase.
- Once a month has passed since the date of purchase, the annuity will pay out.
- Annuity payments for periods other than once a year are:
- Half-yearly means 98% of the annual annuity times 1/2.
- Quarterly means 97% of the annual annuity times 1/4.
- Monthly means 96% of the annual annuity times 1/12.
Here are the benefits that come with each type of annuity:
- There aren't any perks in the immediate annuity option.
- Under the terms of the "immediate life annuity" option that includes a return of purchase price, the death benefits are equal to the full amount of the annuity's purchase price.
- With a deferred life annuity that offers a return on the purchase price, the policyholder can collect the initial investment plus interest or a fixed amount each year. This plan only has guaranteed additions if you choose to defer your pension. These are added up at the conclusion of each policy month as an accumulation. How do you figure out the guaranteed additions? Well, it is the rate of purchase plus (Annual Rate/12)!
The plan has a way to add extra money to annuity payments. The extra amount a customer has to pay can be topped up based on the annuity rates in place at the time the top-up is chosen. (The age used to figure out the annuity rate will not change for top-ups.)
This particular plan does not include any available riders.
Who Should Purchase This Plan?
All Indian citizens between the ages of 30 and 85 are eligible to purchase the plan, with the minimum age being 30 for the immediate annuity options and 45 for the deferred annuity options.
The plan is a great way for both married and single policyholders to get a pension fund and life insurance.
The instant annuity product available through this policy is straightforward and competitive. However, the delayed annuity option, which offers guaranteed high rates, appears to be setting me up for some kind of financial loss.