Planning for retirement can be difficult, and one of the most significant challenges is ensuring a steady source of income post-retirement. In such a scenario, annuity plans come to the rescue, providing a guaranteed source of income for life. One such option is joint life policies, which allow customers to include their spouse or immediate family members who are above 40 years. Let’s delve deeper into how these policies work and the benefits they offer.

Joint Life Plans: Says Vivek Jain, head of investments, Policybazaar.com: “In a joint life annuity plan, the primary annuitant gets a guaranteed income for their entire life. However, post the death of the primary annuitant, the secondary annuitant continues to receive the same guaranteed income. This feature ensures that in the event of the primary annuitant’s death, their spouse or immediate family members can continue to receive a steady income, providing financial security in times of need.”

Return Of Premium Option: Apart from this, customers can also opt for a return of premium option, where the nominee gets back the entire premium invested post the death of the primary and secondary annuitant. This feature ensures that in case of any unforeseen events, the nominee or family members of the annuitant do not have to face financial difficulties.

Waiver Of Premium Option: Additionally, some insurers provide a waiver of premium option. This means that if the primary annuitant dies during the premium-paying term, the secondary annuitant need not pay the remaining premium. However, the policy will continue, and the secondary annuitant will receive the guaranteed income, providing financial security during a challenging time.

New Variants of Annuity Plans: The market is full of new annuity plans that provide various benefits, such as flexibility to customers to invest regularly but not necessarily a lump sum amount. The plan offers a 100 per cent guaranteed income for the entire life of the annuitant and lock-in lifelong guaranteed rates at the time of policy purchase. Further, it also allows you to invest as early as 40.

Eligibility Criteria:  You must fulfil some eligibility criteria to buy these plans. The minimum age of the primary annuitant should be 40 years, and the minimum age of the secondary annuitant should be 40 in case of joint life. The maximum premium payment and deferment terms are 15 years, and the minimum monthly annuity amount should be Rs 1,000.

Risks: The plan has no risks as these are guaranteed plans. The IRR from annuity plans is a bit low-usually between five to seven per cent. However, considering that the return rates are guaranteed for life, it is advised to invest in annuity plans. These plans are an excellent choice for retirement planning as they provide a steady income over the retired life of the annuitant.

Real Rate Of Return: “The real rate of return from these annuity plans is between five to seven per cent. However, the return rates are guaranteed and locked for the entire life of the annuitant on the day the policy is booked. With a trend of dropping interest rates across all guaranteed instruments, having insurance that can lock your returns for life is beneficial and makes sense for the customers,” says Jain.