Sold Only by Life Insurance Companies
It is because this product combines annuity payments to the annuitant till he is alive or to his spouse/nominee (plan option) upon his death. So, since life of the individual is linked to this product, it is only the life insurance companies that offer this product in the market.
There is no life-cover benefit in the scheme. It is an immediate annuity product that is invested in government securities to enable the growth of the fund invested, so that immediate payments are effected for annuitants based on the payment mode chosen by them.
Some of the life insurance companies are offering the following benefits:
Only a few companies are offering ‘surrender value’ as part of the plan with specified payment options. Most companies including Star Union Daiichi and HDFC Life do not offer this benefit.
The ‘Surrender’ Option
Once you start taking the annuity, if you feel that you want to stop it (for whatsoever reason), you need to tell the insurance company that you want to ‘surrender’ the annuity plan. The insurance company will then deduct a charge (surrender charge) and return you a certain amount of money (surrender value). However, surrender of an immediate annuity plan can be done only if the contract of the annuity plan allows it in the first place, and only for certain types of annuity options.