Pay­ment Op­tions

Consumer Voice - - Bfsi -

There are about 10 an­nu­ity pay­ment op­tions of­fered by var­i­ous life in­sur­ance com­pa­nies. Listed be­low are the most prom­i­nent ones.

Life an­nu­ity: It is based on the pay­ment mode opted for un­til death of the an­nu­i­tant. The pay­ment there­after ceases.

Life an­nu­ity with re­turn of pur­chase price: In this case, af­ter demise of the an­nu­i­tant, the an­nu­ity pay­ment ceases but the pur­chase price is paid back to the spouse or the nom­i­nee.

Life an­nu­ity paid be­tween 5 and 20 years: Joint life an­nu­ity with re­turn of pur­chase price:

The ‘ guar­an­teed pen­sion for life’ op­tion of­fers very low re­turns (be­tween five per cent and eight per cent).

The in­come tax ben­e­fit is avail­able un­der Sec­tion 80CCC only, thereby mak­ing this prod­uct fi­nan­cially unattrac­tive to mid­dle-aged per­sons look­ing for ad­di­tional pen­sion in­come when they re­tire from ac­tive ca­reer.

The money is re­quired to be locked for life of the per­son par­tic­i­pat­ing in this plan – which could af­fect his liq­uid­ity in case of emer­gency cash re­quire­ments, as most of the life in­sur­ance com­pa­nies do not al­low loans, as­sign­ment (to take a loan from ei­ther the in­sur­ance com­pany or a bank) and sur­ren­der of the pol­icy (to get sur­ren­der value). So, should you need a large sum due to illness or an­other emer­gency, you may find your­self out of money.

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