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Annuity insurance helps you enjoy a regular lifelong income even without your 9-5 job. Click here to understand what an annuity plan is and how it can help you.
When you hear the word “Retirement”, a few things immediately pop into your head. From that long-awaited world tour to spending quality time with family and friends or pursuing all the hobbies and dreams you ever had on your bucket list - you picture a post-retirement life where you get to do it all at your own pace.
However, checking these off of your list demands sufficient funds, and acquiring those funds when you no longer have a regular source of income seems nearly impossible. Furthermore, with rising living costs, increasing medical inflation, and longer life expectancies, it is more important than ever to plan intelligently for your post-retirement life.
What if we tell you that fulfilling your dreams is not actually impossible, and you can enjoy the golden period of your life just the way you always wished to? Yes, with annuity insurance, you can enjoy a regular lifelong income even without your 9-5 job.
Let’s understand what an annuity plan is and how it can help you.
Annuity plans are contracts issued and distributed by financial institutions where the funds are invested to pay a fixed income stream later on. Annuity policy was designed to be a reliable means of securing steady cash flow during your retirement years to alleviate fears of the longevity risk of outliving your assets.
These are appropriate financial products for individuals seeking stable, guaranteed retirement income. As long as you comprehend that you are trading a liquid lump sum for a guaranteed cash flow, the product is suitable for you. However, do note, the lump sum put into the annuity is illiquid and is entitled to withdrawal penalties. It is, therefore, not recommended for younger individuals or those with liquidity needs to buy annuity insurance.
Annuities exist first in an accumulation phase where you fund the annuity scheme with either a lump-sum or periodic payments. Then, it reaches the annuitization phase, where it begins paying you for a fixed period or your remaining lifetime.
Annuities can be broadly classified into four categories:
Now that you know what an annuity means, you should also understand why annuity plans in India are so relevant. Numerous reasons exist for buying an annuity policy; however, some of the most prominent ones include:
You should be aware of its tax implications. Since it provides you with the benefits of payouts, it is treated as a monthly salary. Therefore, the income tax authorities tax it as per prevailing income tax slabs. Annuities are promising investment avenues that provide a steady and regular stream of money to the dependents.
Entrusting your hard-earned money to the appropriate suitable annuity plan is the solution to your need for guaranteed and regular income in the sunset years of your beautiful life. After all, it is specifically designed to meet your long-term retirement goals. However, to reap the benefits of all the seeds you sow, you should start early and strategically select the right plan as per your requirements. With the right annuity plan by your side, you can make your retirement years a memorable new chapter of your life.
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