Written by : Knowledge Centre Team
2025-12-18
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8 minutes read
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Annuities are a type of investment that can provide income during retirement. Annuities are important, as they provide a guaranteed stream of income that can last for years or even decades. This can be especially helpful for retirees who are worried about outliving their savings. There are many different types of annuities, and they can be purchased from insurance companies, banks, or other financial institutions. So, which annuity is the right one for you?
What is an Annuity Plan?
An annuity is a financial product that pays out a fixed stream of payments to you, typically for a certain number of years. The most common type of annuity is a retirement annuity, which pays out a fixed sum of money each month after you reach retirement age.
The first stage of an annuity contract is the accumulation stage, during which you contribute money to the annuity. The second stage is the annuity stage when you start receiving payments from the annuity.
Types of Annuities in India
There are several types of annuities in India. Some of them are listed below:
- Life Annuities: A life annuity pays a specified amount of money to you for the rest of your life.
- Immediate Annuities: An immediate annuity pays a specified amount of money to you immediately.
- Deferred Annuities: A deferred annuity pays a specified amount of money to you in the future, typically after retirement.
- Fixed Annuity: A fixed annuity is an insurance contract that promises to make periodic payments to you, starting immediately or at a future date. The payments are fixed, meaning they do not change over time.
- Variable Annuity: A variable annuity is a type of annuity that does not have a guaranteed rate of return. The return on a variable annuity depends on the performance of the underlying investment, which can be a basket of stocks, bonds, or other assets.
- Growing/Increasing Annuity: A growing annuity is an annuity in which the payments increase at a fixed rate over time. The payments may increase at the same time each year, or they may increase at the end of each payment period.
- Limited Annuity: Pays income for life, but in case of your unfortunate demise, before the annuity pays its last rupee, the annuity company keeps any leftover money.
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Four Main Types of Annuity Plans
- Immediate Fixed Annuity: An annuity that provides fixed payments to you starting as soon as the annuity is purchased.
- Immediate Variable Annuity: An annuity that provides payments to you starting as soon as the annuity is purchased, but the amount may vary depending on the underlying instrument and market conditions.
- Deferred Fixed Annuity: A deferred annuity pays a specified fixed amount of money regularly starting a few years after investment.
- Deferred Variable Annuity: A deferred variable annuity also starts paying you a few years after the investment, but the amount may vary depending on:
- The underlying instrument and market conditions
- The fixed rate of growth for a growing annuity
| FIXED | VARIABLE | |
|---|---|---|
| IMMEDIATE | Type 1: Immediate Fixed Pros: 1. Start receiving income immediately 2. Know the amount you'll receive in pay out Cons: 1. May end on death 2. May not beat inflation; | Type 2: Immediate Variable Pros: 1. Guaranteed lifetime income 2. Opportunity to benefit from market growth Cons: 1. Unpredictable monthly payments |
| DEFERRED | Type 3: Deferred Fixed Pros: 1. Payment timing can be pre-decided; 2. Tax-deferred growth during the accumulation phase; 3. Not affected by market movement Cons: 1. Early-withdrawal penalties may apply; 2. It May not beat inflation | Type 4: Deferred Variable Pros: 1. Tax-deferred growth during the accumulation phase; 2. Opportunity to benefit from market growth Cons: 1. Early-withdrawal penalties may apply; 2. Unpredictable pay outs |
Which Annuity Plan to should you Choose?
The best annuity plan for you will depend on your individual goals and financial situation. Consider the following factors when choosing an annuity plan:
- Your age
- The type of annuity you want
- Your investment goals Your risk tolerance
- Your financial situation
Your age will play a large role in the type of annuity you choose. The type of annuity you choose will also depend on your investment goals. If you are looking for immediate income, you may want to choose an immediate annuity. If you are looking for long-term growth, you may want to choose a deferred annuity. Your risk tolerance will also play a role in the type of annuity you choose. If you are willing to take on more risk, you may want to choose an annuity with a higher rate of return.
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Canara HSBC Life Insurance offers both deferred and immediate annuity plans. You can also use ULIP, and savings plans to save and then receive an annuity from them upon retirement. Here’s a list of plans to choose from to meet your annuity goals:
1. Pension4Life Plan
- Options to have immediate or deferred annuities
- Guaranteed Pension
- Option for joint life annuity which continues until one partner is alive
2. Smart Lifelong Pension
- The plan continues until 99 years of age
- Pay premiums till 60
- Build corpus and draw pension using systematic withdrawal option
- Increase or decrease sum assured as you grow
- Use as a legacy plan
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3. Promise4Growth Plus
- Invest in a portfolio of equity and debt
- Automatic portfolio management
- Bonus additions for long-term investors
- Stay in up to the age of 99
- Use as a retirement corpus builder, pension, and legacy plan
- Systematic withdrawals and limited investments till 60 years of age
- You can increase your withdrawals as per inflation
4. iSelect Guaranteed Future
- Guaranteed benefits - maturity and bonuses
- Long-term investors enjoy better growth
- Guaranteed income available after completing the premium payment term
- Stay in the plan until the age of 80
Annuities are important because they provide a guaranteed income stream for a set period. This can be helpful for retirees who want to know they will have a certain amount of money coming in each month. An annuity can be a good idea for retirement income if it is part of a well-diversified retirement plan. Annuities can provide a guaranteed income stream in retirement, which can help meet basic living expenses.
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Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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