Annuity Plus Plan of SBI Life – Features, Options and Benefits
SBI Life offers in interesting immediate and non-participating annuity plan for those who are looking forward to maintaining their lifestyle post requirement. The plan is actually traditional by nature but SBI Life did a good job of lacing this financial product with some interesting benefits and features which cater to the needs of most of the people looking for annuity plans. Let us take a look at these features, options and benefits of this plan and find out whether it is a good option to choose or not.
But before we start, we will like to ask a question. A few years from now, will you like to degrade your lifestyle once your primary income source ceases to exist or will you like to maintain the same?
We will get back to this question at the end of this article. Until we reach there, let’s start with the features of the Annuity Plus plan.
Features of SBI Life’s Annuity Plus
- This plan offers a number of annuity options and buyers are actually free to select the one that they like.
- Annuity payouts can be triggered as early as 40 years of age. This means that when the buyer of this plan attains the age of 40, he or she can actually start earning a monthly income stream. There is absolutely no need to wait till the age of 60 (that is retirement age).
- Buyers can actually opt for annuity payouts throughout the life not just for themselves but also for any one of their family members.
- Buyers can decide on how frequently they want their annuity to be paid out to them. Some may want it every month. Some may want it once every three months or once every 6 months. Some may even ask for annuity payments only once every year. Buyers are absolutely free to choose what suits them the best.
- Those who choose to pay higher premiums get to enjoy higher rates of annuity.
- Buyers are free to advance their annuity payouts.
- Buyers also get the option of get a return of the premiums they pay or the balance premium.
- Buyers can also add the benefit rider for accidental death.
Benefits of SBI Life’s Annuity Plus
The Annuity Plus plan of SBI Life comes with a host of interesting benefits which are summed up below:
- Buyers of this plan get to choose the frequency at which they want the annuity payout. In short, they can select for four options of monthly payout, quarterly payout, half-yearly payout and yearly payout.
- If the buyers want, they are allowed to purchase additional rider for accident death. This will attract extra costs in terms of premiums paid per month.
- The rider will remain active for a period of 10 years.
- The minimum age at which annuity payouts begin is 40 years.
- The maximum age at which annuity payouts begin is 80 years.
- The maximum age that can be selected for the maturity of the plan is 70 years.
- Buyers can opt for a very small sum assured of INR 25,000.
- Buyers can opt for a large sum assured of INR 50,00,000.
- Buyers of Annuity Plus can enjoy tax benefits under Income Tax Act of India. These benefits may however change over time if the government decides to make changes in exemption rules.
A quick look into the product options
|Age at which annuity payout begins||40 years||80 years|
|Annuity payment in a single instalment||Monthly||INR 200||There is no maximum limit.|
|Half Yearly||INR 1,200|
|Amount of premium to be paid||At least that much premium is to be paid so that the minimum annuity payout can be achieved.||There is no maximum limit set.|
The different types of annuity options that one can select from
As mentioned earlier, buyers are free to select from a range of annuity options depending on their needs. Here we sum up the different annuity options which are provided under the Annuity Plus plan:
- Single Life – Life Annuity: There is a guaranteed annuity rate if this option is chosen. This rate will be maintained throughout the life of buyer which is technically known as annuitant. Here there are several options to select from:
- Income for lifetime.
- Capital* refund along with income for lifetime.
- Capital* refund in several parts along with income for lifetime.
- Refund of Balance Capital** Plus Lifetime Income: The annuitant gets annuity payments as long as he or she is alive. Upon death of annuitant, the remaining balance premium will be paid out in bulk.
- Lifetime Income Tagged with 3 or 5% Yearly Increase: This means that the annuitant receives annuity payout which keeps increasing either at 3% simple rate or 5% simple rate every year as long as the person remains alive. Once the person dies, no further annuities are paid and the whole contract ends immediately.
- Regular Payout for Predefined Period of 5 Years, 10 Years, 15 Years and 20 Years and Then Annuity for Life: This simply means that annuity will be paid by the company for a fixed period as per contract at a constant rate. No matter what happens during this period, the company is bound to pay, i.e. even if the person dies. However, beyond that period, if the person continues to live, the company will continue to pay annuity.
- Two Lives – Life Annuity: Two Lives refer to an annuity plan where there are two annuitants instead of one. Under this variant, both the annuitants continue to get the promised annuity rate or guaranteed annuity rate as long as they continue to live. However, there are two possible options that the joint annuitants can select from.
- The first option is that the joint annuitants continue to earn annuity as normal until one of the two people dies. In that case, the survivor will still be entitled to earn annuity. The survivor in this case will have to choose between 50% or 100% of income. Alongside this income, the annuitant will also get capital refund.
- The first option is that the joint annuitants continue to earn annuity as normal until one of the two people dies. In that case, the survivor will still be entitled to earn annuity. The survivor in this case will have to choose between 50% or 100% of income. However, the company will not make any capital refund in this case.
Capital* is calculate using this formula:
Capital = [(Sum total of all premiums paid) – (Premium paid for accidental death rider) – (service tax)]
Please note that here Balance Capital** refers to balance left over after deducting all the annuities paid, service tax and premium for rider (if opted for).
Definitely, the Annuity Plan allows extreme flexibility. The question here is whether you should go for it or not? This brings us back to the question we asked earlier. The answer is simple! No one wants to see a dip in lifestyle. It is painful and puts a lot of mental stress. Regular annuity flow ensures that the lifestyle can be maintained at least at the same level (of course ignoring factors like inflation). If inflation is to be covered, 3% growth or 5% growth option definitely looks a bright one because that will ensure that hike in prices is countered by hike in income. Usually inflation growth does not show abrupt jumps and the growth is almost steady with 1 to 2% growth a time. So, 3% growth or 5% growth in income should keep one covered against the steady inflationary growth.