Insurers to offer standard pension plan with two annuity options

Soon, life insurance companies will offer a standard pension plan with two annuity options.

Continuing its drive to ensure standardisation across all product segments, the Insurance Regulatory and Development Authority of India (IRDAI) has directed life insurers to offer ‘Saral’, a standard individual immediate annuity product from April 1.

In view of the many immediate annuity products in the market, it was necessary to introduce a standard individual immediate annuity product with simple features and standard terms and conditions suitable to an average customer, said the IRDAI.

As per the guidelines issued by the regulator, Saral Pension will offer two annuity options – life annuity with 100 per cent return of purchase price and joint life annuity with a provision of 100 per cent annuity to the secondary annuitant on the death of the primary annuitant, and return of 100 per cent purchase price on death of the last survivor.

No maturity benefit

The minimum annuity will be ₹1,000 per month, ₹3,000 per quarter, ₹6,000 per half-year and ₹12,000 per annum. There will be a limit for maximum annuity. There will be no maturity benefit under the product.

Industry players feel the proposed Saral Pension will auger well for post-retirement plans. According to Tarun Chugh, MD and CEO, Bajaj Allianz Life, post-retirement income is an important customer need that is mostly unplanned for in India.

“Annuities from life insurers meet the need of a life-long guaranteed income, and offering a standard product with simplified features is a great step in that direction from the IRDAI,” he said.