There are different types of immediate annuity options. The amount paid to the annuity holder varies depending on the option. It is advisable to buy annuity policies online to get better rates and discounts.
In annuity payable for life at a uniform rate, there is no change in annuity amount and this is given for the entire duration of the person's life. There is annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the annuitant is alive.
The life annuity with return of purchase price option pays you an annuity for life and on death, the purchase price is returned to your nominee.In case of a life annuity with return of 50% purchase price, you get an annuity for life and on death, 50% of the purchase price is returned to your nominee.
In life annuity with return of balance purchase price option, on death the balance purchase price is returned to your nominee. Do remember balance purchase price will be equal to purchase price (premium paid by you at the beginning excluding taxes) less sum total of the annuities already paid. If the balance is negative, then no benefit will be payable on death.
Life annuity with an annual increase of 3-5% seeks to beat inflation. In this option, you get an annuity for life. The annuity payout increases at a simple rate of 3-5% for each complete policy year throughout the life of the annuitant.
There are also options in joint life format. In the Last Survivor without Return of Purchase Price variant, when you and your spouse die, no further benefits are payable. In the last survivor with the return of purchase price, on the demise of the last survivor, the purchase price is returned to your nominee.
There is also an NPS – family income option available specifically for National Pension System (NPS) subscribers only. As per current regulations, the annuity benefit will be payable for life of the subscriber and his/her spouse as per the annuity option -joint life last survivor with the return of purchase price. In case, the subscriber does not have a spouse, it will be life annuity with return of purchase price.
NPS subscribers can get 0.5% discount on purchase price. Some insurers also offer life annuity with return of purchase price on critical illness (CI) or permanent disability due to an accident (PD) or death. This option pays you annuity till earlier of the first occurrence of any of the specified CI or PD, before the age of 80 years, or death. Further, the purchase price is returned to you/nominee in either of the three events happening.
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