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Your parents would have undoubtedly worked hard to fulfill all your life goals. They would have planned their finances and structured their investments in a way that the key milestones in your life could be smoothly achieved. Right from your school education and your graduation, to your wedding or even the launch of your own business, your parents would have backed you financially at every step of the way.
Now, as their child, you can work towards fulfilling their retirement goals. India’s insurance sector gives the youngsters of today an opportunity to secure the future of their parents financially. An annuity plan, designed to secure a guaranteed stream or source of income post-retirement, can help your parents with a financial cushion after they’ve retired.
What are the types of annuity plans available to choose from?
If you’re looking for an annuity plan for your parents, the insurance market in India offers a variety of options to choose from. At the broadest level, you can choose between immediate annuity plans and deferred annuity plans. Immediate annuities start to make the payouts right away, while in deferred annuity plans, the payouts are postponed to a future point in time.
How long will the annuity payouts last?
Annuity policies offer payouts that last throughout the Annuitant’s lifetime. When you are purchasing an annuity plan for your parents, you need to take many factors into consideration. Look at any other sources of income they may have. Check the timeline across which those income sources will continue to support their basic requirements. This will help you understand the amount of annuity required to last their lifetime.
Will the annuity plan cover both parents?
It’s understandable that you want to secure the future of both your parents. There are annuity plans in the market that help you do just this. A joint life annuity option. With this kind of an annuity plan, in case of the annuitant’s demise, the annuity payouts will be made to the spouse during their lifetime.
Will the premium paid be returned?
You can opt for annuities that come with the ‘return of purchase price’ option. In such plans, annuitants receive the payouts for life and after their demise, the purchase price is returned to the nominee.
You can also opt for annuity plans that include the joint life option along with the return of purchase price. Here, in case of the annuitant’s demise, the annuity payouts will be made to the spouse during their lifetime. And on the spouse’s demise, the purchase price is returned to the nominee.
Can NRIs gift annuity plans to their parents?
Yes, most certainly. Non-resident Indians can purchase annuity plans for their parents. The annuity payouts can act as an additional source of income for the parents and help them live comfortably, without compromising on their needs.
NRIs can also add more value to the annuity plans bought for their parents by choosing the joint life option and/or the return of premium benefit. This way, even if one parent passes away, the surviving parent’s future remains financially secure, thanks to the guaranteed income provided by the joint life option in the annuity plan.
As with all financial products, when you are gifting an annuity policy for your parents, planning is important. Take their retirement plans into account, draw up a quick budget and identify their overall requirements. That should give you a good idea of the amount of annuity you need to opt for.