HDFC Life Pension Guaranteed

About HDFC Life Pension Guaranteed plan

The HDFC Life Pension Guaranteed plan is a single premium annuity plan that provides policyholders with an income to last a lifetime. The plan assists with a comfortable retirement, along with providing a life cover for your family in case you meet an untimely demise. The vesting benefits of the plan are inclusive of a sum assured + guaranteed additions + vesting additions + tax benefits. In situations of death, the nominee receives an accumulated amount of total premiums paid at a guaranteed rate of 6% that is compounded annually. The deferred annuity option also allows an accumulation of funds for major growth in the death benefit, as well as surrender benefits in case you require the money for an emergency expense before maturity.

Let’s understand this plan in brief before getting into its details.

How Does the Plan Work?

Firstly, the individual decides the amount for the annuity returns according to the benefits required. It is a single premium policy, requiring a one-time payment. The individual decides the annuity pay-out frequency, which can be monthly, quarterly, half-yearly, or yearly.

The policy can cover a single life or can be taken on a joint life basis for all mentioned options. Primary annuitant will be the primary person who will receive pay-outs. The secondary annuitant will receive annuities in the event of the death of the primary annuitant.

The HDFC Life Pension Guaranteed plan can be purchased as any of the following three options, offered with no maximum premium limits. However, there are minimum limits, as mentioned here:

• Immediate Life Annuity (minimum premium INR 42,076) – Annuity payments will be discontinued in case of death of primary and secondary annuitant.
• Immediate Life Annuity with Return of Purchase Price (minimum premium INR 1,60,261) – Annuity payments will begin according to the frequency chosen as long as the annuitant is alive. After the annuitant’s death, a lump sum payment will be made to the nominee according to the policy terms and premiums paid.
• Deferred Life Annuity with Return of Purchase Price (minimum premium INR 76,046) – Annuity payments can be deferred between 1 to 10 years, which has to be decided at inception. The payments will begin according to the deferment period. It will continue until the annuitant is alive. On death, the death benefit will be paid as a lump sum to the nominee and the policy will terminate.

Here are some other important points to note:

• The primary annuitant will receive annuity pay-outs through direct credit to their bank account. The value of the pay-outs is proportional to applicable annuity rate along with the purchase price (purchase price excludes taxes and any other statutory levies).
• Yearly frequencies yield an annuity pay-out for one year from the date of purchase.
• Half-yearly frequencies yield an annuity pay-out after 6 months from the date of purchase.
• Quarterly frequencies yield an annuity pay-out after 3 months from the date of purchase.
• Monthly frequencies yield an annuity pay-out after a month from the date of purchase.
• Annuity installments for frequencies that are not annual are:
  • Half-yearly = 98% of yearly annuity * 1/2
  • Quarterly = 97% of yearly annuity * 1/4
  • Monthly = 96% of yearly annuity * 1/12

Here are the death benefits for different annuity options:

• No benefits are offered for the immediate life annuity option
• 100% of the purchase price of the annuity is offered as death benefits under the immediate life annuity with return of purchase price option
• The deferred life annuity with return of purchase price option avails the policyholder the purchase price + guaranteed additions

Guaranteed additions are offered only with the deferment option of the HDFC Life Pension Guaranteed plan. These get accrued at the end of policy months. The guaranteed additions accrued are calculated as:

Purchase rate + (Annuity Rate / 12)

The plan offers a top-up option to increase annuity pay-outs. The additional amount payable can be topped-up according to the annuity rates prevailing at the time a customer opts for the top-up. (the age considered for annuity rate will remain the same for top-ups).

Riders

There are no riders available with this plan.

Why Should I Buy This Plan?

The HDFC Life Pension Guaranteed plan provides the following benefits in addition to all the ones mentioned earlier:

• An individual can buy the plan on a single or joint life basis
• Pay-outs can be immediate or deferred, each with its own benefits
• An individual can opt for the purchase price to be returned in the unfortunate circumstance of his/her death

Who Should Buy This Plan?

The plan can be purchased by citizens of India with a minimum age of 30 years (immediate annuity options) or 45 years (deferred annuity options) and maximum age of 85 years.

The plan is a perfect combo of a pension provision fund and death cover, for both single and couple policyholders.