The plan will provide a minimum annuity of ₹1,000 per month, ₹3,000 per quarter, ₹6,000 per half year, and ₹1,2000 per annum. There is no limit for taking the maximum annuity, as this will depend on the maximum purchase price the annuitant can make.
According to the IRDAI guidelines issued on 25 January, the standard individual immediate annuity product will be called, ‘Saral Pension’, prefixed by the insurer’s name. The minimum entry age to buy this plan will be 40 years and the maximum will be 80 years.
Take a look at some of the important things about Saral Pension plan, as per IRDAI:
Types of Annuity options available
The product will offer the following annuity options and no other options:
a) Life annuity with 100% return of purchase price
Under this option, the annuity is paid for the life of the annuitant. Besides, 100% purchase price will be returned to the nominee/legal heirs on the death of the annuitant.
b) Joint life annuity with a certain provision
A joint-life annuity can be provided by the insurer with a provision of 100% annuity to the secondary annuitant on the death of the primary annuitant and a return of 100% purchase price on the death of the last survivor.
In this case, the annuity is first paid to the annuitant for life. After the death of the annuitant, if the spouse is surviving, the spouse continues to receive the same amount of annuity for life till his/her death. Subsequently, on the death of the spouse, the purchase price shall be payable to the nominee / legal heirs. However, if the spouse has pre-deceased the annuitant, then on the death of the annuitant, the Purchase price shall be payable to the nominee / legal heirs, as per the IRDAI guidelines.
Mode of annuity payment
The annuity will be paid on the monthly, quarterly, half-yearly and yearly basis. As per the Irdai guidelines “The payments will be in arrears only, which means that the first annuity payment will start after the modal duration; for example, after three months in case of quarterly mode. Modal factors to be derived with an interest rate consistent with pricing rate of interest.”
How will the benefits be paid?
1. Death
In the case of a single-life annuity, 100% of the purchase price.
In the case of a joint-life annuity, after the death of the annuitant:
a) If the spouse is surviving, the spouse continues to receive the same amount of annuity for life till his/her death. Subsequently, on the death of the spouse, 100% Purchase Price shall be payable to nominee/legal heirs.
b) However, if the spouse has pre-deceased the annuitant, then on the death of the annuitant, the Purchase price shall be payable to the nominee /legal heirs.
2) Survival
An annuity is payable during the survival of the annuitant.
3) Maturity
There is no maturity Benefit under the product.
4) Surrender on the diagnosis of critical illness of the annuitants
The policy can be surrendered any time after six months from the date of commencement, if the annuitant or the spouse or any of the children of the annuitant is diagnosed as suffering from any of the critical illnesses specified in the policy document, based on the documents produced to the satisfaction of the medical examiner of the Insurer.
The list of critical illnesses may be revised from time to time by the Authority as needed. As per the Irdai guidelines, on approval of surrender, 95% of the purchase price will be paid to the annuitant, subject to deduction of outstanding loan amount and loan interest, if any. On payment of surrender value, the policy stands terminated.
Policy pricing
As per the guidelines, the pricing is left to the insurers. However, annuity rates will have to be derived based on actuarial principles ensuring that such annuity rates are fair and reasonable to customers. Band wise annuity rates have to be derived in respect of the following bands:
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Is the loan facility available?
The loan can be availed by the annuitant any time after six months from the date of commencement of the policy. The interest on the loan will be at 10-year G-Sec rate per annum as on 1 April, of the relevant financial year, as published by Financial Benchmarks India Pvt Ltd (FBIL), plus not more than 200 bps and will be applicable for all loans granted during the period of twelve months, beginning 1 May of the relevant financial year.
