Planning for retirement is essential to ensure your financial security during the golden years. While there are various strategies for planning retirement finances, one of the popular options in India is an annuity plan. In a typical annuity plan offered by a life insurance company, the retiree pays a lump sum of money to an insurance company and in turn gets guaranteed income as long as he survives and the premium paid is returned to the survivor upon his/her death.
However, the industry has evolved over the last few years and there are more annuity options than just a guaranteed annuity for life with return of premium.
The new age options are based on the concerns that retirees express, typically around securing an income for spouse or beating inflation or a customization that can optimize the annuity value basis the size of the family.
Let’s take a closer look at what the Max Life SWAG Pension Plan has to offer, how the different options can be used by the consumers and how the rates being offered compare in the market.
What is the Max Life Insurance SWAG Pension Plan?
The Max Life Insurance Smart Wealth Annuity Guaranteed Pension Plan is a non-linked, non-participating individual/group general annuity savings plan. This retirement plan is highly customizable and can offer secure and regular stream of post-retirement income over the entire lifetime of the annuitant(s).
You can start planning your retirement with Max Life Insurance SWAG Pension Plan with 4 simple steps:
Step 1. Choose your desired annuity or pension amount or premium amount you wish to pay.
Step 2. Choose annuity variants and frequency at which you want to receive the annuity or pension payout.
Step 3. When do you want to start receiving the annuity – longer you wait, more annuity or pension amount you receive.
Step 4. Enjoy guaranteed annuity or pension income for lifetime.
Let’s take a look at the different options that Max Life SWAG Pension Plan has to offer:
- Immediate Annuity with proportion of premium – you can receive annuity or pension starting as early as next month, which continues for life. Upon death, the chosen proportion of premium is returned to the surviving annuitant or nominee as opted at inception of the policy.
- Increasing annuity with return of premium – you decide a percentage increase for your annuity/pension payout when you purchase the policy. You start receiving annuity starting as early as next month and the amount keeps increasing by the chosen rate (simple interest) for as long as you live. You may receive a slightly lower pension amount to start with, but as you age, the increase in the pension amount will compensate the same.
- Immediate Annuity with early return of premiums – you start receiving annuity or pension amount starting as early as next month and continue to receive the same for life. Upon receive a milestone age (as chosen at start of the policy), you receive full or half the premium paid, which you may use to generate more income or to fulfil any financial aspiration at that age.
- Deferred annuity – you define a delayed start of annuity. More you delay, higher is the annuity that you are eligible to receive.
The first and fourth options are available on joint life basis also, wherein one can secure the annuity or pension for self with spouse or other family member.
How Does the Max Life SWAG Pension Plan Compare to Other Annuity Plans?
The below table compares key features of the Max Life Insurance Smart Wealth Annuity Guaranteed Pension Plan to some competing annuity plans currently available in India:
As you can see, the Max Life Insurance SWAG Pension Fund offers you a number of features that are not available with many competing annuity plans currently available in India.
| Annuity Variant | Max Life SWAG Pension Plan | LIC Jeevan Shanti & Jeevan Akshay | BALIC Guaranteed Pension Goal | Tata Fortune Guaranteed Pension | iPru Guaranteed Pension Plan | HDFC Pension Guaranteed Plan |
| Immediate Annuity with choose proportion of premium on death | Available 25%/50%/75% or 100% | N/A | N/A | N/A | N/A | N/A |
| Return of Premium on 1st death in Joint Life variants | Available 25%/50%/75% or 100% | N/A | N/A | N/A | N/A | N/A |
| Early Return of Premium of 50% or 100% on attaining milestone age | Available for milestone age of 70/75/80 and 85 years | N/A | N/A | N/A | Milestone age of 70,75 and 85 is not available | N/A |
| Increasing Immediate Annuity with death benefit | Available for annual increase of 1% to 6% | N/A | N/A | N/A | N/A | N/A |
| Deferred Annuity with monthly deferment option | Deferment available for period of 1 month to 12 years | N/A | N/A | N/A | N/A | N/A |
As you can see, the Max Life Insurance SWAG Pension Fund offers you a number of features that are not available with many competing annuity plans currently available in India.
Existing Annuity rates for 60 years of age and at 10 lakhs Single Premium:
| Annuity Variant (Single Life) | SWAG Pension | HDFC PGP | TATA FGP | Ipru GPP | BALIC GPG | LIC JA/JS | Kotak |
| Immediate Annuity with 100% ROP | 7.09% | 6.04% | 5.98% | 6.06% | 6.16% | 6.60% | 6.38% |
| Deferred Annuity with ROP - DA 1 Yr | 7.26% | 6.32% | 6.51% | 6.94% | 6.49% | 7.08% | 6.15% |
| Deferred Annuity with ROP- DA 5 Yr | 10.06% | 8.48% | 8.93% | 9.21% | 8.80% | 9.53% | 8.67% |
| Deferred Annuity with ROP - DA 10 Yr | 16.27% | 11.74% | 12.13% | 12.70% | 11.26% | 13.38% | 12.36% |
Existing Annuity rates for 60 yrs Male and 55 Years Female and at 10 lakhs Single Premium
| Annuity Variant (Joint Life) | SWAG Pension | HDFC PGP | TATA FGP | Ipru GPP | BALIC GPG | LIC JA/JS | Kotak |
| Immediate Annuity with 0% ROP on first Death and 100% on Second Death | 7.04% | 5.97% | 5.91% | 6.03% | 6.15% | 6.53% | 6.29% |
| Deferred Annuity with ROP - DA 1 Yr | 7.04% | 6.27% | 6.50% | 6.84% | 6.46% | 6.99% | 5.93% |
| Deferred Annuity with ROP - DA 5 Yr | 9.70% | 8.14% | 8.55% | 8.79% | 8.45% | 9.12% | 7.98% |
| Deferred Annuity with ROP - DA 10 Yr | 14.97% | 11.17% | 12.25% | 12.03% | 11.01% | 13.23% | 11.42% |
As illustrated above, SWAG pension is providing Best-in-class rates against the leading competitors.
So, let’s take a closer look at the relevance of different options offered under the Max Life SWAG Pension Plan.
Inflation-Proofing Annuity Payouts
The Reserve Bank of India (RBI) has projected that average retail inflation in India for FY 23-24 will be 5.4% and as inflation rises, everything becomes more expensive with time. To help inflation-proof your retirement finances, the Max Life SWAG Pension Plan allows you to plan ahead for rising inflation by allowing you to customize how your annuity payouts will increase with time.
In case you opt for the annual annuity increase variant, you can choose to increase your annuity payout by up to 6% annually. The exact percentage of increase can be selected by the policyholder at the time of inception.
Both the abovementioned increasing annuity variants offered by SWAG Pension Plan come with in-built death benefit. So, on demise of the annuitant, 100% of the premium paid will be paid out to the nominee(s) and the plan will terminate.
Higher Income Through Deferred Annuity
The Max Life SWAG Pension Plan allows the policyholder to defer annuity payments so that annuity payments with arrears can be obtained post completion of the deferment period. Due to the payment of arrears, individual annuity payouts in such cases are higher than the annuity payout at inception.
The actual annuity payout and arrears will depend on the deferment period chosen as well as the guaranteed annuity payout amount at inception. This deferment period can be between 1 month to 36 months (in months) or 4 years to 12 years (in years).
Early Return of Premium On Reaching Age Milestone
Another unique customisation option available with the Max Life SWAG Pension Plan is the option of immediate annuity with early return of premium. The proportion of premium returned can be either 50% or 100% of Total Premium paid if the policyholder reaches a specific age milestone. Currently, the age milestone options available in the case of SWAG Pension Plan are 70, 75, 80 and 85 years (last birthday). This customisation is currently available only if the policyholder opts for the Single Life with Death Benefit variant of the SWAG Pension Plan.
Both the proportion of premium i.e. 50% or 100% and the age milestone have to be chosen at policy inception. On survival till the chosen milestone, either 50% or 100% of the Total Premium paid less benefits already paid at the milestone age will be paid out to the policyholder. In case of the policyholder’s death, the nominee is eligible to receive 100% of the total premiums paid less benefits already paid out.
Advance Annuity Option
Life is unpredictable and Max Life SWAG Pension Plan can help you stay on top of post-retirement financial emergencies and various urgent financial needs through the Advance Annuity Option. By availing this benefit, you can get the present value of annuities payable in the next 5 years as a lump sum payout and the Annuity payment during the next 5 Policy Years shall stop from the Policy Anniversary. Post completion of the 5-year period, regular annuity payments will resume as per the plan’s original terms and conditions.
Some key factors to keep in mind about the advance Annuity Option include:
- Available only with select variants, namely, Immediate Annuity - Joint Life with Death Benefit
- Advance annuity can be availed anytime within 3 months from the date of death of the first annuitant
- The 5-year Advance Annuity Period starts from the policy anniversary after the death of the first annuitant i.e. the year subsequent to the year in which the option of advance annuity is opted
- Annuity payment scheduled during the policy year of exercising the Advance Annuity option will continue to be payable as and when due
What more, if you have chosen an annuity option with death benefit, you are also eligible to obtain a loan against the policy from Max Life in case of a financial exigency, without any hassle.
So, don’t wait anymore and get started with securing your post-retirement income by availing the various customization options offered under the Max Life SWAG Pension Plan today.
Moneycontrol Journalists were not involved in the creation of the article.
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