Syllabus section: economy

Why in News?

The Insurance Regulatory and Development Authority of India (Irdai) has asked life insurers to offer a standard immediate annuity plan named Saral Pension. The regulator has already made standard plans mandatory in categories like term, health, and travel.

About Saral pension

• Anyone between 40 and 80 years can invest in Saral Pension which will be a Single Premium plan i.e. one will have to invest a lump sum amount to get a regular pension on a Monthly, Quarterly, Half-Yearly, or Yearly basis.

• The minimum amount of pension will be Rs. 1000 per Month, Rs. 3000 per Quarter, Rs. 6000 Per half-year and Rs. 12000 per annum. The amount invested is called Purchase Price in annuity place.

• There is no Maturity Benefit under the product. In the case of a single life annuity, 100% of the Purchase price is paid on death. In the case of a joint-life annuity, 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, 100% Purchase Price shall be payable to 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.

With a view to having uniformity across Insurers, and to make available a product by all Life Insurers that will broadly meet the needs of an average customer, it is felt necessary to introduce a standard, individual immediate annuity product, with simple features and standard terms and conditions.

Source: Financial express