Now Reading: Annuity income beats lump sum for retirement, insurer says
-
01
Annuity income beats lump sum for retirement, insurer says
A lump-sum retirement corpus, gratuity or asset sale proceeds alone may not provide enough income through retirement, according to Ashok Manwani, vice-president of products at Go Digit Life Insurance. He said retirees…
A lump-sum retirement corpus, gratuity or asset sale proceeds alone may not provide enough income through retirement, according to Ashok Manwani, vice-president of products at Go Digit Life Insurance. He said retirees must focus on converting savings into a sustainable income stream, not just building wealth.
Annuities, sold by life insurers, offer regular payouts in exchange for a lump sum or premiums. A fixed annuity guarantees the full payout. A variable annuity guarantees a portion, 60% in the insurer's example, and links the rest to the Nifty 50. An illustration shows a 45-year-old investing Rs 2 lakh annually for 10 years and receiving Rs 2.55 lakh a year from age 61 under a fully guaranteed plan, or Rs 3.55 lakh under a variable plan assuming 12% index returns. Market-linked figures are illustrative and not guaranteed.
Manwani said the key question approaching retirement is not how much has been saved, but how savings will pay out monthly after work stops.
Indian Opinion Analysis
Go Digit Life Insurance vice-president Ashok Manwani said a lump-sum retirement corpus alone is not enough and that retirees must convert savings into a regular income stream. Annuities from life insurers can provide that. A fixed annuity offers predictable payouts, a variable annuity mixes a guaranteed base with returns linked to the Nifty 50. The company's illustration for a policyholder investing Rs 2 lakh a year from age 45 shows a guaranteed annual payout of Rs 2.55 lakh from age 61. A variable version could yield Rs 3.55 lakh if the index returns 12% annually, but that is illustrative and not assured.
Source: businesstoday.in
This brief was synthesised by AI from the source linked above.
