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HDFC Life New Immediate Annuity Plan

HDFC Life New Immediate Annuity Plan is a non-linked traditional annuity plan that provides the policyholder several annuity options, so that he/she can enjoy a financially stable retirement period. The policy provides a steady source of income post retirement, till the death of the policyholder or his/her spouse. The policyholder also has the flexibility to choose annuities at annual, semi-annual, quarterly, and monthly frequencies. He/she can also benefit from higher rates of annuity with investments of Rs.2,50,000 or more. Some of the annuity options also provide death benefits to the spouse of the policyholder.

Eligibility - Who is the HDFC Life New Immediate Annuity Plan for?

A customer is required to satisfy certain eligibility criteria to be able to purchase the HDFC Life New Immediate Annuity Plan. These factors are related to the age of the customer and the payout of the annuity. The eligibility factors of the HDFC Life New Immediate Annuity Plan are detailed below:

Minimum Entry Age 30 years
Maximum Entry Age 85 years
Minimum yearly annuity payout Rs.10,000
Maximum yearly annuity payout No limit
Minimum half-yearly annuity payout Rs.5,000
Maximum half-yearly annuity payout No limit
Minimum quarterly annuity payout Rs.3,000
Maximum quarterly annuity payout No limit
Minimum monthly annuity payout Rs.1,000
Maximum monthly annuity payout No limit

All ages mentioned above are with respect to the last birthday of the policyholder.

The minimum price of purchase that will produce the minimum annuity (as per the table above) will be dependent on the annuity rates prevalent at the time of purchase. These rates are prone to changes with time; however, once the annuity is bought, it is guaranteed for life.

Sum Assured and Premium Range - What you Get and What it Costs:

Sum Assured:

The payout will be at the end of the annuity payment frequency. This indicates that:

  • For annual frequency, the annuity payout will be after one year from the date of purchase of the policy.
  • For semi-annual frequency, the annuity payout will be after 6 months from the date of purchase of the policy, and the amount paid will be (98% of yearly annuity*½).
  • For quarterly frequency, the annuity payout will be after 3 months from the date of purchase of the policy, and the amount paid will be (97% of yearly annuity*¼ ).
  • For monthly frequency, the annuity payout will be after 1 month from the date of purchase of the policy, and the amount paid will be (96% of yearly annuity*1/12).

Premium:

The annuity rates vary based on the price band, and hence, the policyholder stands to benefit greatly from higher annuity rates when the purchase price is Rs.250,000 and above. The purchase price bands are specified in the table below:

Band Purchase Price
Band 1 Less than Rs.250,000
Band 2 Rs.250,000 - Rs.499,999
Band 3 Rs.500,000 - Rs.999,999
Band 4 Rs.1,000,000 - Rs.4,999,999
Band 5 Rs.5,000,000 and above

For instance, the applicable annuity rate for a customer may be 8.75% when the price of purchase is Rs.250,000. If the purchase price is Rs.1,000,000, the annuity rate will be higher, say around 8.85%. However, these rates are subject to change; so you must consult a certified financial consultant for the latest updates on annuity rates.

Plan Coverage - What the HDFC Life New Immediate Annuity Plan Covers?

HDFC Life New Immediate Annuity Plan offers you a steady income stream after you enter into retirement. This guaranteed income will be offered to you or your spouse till death. This enables you to enjoy a retirement life that is financially secure and free of worries.

At the inception of the policy, you can choose to opt for any of the following annuity options:

Single Life Annuity Options:

  1. Life Annuity:
  • The annuity is paid to the annuitant uniformly in arrears for his/her entire life.
  • If the annuitant faces death during the policy term, the annuity payments will stop, and no further amount will be paid.
  1. Life Annuity with Return of Purchase Price:
  • The annuity will be paid at a uniform rate in the form of arrears, till the end of life of the annuitant.
  • If the annuitant faces death, the annuity payments will stop and the annuitant’s nominee will be paid 100% of the purchase price.
  1. Life Annuity with Return of Balance Purchase Price:
  • The annuity is paid to the annuitant at a uniform rate for his/her entire life, in the form of arrears.
  • At the death of the annuitant, the annuity payments cease to exist and the annuitant’s nominee will be paid the purchase price less all annuity instalments made before death.
  1. Life Annuity with a Guaranteed Period:
  • The annuity will be paid to the annuitant in the form of arrears for his/her entire life, or till the end of the guarantee period, whichever comes later.
  • At the end of the guarantee period or at the death of the annuitant (whichever is later), the annuity payments will stop and no further amount will be paid. The annuitant can choose a guarantee period of 5, 10, 15, or 20 years.
  1. Life Annuity with 5% escalation:
  • The annuity is paid to the annuitant in the form of arrears for his/her entire life.
  • The annuity will increase annually at a rate of 5% per annum of the annuity amount at the start of the policy.
  • The first escalated payment will be made after one year following the first payment.
  • If the annuitant faces death, the annuity payments will stop and no further amount will be paid.
  1. Life Annuity with Return of Purchase Price in Parts:
  • The annuity is paid to the annuitant at a uniform rate in the form of arrears, till his/her death.
  • If the annuitant survives till the end of 7 years, he/she will be paid 30% of the purchase price.
  • If the annuitant faces death after 7 years, the annuity payment will stop and the nominee will be paid 70% of the purchase price.
  • If the annuitant faces death within 7 years, the annuity payment will cease and the nominee will be paid the full purchase price.
  1. Life Annuity with Return of Purchase Price on Diagnosis of Critical Illness:
  • The annuity will be paid to the annuitant at a uniform rate in the form of arrears for his/her entire life.
  • At the death of the annuitant, or if he/she is diagnosed with any of the predefined critical illnesses before he/she turns 85 years of age (whichever occurs earlier), the annuity payments will stop. At this point, if the annuitant is alive, 100% of the annuity purchase price will be paid to him/her, else it will be paid to his/her nominee.

Joint Life Annuity Options:

In this type of a policy, the primary annuitant is the individual whose life events are of utmost importance with respect to the payout under the contract. Secondary annuitant is the individual who is associated with the joint life contract, in addition to the primary annuitant.

  1. Joint Life Annuity with 100% annuity to the secondary annuitant:
  • The annuity is paid in the form of arrears at a uniform rate, as long as either one of the two annuitants is alive.
  • At the death of the primary annuitant, the secondary annuitant will receive 100% of the original annuity for his/her entire life.
  • At the death of the last surviving annuitant, the annuity payments will stop and no further amount is paid.
  • If the secondary annuitant dies before the primary annuitant, the annuity payments will stop when the primary annuitant also faces death.
  1. Joint Life Annuity with 50% annuity to the secondary annuitant:
  • The annuity is paid in the form of arrears at a uniform rate , till the death of the primary annuitant.
  • When the primary annuitant dies, the secondary annuitant will be paid 50% of the original annuity for his/her entire life.
  • After the death of the last surviving annuitant, the annuity payments will cease and no further amount is paid.
  • If the secondary annuitant dies before the primary annuitant, the annuity payments will stop at the death of the latter.
  1. Joint Life Annuity with 100% annuity to the secondary annuitant and return of purchase price:
  • The annuity is paid in the form of arrears till the death of both annuitants.
  • When the primary annuitant dies, the secondary annuitant will be paid 100% of the original annuity for his/her entire life.
  • At the death of the last surviving annuitant, 100% of the purchase price will be returned to the nominee.
  1. Joint Life Annuity with 50% annuity to the secondary annuitant and return of purchase price:
  • The annuity is paid in the form of arrears till the death of both annuitants.
  • When the primary annuitant dies, the secondary annuitant will be paid 50% of the original annuity till his/her death.
  • At the death of the last surviving annuitant, 100% of the purchase price is paid to the nominee.

The coverage under the HDFC Life New Immediate Annuity Plan includes the following:

  • Death Benefit - This is paid to the nominee or legal heir of the policyholder, and it varies based on the annuity option chosen. The following table describes the death benefit according to the annuity option:
Annuity Option Death Benefits
Life Annuity None
Life Annuity with Return of Purchase Price or Premium 100% of the purchase price or premium of the annuity will be paid to the nominee
Life Annuity with Return of Purchase Price or Balance Premium The amount paid to the nominee will be equal to 100% of purchase price or premium of the annuity less the aggregate of all annuity instalments that were already paid to the annuitant
Life Annuity with a Guarantee Period None
Life Annuity at 5% escalation None
Life Annuity with Return of Premium or Purchase Price in Parts 1) At the death of the annuitant before the seventh policy anniversary, 100% of the premium or purchase price will be paid to the nominee 2) At the death of the annuitant after the seventh policy anniversary, 70% of the premium or purchase price will be paid to the nominee
Life Annuity with Return of Premium or Purchase Price on diagnosis of Critical Illness 100% of the purchase price or premium of the annuity will be paid to the nominee
Joint Life Annuity with 100% annuity to the Secondary Annuitant None
Joint Life Annuity with 50% annuity to the Secondary Annuitant None
Joint Life Annuity with 100% annuity to the Secondary Annuitant and return of Purchase Price or Premium 100% of the purchase price or premium of the annuity is payable to the nominee
Joint Life Annuity with 50% annuity to the Secondary Annuitant and return of Purchase Price or Premium 100% of the purchase price or premium of the annuity is payable to the nominee
  • Annuity Payout - The annuity payout is credited directly to the bank account of the policyholder through NEFT or ECS. The payout will be done according to the following timelines:
Frequency Time of Annuity payout
Annual After one year from the purchase of the policy
Semi-annual After 6 months from the purchase of the policy
Quarterly After 3 months from the purchase of the policy
Monthly After 1 month from the purchase of the policy

Annuity instalments for various frequencies are as follows:

Frequency Annuity Instalment
Semi-annual 98% of yearly annuity * 1/2
Quarterly 97% of yearly annuity * 1/4
Monthly 96% of yearly annuity * 1/12

Add-On Plans – Additional Coverage under HDFC Life New Immediate Annuity Plan:

This is not applicable for the plan.

Exclusions - What the HDFC Life New Immediate Annuity Plan doesn’t Cover?

There are no exclusions under this plan.

Other Key Features – Freelook Period, Surrender Values, Grace Period:

  • Free-look Period

In case the policyholder is not satisfied with the terms and conditions specified within the policy, he/she can return it back to the insurance company within 15 days from the receipt of the policy documentation. The free-look period for policies that are purchased through distance marketing is 30 days. When the insurer receives the letter and original policy documents from the insured, they will arrange for a refund after deducting the stamp duty and annuity payout. Once the policy is returned, it cannot be revived, restored, or reinstated again.

  • Surrender Benefits

The annuity options listed in the table below are associated with guaranteed surrender values. The insurer may pay a higher surrender value, i.e., Special Surrender Value, for the policy on the basis of prevalent market conditions.

Annuity Option Guaranteed Surrender Value
Life Annuity with Return of Purchase Price 100% of the purchase price
Life Annuity with Return of Purchase Price on diagnosis of critical illness
Life Annuity with Return of Purchase Price in parts a) If surrender was within 7 years, 10% of the purchase price b) If surrender was after 7 years, 7% of the purchase price

Tax Benefits – How you can save with HDFC Life New Immediate Annuity Plan?

The annuity payouts will attract income tax as per prevalent laws on the date of payout. The policyholder will have to check with his/her tax consultant for specific details.

Other Benefits – How you can save with HDFC Life New Immediate Annuity Plan?

HDFC Life is a leading insurance company in India, offering a bouquet of individual and group insurance schemes. The insurance plans formulated by the company serve the purposes of Investment, Pension, Protection, and Health. The insurer had an excellent claim settlement ratio of 99.41% in the financial year 2013-14. HDFC Life also provides efficient customer service through their dedicated claims assistance cell.

Why you should Buy HDFC Life New Immediate Annuity Plan?

Spread across 398 offices and 9,000 touch-points across the country, HDFC Life ensures that their products are easily accessible. The insurer also has a proficient financial consultancy wing that provides financial assistance to customers within India and abroad.

HDFC Life New Immediate Annuity Plan FAQs:

Q. What illnesses are covered under the annuity option of Life Annuity with Return of 100% of Purchase Price on Diagnosis of Critical Illness?

A. The following illnesses are covered under this annuity option:

  • Cancer
  • Heart attack
  • Coronary Artery Bypass Graft Surgery (CABGS)
  • Stroke
  • Failure of kidneys
  • Major organ transplant surgery, where the insured is the recipient

Q. What is the maturity benefit under this plan?

A. The HDFC Life New Immediate Annuity Plan does not offer any maturity benefit.

Q. Can I avail a policy loan under this plan?

A. Policy loan is not allowed under the HDFC Life New Immediate Annuity Plan.

Q. Can I request for alterations after the annuity is purchased?

A. After the purchase of the annuity, no alterations can be made.

Q. Is it possible to assign the policy to another individual?

A. This policy cannot be assigned to another individual.

Q. What taxes are associated with the HDFC Life New Immediate Annuity Plan?

A. Direct taxes - The amount pertaining to direct taxes will be deducted at the applicable rates for payments made towards the policy, as per the Income Tax Act, 1961. This amount is amended from time to time.

Indirect taxes - Service tax and cess will be levied. Any other form of tax or statutory levy may become applicable in the future, and will have to be borne by the policyholder.

Q. I already have a savings and investment plan. Do I need to buy a pension plan as well?

A. The purpose of a pension plan is different from that of a savings and investment plan. When you enter into retirement and have no other source of income, a pension plan provides you a regular payout like a monthly income. Moreover, pension plans cannot be liquidated easily. This implies that your savings are secure for use during the time when you need it the most.

Q. When should I start planning for retirement?

A. The best time to start planning for retirement is during your thirties. However, the earlier your start planning, the greater would be the savings in your retirement corpus. The power of compounding over a period of time enables you to build a large amount in your retirement kitty from relatively low investments.

Q. I have various sources of income. So do I need to purchase a retirement plan?

A. Having diverse incomes is good for you during your earning years. But when you are older, you may not be able to work like you do now. At that point, your alternate incomes may not seem as lucrative as they are today. The ideal way in which you can ensure that you have a good balance in your retirement corpus is by purchasing a pension plan that provides you regular payouts post retirement.

Q. My employer has a pension scheme in which I have enrolled. So, do I need to buy an individual pension plan separately?

A. As you grow older, there are several unexpected factors that affect your expenses. Increase in life expectancy and cost of living may render your employer-funded pension insufficient for your daily expenses. Ideally, you should look to accumulate an amount in your retirement kitty that equates to 20 times the value of your income in the year just before retirement. Hence, you should invest in a pension plan at an early age to supplement your employer-funded pension after retirement.