One of the major concerns among people in their old age is outliving their savings. Therefore, it is important to have sufficient funds to live through a long period of retirement. A life insurance annuity plan is one option that people in Singapore can choose for all their retirement needs. It is a life insurance policy that provides the policyholder with a steady monthly income after retirement until he/she passes away. Life insurance annuity plans can be obtained either through cash or through CPF Minimum Sum Scheme. Here are some of the key features of annuities:
- The steady monthly income a policyholder gets after retirement is the biggest feature of annuities. The policyholder will receive this monthly amount until his/her death, so the longer one lives, the more he/she would receive.
- The premium amount for annuities can be paid either through fixed payments for a period of time or as a lump sum amount.
- There are some annuities that provide for a minimum definite period of regular income, for instance 15 years. Under such circumstances, the insurance provider will carry on paying the regular income until the end of the guaranteed period even if the policyholder passes away during this period.
- There are a few annuity plans where policyholders get a minimum assured death benefit through a lump sum payment when the policyholder passes away during the initial years of the policy. The lump sum amount would be the premiums paid minus the total monthly income received.
Things prospective buyers should consider before getting a life insurance annuity plan:
- Go through the entire terms and conditions document carefully and a get a clear understanding of how it works. If there is anything in the document that is not making sense, seek clarification from a financial expert.
- Most annuities have no surrender value and may exclude death benefits.
- A life insurance annuity plan is a long-term commitment like most life insurance plans, so one must plan his/her insurance needs and finances judiciously before committing savings to annuity.
- For annuities where the policyholder receives a regular monthly income, the purchasing power is likely to be low as it does not consider the effects of inflation.
List of best Life Insurance Annuity Plans in Singapore
- Axa Retire Happy Plus: This flexible savings plan has numerous income payout and premium term options that allow policyholders to add to their retirement funds, children’s education and more. Some key features of this annuity plan include hassle-free application, guaranteed returns, flexibility in retirement planning, guaranteed capital at selected age of retirement, no disruption to savings plan, cushion against the effects of inflation and more.
- Aviva MyRetirement Plus: With Aviva MyRetirement Plus, the policyholder will get a guaranteed steady retirement income at an age of his/her choice. This steady income will increase every year so that the policyholder can adjust to the rising cost of living and add to CPF savings. The key benefits of this plan include flexibility to choose when to withdraw a lump sum amount, guaranteed retirement income for 20 years, choice to select own retirement age, regular guaranteed retirement income that will increase by 3.5% every year to tackle inflation, choice of premium payment term, 100% capital guaranteed and more.
- Manulife RetireReady: With Manulife RetireReady the policyholder will have the security of two times the guaranteed monthly income in case of loss of independence (people who suffer physical, social or emotional setbacks which prevent them from functioning independently), guaranteed monthly income and more. The key benefits of this policy include flexibility to choose retirement age, income payout period and premium payment period. Waiver of all premiums in case the policyholder gets permanently disabled during premium payment period. The policyholder will get a guaranteed monthly income at an interest rate of 2.57% per year, starting from the retirement age he/she has selected. The plan also comes with an annual bonus before retirement and cash bonus after the retirement age.
Annuity plan is a vital asset to generate income during retirement. Along with CPF Life, annuity plan provides a sure foundation for retirement. With different payout periods and premium payments, the above three products, AXA RetireHappy, Manulife RetireReady and Aviva MyRetirement Plus will produce different results.