Immediate Annuity Plan

Transcription

1 Immediate Annuity Plan Frequently Asked Questions TRA/6/13-14/5974 June, 10, 2013 Prepared by Product Management 1 For Internal Circulation only

2 Contents BSLI Immediate Annuity Plan Summary What is BSLI Immediate Annuity Plan all about? What are the significant features of BSLI Immediate Annuity Plan? Am I eligible for this plan? What is the term of the policy?... 3 Premium How many years do I need to pay my premium? What is the minimum and maximum premium to be paid? Do I have any premium rebates? Can I do top ups under this plan? How can I pay my premiums?... 4 Benefits What is the Survival Benefit under this plan? What are the annuity options available under this plan? What happens on death of the annuitant? Under option 3 what happens on death of the annuitant in preset period? What are the due dates of annuity payouts? Can you explain with example how option 4 works? How does option 5 joint life works? Are my annuity payouts taxable? What is the Maturity Benefit under this plan? What is the Surrender Benefit under this plan? Is there any rider benefit in this plan? Do I have a loan facility under this plan? Will there be any service tax applicable on this plan? Can I avail of tax benefits under this plan?... 6 Miscellaneous Are my annuity rates guaranteed? What are enhanced annuity rates? What are the benefits to a customer who directly approaches BSLI for this plan without any agent/advisor? What is a survival certificate? What if I no longer want the annuity? How does Freelook work under this product? Can I change the annuity payout mode? Can I change the annuity option? Is there a nomination facility available with the plan? Can I assign the policy?... 7 Termination When will my policy terminate?... 8 Operational Guidelines What application form is required for BSLI Immediate Annuity Plan? Can life insured and proposer be different under this plan? For submission of survival certificate, will the client need to be physically present in the branch?... 8 Prepared by Product Management 2 For Internal Circulation only

3 BSLI Immediate Annuity Plan Summary 1. What is BSLI Immediate Annuity Plan all about? BSLI Immediate Annuity Plan is a traditional, non-participating, single premium annuity plan with various annuity options. Decide the amount (lump sum amount) you want to pay to purchase the annuity depending on the amount of regular income you wish to receive. This annuity payment is guaranteed for life and depends on the annuity rates prevailing at the time of the purchase of the annuity. 2. What are the significant features of BSLI Immediate Annuity Plan? Key features of BSLI Immediate Annuity plan are: - Traditional single premium immediate annuity plan. - Periodic annuity payouts are guaranteed for life. - Flexibility to choose from 5 different annuity options - No medical underwriting required - The plan offers convenient annuity payout mode monthly, quarterly, semi annually and annually from the date of purchase. - Enhanced annuity payout rates will be given on higher purchase price and when an annuity is purchased directly without help from an advisor/distributor. 3. Am I eligible for this plan? You are eligible if - your age at entry is between ages 30 year - 90 years - You are able to purchase the annuity such that you can get a regular income of Rs.1,000, Rs.3,000, Rs.6,000 or Rs.12,000 for monthly, quarterly, semi-annual and annual mode of annuity payment respectively. There is no maximum limit on the purchase price. Plan Structure At inception you choose - 1. Annuity Purchase Price or Annuity Amount 2. Annuity Option 3. Annuity Payout Mode Your annuity payouts are based on the Purchase Price, Age, Gender, Payout Mode and Annuity Option. Purchase Price is banded as follows: Purchase Price Band Band 1 Band 2 Band 3 Band 4 Purchase Price (Rs.) <500, ,000 to 999, ,000 to 4999, , What is the term of the policy? Immediate Annuity has a policy term of Whole Life. Prepared by Product Management 3 For Internal Circulation only

4 Premium 5. How many years do I need to pay my premium? Premium paying term is single pay, payment accepted by cheque/demand draft or fund transfer from an existing BSLI insurance plan. 6. What is the minimum and maximum premium to be paid? Your minimum premium should be sufficient to purchase minimum annuity of Rs.1,000 per month, Rs. 3,000 per quarter, Rs. 6,000 semi annually and Rs.12,000 annually as per selected annuity option. There is no limit for maximum premium 7. Do I have any premium rebates? No there is no premium rebates under this plan but there are enhanced annuity rates based on your Purchase Price band (as explained later) 8. Can I do top ups under this plan? No - top ups are not allowed under this plan. 9. How can I pay my premiums? You can pay your premiums by cheque/demand draft or fund transfer from an existing BSLI insurance plan. Benefits 10. What is the Survival Benefit under this plan? The product provides periodical annuity payouts to the annuitant for whole life. The annuity rate varies by annuity option selected, entry age, gender and the slab of purchase price. Annuitant can select monthly, quarterly, semiannual or annual payout mode. Annuity payouts will be made through post dated cheques or through direct credit to annuitant s bank account. You need to provide a Survival Certificate (explained later) to get regular stream of income. 11. What are the annuity options available under this plan? You have following annuity options to choose from Option 1: Annuity payable for life at uniform rate Option 2: Annuity payable for life with return of purchase price on death of annuitant Option 3: Annuity payable for the chosen term of 5/10/15/20 years is guaranteed (even in case of death of annuitant) and after that as long as annuitant is alive. Option 4: Annuity payable for life at simple increasing rate of 3% per annum Option 5: Joint Life, Last Survivor where the annuity is first paid to the primary annuitant. After the death of the primary annuitant, the second annuitant (spouse) receives the annuity. 12. What happens on death of the annuitant? In unfortunate event of death of annuity death benefit applicable is as mentioned below Payout Option 2: Upon the death of the annuitant the annuity payouts will cease and the purchase price (excluding service tax and any other applicable taxes) will be refunded to the nominee. Prepared by Product Management 4 For Internal Circulation only

5 On the death of the annuitant, no part of the annuity payout shall be paid for the time elapsed between the annuity payout immediately preceding the death of the annuitant and the date of his/her death. In situation where a annuity payout was paid by BSLI, after the date of death of annuitant, then the amount of such annuity payout would be deducted from the purchase price to be refunded. The policy will be terminated once the death benefit is paid. Payout Option 3: Upon the death of the annuitant before the end of the chosen term, the nominee will continue to receive the annuity payout till the end of the chosen term. The policy will be terminated at the end of the chosen term. Payout Option 5: Upon the death of the primary annuitant, the secondary annuitant will continue to receive the annuity. If the secondary annuitant pre-deceases the primary annuitant, annuity payments cease on the death of the primary annuitant. The policy will be terminated upon the deaths of both the primary and secondary annuitants. Payout Option 1 & 4: Upon the death of the annuitant under these payout options the annuity payouts will cease immediately and the policy will be terminated. 13. Under option 3 what happens on death of the annuitant in preset period? Under option 3 annuity payable for the chosen term of 5/10/15/20 years is guaranteed even in case of death of annuitant and after that as long as annuitant is alive. If the annuitant dies before completion of preset period, the annuity shall be payable to nominee for remaining years of preset period Example: XYZ aged 50 years, has purchased annuity under option 3 annuity payable for the chosen term of 10 years. Unfortunately the annuitant dies in 5 th year of preset term. In this case annuitant s nominee will receive regular annuity for remaining period of preset period i.e. from 6 th year to 10 th year. After completion of preset term (10 years) policy will terminate 14. What are the due dates of annuity payouts? Due date for payout of annuity is the date after a month, three months, six months or one year from the date of purchase of annuity depending upon that payout option chosen. Series of annuity payouts will be due thereafter at the same periodical frequency. Example: Annuity issued to Mr Salil aged 50 years, 20th January 2013 then as per selected annuity payout option your annuity payout due dates will be in the following manner: Monthly Mode 20 th February 2013 and thereafter on 20 th of every month Quarterly Mode 20 th April 2013 and thereafter 20 th of every July, October, January and April Semi-annual Mode 20 th July 2013 and thereafter 20 th of every July and January Annual Mode 20 th January 2014 and thereafter 20 th January of every year Prepared by Product Management 5 For Internal Circulation only

6 15. Can you explain with example how option 4 works? Option 4 is Annuity payable for life at simple increasing rate of 3% per annum. Here the annuity rate will simply increase by 3% of base rate. Example: Mr Salil purchased annuity with option 4 i.e Annuity payable for life at simple increasing rate of 3% per annum in January When he purchased the annuity the annuity rate was 6%. Since he has opted for option of Annuity payable for life at simple increasing rate of 3% per annum his annuity rate in January 2014 will be 6% % (3% of 6%) = 6.18% January 2015it will be 6.18% %(3% of 6%) = 6.36% 16. How does option 5 joint life works? Under Annuity Option 5, the product provides annuity payouts to the primary annuitant. After the death of the primary annuitant, the second annuitant receives the annuity. If the second annuitant pre-deceases the primary annuitant, annuity payments cease on the death of the primary annuitant. Only spouse above the age of 18 years is allowed as the joint life in option Are my annuity payouts taxable? Your annuity payouts you receive are taxable as per extant tax laws. 18. What is the Maturity Benefit under this plan? There is no Maturity Benefit available under this plan. 19. What is the Surrender Benefit under this plan? This policy does not offer any surrender benefit 20. Is there any rider benefit in this plan? No- Riders are not available under this plan. 21. Do I have a loan facility under this plan? No This plan does not offer any loan facility 22. Will there be any service tax applicable on this plan? Yes - Service Tax as per current tax laws will be charged on purchase price. 23. Can I avail of tax benefits under this plan? As per extant tax laws, this plan offers tax benefits under Section 80CCC of the Income Tax Act, 1961 You are advised to consult your tax advisor for details. Miscellaneous 24. Are my annuity rates guaranteed? The annuity rates are determined at the date of purchase and are guaranteed for life. Prepared by Product Management 6 For Internal Circulation only

7 25. What are enhanced annuity rates? Based on purchase price band we offer Enhanced annuity payout rates which are as follows Purchase Price Band Band 1 Band 2 Band 3 Band 4 Enhanced Annuity 100% % % % 26. What are the benefits to a customer who directly approaches BSLI for this plan without any agent/advisor? If a customer comes directly to BSLI he will be entitled to 105% of the enhanced annuity rates. Eg: if a customer falls under Band 3 and approaches directly to BSLI, he will be getting enhanced annuity rates of 105% of 102.5% i.e %. 27. What is a survival certificate? Survival certificate is a proof that shows annuitant is alive so that his annuity will be paid to him regularly for next policy year. Annuitant needs to submit survival certificate in the prescribed format which should reach us 15 days before policy anniversary. If there is any change of address the proof of address is also required. The survival certificate to be witnessed by one of the following officials: a. Branch Manager of a commercial bank b. State or Central Govt. gazette officer c. Branch Head of BSLI 28. What if I no longer want the annuity? With Immediate Annuity Plan, you cannot change your mind once the contract is purchased and free look period is over. For example, if you have been receiving your stream of income for two years, and you suddenly change your mind, you cannot cancel the income stream and get your remaining lump sum of money back. This policy does not offer any surrender benefit. 29. How does Freelook work under this product? For customer who is utilizing proceeds / vesting benefits from BSLI pension products its mandatory for him to buy an annuity from us only, so he can Freelook the policy for one annuity option & choose other option available with us under the plan. If the customer is from outside who has bought annuity from us then the Freelook treatment will be same as our existing products. 30. Can I change the annuity payout mode? No - Once chosen, the annuity payout mode cannot be changed. 31. Can I change the annuity option? No Once chosen, the annuity option cannot be changed. 32. Is there a nomination facility available with the plan? Yes, nomination facility is available with the plan. 33. Can I assign the policy? No -Assignment facility is not available with this plan. Prepared by Product Management 7 For Internal Circulation only

8 Termination 34. When will my policy terminate? Your policy will get terminated on any of the following events: The date we receive intimation of the death of the life insured. Operational Guidelines 35. What application form is required for BSLI Immediate Annuity Plan? The Retirement Solution application form would be used for this plan. 36. Can life insured and proposer be different under this plan? No- Proposer can t be different from the Life Insured under the plan. 37. For submission of survival certificate, will the client need to be physically present in the branch? Yes For submitting the survival certificate the client has to be physically present in the branch. Prepared by Product Management 8 For Internal Circulation only