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Can the Aviva Annuity Plus Plan provide the peace of mind that comes with a steady income for life?
Can the Aviva Annuity Plus Plan secure your retirement without worrying about running out of money?
Can the Aviva Annuity Plus Plan provide both flexibility and security for your golden years?
Let’s explore the plan’s features and annuity options to assess its suitability. This review aims to provide a clearer understanding of the Aviva Annuity Plus Plan.
Table of Contents:
What is the Aviva Annuity Plus Plan?
What are the features of the Aviva Annuity Plus Plan?
Who is eligible for the Aviva Annuity Plus Plan?
What are the annuity options and the benefits available under the Aviva Annuity Plus Plan?
Free Look Period of Aviva Annuity Plus Plan
Surrendering the Aviva Annuity Plus Plan
What are the advantages of the Aviva Annuity Plus Plan?
What are the disadvantages of the Aviva Annuity Plus Plan?
Research Methodology of Aviva Annuity Plus Plan
Benefit Illustration – IRR Analysis of Aviva Annuity Plus Plan
Aviva Annuity Plus Plan Vs. Other Investments
Aviva Annuity Plus Plan Vs. Fixed Income Instruments
Aviva Annuity Plus Plan Vs. Inflation-adjusted Income
Final Verdict on Aviva Annuity Plus Plan
What is the Aviva Annuity Plus Plan?
Aviva Annuity Plus is a non-participating, non-linked single Premium immediate annuity plan. It is designed to provide you with lifetime income during your post-retirement years.
The amount of Annuity depends on the money invested by you (Purchase Price), annuity option, age of the annuitant and the frequency selected by you.
What are the features of the Aviva Annuity Plus Plan?
- Choose from seven annuity options tailored to your specific financial needs.
- The annuity amount is guaranteed for the entire duration of the policy.
- You can enhance your annuity by topping up your pension plan proceeds.
- Receive annuity payments at a frequency of your choice.
Who is eligible for the Aviva Annuity Plus Plan?
| Minimum | Maximum | |
| Entry Age | 18 years | 80 years |
| Purchase Price | ₹ 25,000 | No Limit |
| Annuity Instalment | ₹ 500 for any annuity frequency | No Limit |
| Annuity Frequency | Yearly, Half-yearly, Quarterly and Monthly | |
What are the annuity options and the benefits available under the Aviva Annuity Plus Plan?
The following options are available for annuity payment. Annuity can be paid monthly, quarterly, half yearly and yearly.
| Option | Annuity payable | Death benefit |
| Option I – Life Annuity | Payable as long as the annuitant is alive | Nil |
| Option II – Annuity Guaranteed for 5 years and for life thereafter | Payable till the guaranteed period of 5 years (irrespective of the survival of the policy holder), or throughout life, whichever is later | Nil |
| Option III – Annuity Guaranteed for 10 years and for life thereafter | Payable till the guaranteed period of 10 years (irrespective of the survival of the policy holder), or throughout life, whichever is later | Nil |
| Option IV – Annuity Guaranteed for 15 years and for life thereafter | Payable till the guaranteed period of 15 years (irrespective of the survival of the policy holder), or throughout life, whichever is later | Nil |
| Option V – Annuity for Life increasing @ 3% per annum simple | Annuity payable increases @ 3% p.a. simple rate and is payable as long as the annuitant survives. | Nil |
| Option VI – Life Annuity with Return of Purchase Price | Payable as long as the annuitant is alive | Purchase price is returned to the nominee |
| Option VII – Joint Life Last Survivor Annuity | Payable as long as one of the two Annuitants is alive (Joint Life Last Survivor). | Nil |
Free Look Period of Aviva Annuity Plus Plan
You have the right to review the terms and conditions of this Aviva Annuity Plus Plan Policy.
If you disagree with any of the terms or conditions, you have the option to return the Policy within 15 days from the date of receipt of the Policy Document (30 days from receipt in case the Policy is solicited through distance marketing).
Surrendering the Aviva Annuity Plus Plan
There is no surrender option.
What are the advantages of the Aviva Annuity Plus Plan?
- Convenient single-payment plan for a stress-free experience.
- Secure guaranteed income for life, ensuring long-term financial stability.
- Select the annuity payment frequency that aligns with your requirements.
- Despite being a single premium plan, additional top-up premiums are permitted.
What are the disadvantages of the Aviva Annuity Plus Plan?
- The annuity amount is fixed for life and does not adjust for inflation.
- The annuity rate is determined and locked at the time of policy inception.
- Annuity payouts are subject to taxation based on your applicable income tax slab.
- The plan does not offer a surrender option.
Research Methodology of Aviva Annuity Plus Plan
Evaluating the Internal Rate of Return (IRR) can help determine if this plan aligns with your long-term financial goals. Comparing the IRR with other investment options allows for an informed decision. Let’s assess the IRR based on a quote from the official portal.
Benefit Illustration – IRR Analysis of Aviva Annuity Plus Plan
For a 60-year-old male purchasing the plan with a single premium of ₹25 lakhs, Plan Option VI (Life Annuity with Return of Purchase Price).
He chooses annual payouts and receives an annuity of ₹1,49,535. Since the plan offers annuity for lifetime, we assume a life expectancy of 85 years. Upon his passing at age 85, the nominee receives the purchase price.
| Male | 60 years |
| Purchase Price | ₹ 25 Lakhs |
| Life Expectancy | 85 years |
| Annuity (per annum) | ₹ 1,49,535 |
| Age | Option VI – Life Annuity with Return of Purchase Price |
| 60 | -25,00,000 |
| 61 | 1,49,535 |
| 62 | 1,49,535 |
| 63 | 1,49,535 |
| 64 | 1,49,535 |
| 65 | 1,49,535 |
| 66 | 1,49,535 |
| 67 | 1,49,535 |
| 68 | 1,49,535 |
| 69 | 1,49,535 |
| 70 | 1,49,535 |
| 71 | 1,49,535 |
| 72 | 1,49,535 |
| 73 | 1,49,535 |
| 74 | 1,49,535 |
| 75 | 1,49,535 |
| 76 | 1,49,535 |
| 77 | 1,49,535 |
| 78 | 1,49,535 |
| 79 | 1,49,535 |
| 80 | 1,49,535 |
| 81 | 1,49,535 |
| 82 | 1,49,535 |
| 83 | 1,49,535 |
| 84 | 1,49,535 |
| 85 | 25,00,000 |
| IRR | 5.87% |
For these cash flows, the IRR is calculated at 5.87% as per the Aviva Annuity Plus Plan maturity calculator. In comparison, a bank Fixed Deposit (FD) may offer a higher return with the added advantage of access to the invested corpus.
Annuity plans, however, lock your funds, preventing surrender or corpus access. Under Option VI, only the nominee receives the purchase price upon death.
In summary, the Aviva Annuity Plus Plan underperforms in terms of both yield and liquidity. Alternative options with better returns and greater flexibility are available, which we will explore in the next section.
Aviva Annuity Plus Plan Vs. Other Investments
This section discusses how to effectively utilize your retirement corpus to generate a steady income stream while maintaining greater control over your investments.
These alternatives offer not only better returns but also the flexibility to customize cash flows based on your needs.
Aviva Annuity Plus Plan Vs. Fixed Income Instruments
Here are some fixed-income instruments that deliver higher returns and greater liquidity compared to the Aviva Annuity Plus Plan:
| Fixed income instrument | Interest Rate |
| Senior Citizen Savings Schemes (SCSS) | 8.20% |
| Bank FD | 7% – 8% |
| RBI Floating Rate Bonds | 8.05% (Floating) |
1. Bank Fixed Deposit (FD): A safe option for retirees, providing fixed interest rates for predictable and regular income.
2. Senior Citizen Savings Scheme (SCSS): A government-backed scheme offering attractive interest rates and low-risk regular income for seniors.
3. RBI Floating Rate Bonds: Government bonds with interest rates linked to market rates, offering potential for higher returns and regular payouts, though with some interest rate risk.
These options provide liquidity, allowing you to access your corpus when needed. However, they do not account for inflation, which can diminish purchasing power over time.
This limitation can be addressed by incorporating equity into your portfolio for long-term growth. A balanced allocation between equity and debt, with periodic rebalancing, ensures inflation-adjusted income and helps your corpus last throughout your lifetime.
Aviva Annuity Plus Plan Vs. Inflation-adjusted Income
Using the same example from the Aviva Annuity Plus Plan, let’s analyse a retirement corpus of ₹25 lakhs with an initial annual withdrawal of ₹1.49 lakhs.
Here we have assumed an Allocation Strategy of 60:40. Invest ₹15 lakhs (60%) in equity for growth and ₹10 lakhs (40%) in debt instruments for regular income. The expected annual returns are assumed as 12% for equity and 6% for debt.
Withdrawals start at ₹1.49 lakhs in the first year and increase by 6% every 5 years to adjust for inflation. To maintain the balance, funds are transferred from equity to debt every 5 years.
This ensures that equity growth offsets inflation while debt supports regular income. The final transfer from equity to debt occurs at age 71, ensuring stability in later years.
| Age | Equity Portion | Shift from Equity to Debt | Debt Portion | ||||
| Opening Balance | Yearly withdrawal | Closing Balance | Opening Balance | Yearly withdrawal | Closing Balance | ||
| 61 | 15,00,000 | – | 16,80,000 | – | 10,00,000 | 1,49,535 | 9,01,493 |
| 62 | 16,80,000 | – | 18,81,600 | – | 9,01,493 | 1,49,535 | 7,97,075 |
| 63 | 18,81,600 | – | 21,07,392 | – | 7,97,075 | 1,49,535 | 6,86,393 |
| 64 | 21,07,392 | – | 23,60,279 | – | 6,86,393 | 1,49,535 | 5,69,069 |
| 65 | 23,60,279 | – | 26,43,513 | – | 5,69,069 | 1,49,535 | 4,44,706 |
| 66 | 26,43,513 | 8,00,000 | 20,64,734 | 8,00,000 | 12,44,706 | 1,58,507 | 11,51,371 |
| 67 | 20,64,734 | – | 23,12,502 | – | 11,51,371 | 1,58,507 | 10,52,436 |
| 68 | 23,12,502 | – | 25,90,002 | – | 10,52,436 | 1,58,507 | 9,47,565 |
| 69 | 25,90,002 | – | 29,00,803 | – | 9,47,565 | 1,58,507 | 8,36,401 |
| 70 | 29,00,803 | – | 32,48,899 | – | 8,36,401 | 1,58,507 | 7,18,567 |
| 71 | 32,48,899 | 32,48,899 | -0 | 32,48,899 | 39,67,466 | 1,68,018 | 40,27,416 |
| 72 | -0 | – | -0 | – | 40,27,416 | 1,68,018 | 40,90,962 |
| 73 | -0 | – | -0 | – | 40,90,962 | 1,68,018 | 41,58,321 |
| 74 | -0 | – | -0 | – | 41,58,321 | 1,68,018 | 42,29,722 |
| 75 | -0 | – | -0 | – | 42,29,722 | 1,68,018 | 43,05,407 |
| 76 | -0 | -0 | 0 | -0 | 43,05,407 | 1,78,099 | 43,74,947 |
| 77 | 0 | – | 0 | – | 43,74,947 | 1,78,099 | 44,48,659 |
| 78 | 0 | – | 0 | – | 44,48,659 | 1,78,099 | 45,26,794 |
| 79 | 0 | – | 0 | – | 45,26,794 | 1,78,099 | 46,09,617 |
| 80 | 46,09,617 | 1,78,099 | 46,97,410 | ||||
| 81 | 46,97,410 | 1,88,784 | 47,79,143 | ||||
| 82 | 47,79,143 | 1,88,784 | 48,65,780 | ||||
| 83 | 48,65,780 | 1,88,784 | 49,57,615 | ||||
| 84 | 49,57,615 | 1,88,784 | 50,54,960 | ||||
| 85 | 50,54,960 | 1,88,784 | 51,58,146 | ||||
Benefits of This Strategy
1. Regular Income: Ensures consistent cash flow for daily expenses.
2. Inflation-Adjusted Withdrawals: Sustains your lifestyle by keeping pace with inflation.
3. Corpus Longevity: Leaves a substantial corpus for heirs, ensuring financial security.
At age 85, this strategy leaves you with a corpus of ₹50 lakhs, even after accounting for inflation-adjusted withdrawals throughout your life. This is double the return of the purchase price of ₹25 lakhs offered under the Aviva Annuity Plus Plan.
Final Verdict on Aviva Annuity Plus Plan
The Aviva Annuity Plus Plan is an immediate annuity plan designed to provide a steady income stream for life. With seven annuity options and flexible payout frequencies, it may seem appealing to senior citizens seeking reliable income after retirement.
However, a closer analysis reveals that the plan’s returns are relatively low. Additionally, the Aviva Annuity Plus Plan locks your funds, and you are limited to receiving only the annuity payouts.
The corpus is not accessible for emergencies or other financial goals. Relying solely on this annuity as your primary post-retirement income source may lead to inadequate funds in the long run and it also has a high agent commission.
As highlighted earlier, adopting a balanced approach that combines growth and stability offers better returns and greater flexibility compared to annuity plans. This strategy can be customized to align with individual goals and risk tolerance.
Do Quora, Facebook, and Twitter have the final say when it comes to financial advice?
For post-retirement income, avoid depending entirely on readymade annuity or pension plans. Instead, consult a Certified Financial Planner who can design a tailored plan to meet your objectives and align with your risk tolerance.
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