Including your partner in your retirement plans is often a priority for many, and rightly so. Once you step into the latter phase of life and the kids have flown the coop, your spouse may be your constant companion. Moreover, you have probably dreamt of sharing this phase of life with your partner.
Joint and survivor annuity plans are a financial instrument that you can use to include your partner, or any other family member, in your retirement plans. These policies will include another person on your plan, and its benefits will extend to the survivor. What is a joint and survivor annuity, and how does it work? Let’s dive in.
Joint Survivor Annuity
A basic annuity plan is meant for one person. You can buy it when you are closer to retiring and want to convert some of your savings into regular, pension-like income. The annuities from such plans cease with the death of the policyholder. Depending on the plan features, their nominee may receive a capital refund, i.e., a lump sum pay-out upon the passing of the policyholder.
In such cases, the annuitant may be leaving behind someone who depended on their financial support. They may need to look for other means of income to support themselves.
A joint survivor annuity helps the annuitant protect themselves as well as the dependant against the possibility of having to make new financial arrangements after the passing of either.
You may not find ‘joint survivor annuity’ listed as a plan with the provider. Instead, your immediate annuity plans may offer you the option to cover two lives with a single plan. This will allow you to convert your plan into a joint survivor one.
Once you buy the policy, you can rest assured that even after your passing, your partner will not have to worry about their regular expenses. The policy assures regular income to the survivor.
Features
A joint survivor plan works much the same as a regular immediate annuity plan while offering some additional benefits. Some of the key features of these plans are:
· Regular lifetime income
Unless you have chosen an arrangement that stops your regular income after some years, you can expect your annuities to continue for as long as you live.
· Pay-out frequency options
The pay-outs you receive from the plan need not be monthly. You can choose for them to quarterly, half-yearly, or annual as well. The choices offered will vary across plans and policy providers.
· Provisions for a second annuitant
You can include any family member as a second annuitant on your joint survivor annuity plan, provided they are over 40 years of age. This allows you to make provisions for your spouse or a dependant family member.
· Tax Benefits
You may be able to avail of tax exemptions on your plan pay-outs as directed by the IT Act and any other relevant income tax regulations prevalent in the region.
Joint and survivor immediate annuities offer you a way to ensure that even after you’re gone, your partner will not suffer financially. The plan will continue to pay them. Plan specifications may vary across providers. When buying plans, it is ideal to compare them and choose one that suits you best.
