There are 2 types of pension plans namely Deferred pension plans and immediate annuity pension plans, the details are as mentioned below:
a. Deferred pension plans – under these plans,
The policyholder chooses a policy term and pays premiums during the term. These premiums get accumulated into a lump sum benefit. Pension starts from the date of Vesting.
Death benefit before Vesting: In case of early death, the death benefit is paid
On Vesting: At the time of vesting, the annuitant can withdraw 1/3rd of the accumulated corpus as tax-free withdrawal and the remaining portion is then paid as annuity according to the annuity option selected.
Death benefit after Vesting: It depends on the annuity option chosen. If the annuitant has chosen, return of purchase price option, then the same would be paid to the nominee.
b. Immediate annuity plans – under these plans,
The policyholder pays a lump sum amount to buy the plan and the annuity starts immediately according to the annuity option selected.
Death benefit after Vesting: It depends on the annuity option chosen. If the annuitant has chosen, return of purchase price option, then the same would be paid to the nominee.