HDFC Standard Life Insurance Co. Ltd has launched an annuity product called HDFC Life Pension Guaranteed Plan. Annuities are pension products that offer a fixed sum every year. You can buy this product in two ways: deferred and immediate. A deferred annuity requires you to first build a corpus, and then use it to buy an annuity. For an immediate annuity, you don’t have to accumulate a corpus; just take your money and buy an annuity from any insurer. The plan by HDFC Life offers both options, and goes a step further.
The plan allows you to lock in your annuity rate at the time of buying the deferred annuity option. In a typical deferred annuity plan, you invest first and then use this money to buy an annuity at the then prevailing interest rate. In that sense, the plan by HDFC Life takes care of the interest rate risk. But is that enough?
