1. Pension plan with /without life cover
-Pension plans with life insurance cover offers an assured life cover (i.e. sum assured) in case of death during the accumulation phase (policy term).
-Pension plans without life cover, payout the corpus built till date to the nominees in case of death of the policyholder during the policy term. There is no life cover (sum assured) in these plans.
2. Immediate Annuity and Deferred Annuity
-In case of Immediate Annuity plans, the premium amount is paid in one lump sum and the annuity/pension commences immediately after paying the premium depending on the payment frequency (Monthly, quarterly, semi annually or annually).
-In case of Deferred Annuity, a policyholder pays a regular premium for a certain number of years. This is called the accumulation phase. The money that has accumulated at the end of the accumulation phase is used to buy immediate annuities, which, in turn, generate a regular income for life. For example, if an individual buys a pension plan with tenure of 30 years then his annuity will begin at the end of the 30th year. So deferred annuities are like any other investment product that help you build a corpus by investing regularly.
3. Traditional pension plans and Unit Linked pension plans
During the accumulation phase the individual can choose to invest in a traditional pension plan or a unit-linked pension plan, based on their risk appetite. A traditional pension plan invests most of the funds in Government securities, whereas in a unit-linked retirement plan the investment is in a combination of stocks, bonds, securities, etc.
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