Annuity Plan
For the purpose of getting regular income at retirement.
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Product Summary
AIICO Annuity plan is a policy taken by an insured for the purpose of getting regular income at retirement. There are two types:
Deferred Annuity
The annuity plan allows policy owners to save towards a deferred income. A deferred annuity provides for retirement age at 50, 55, 60, 65, and 70.
Immediate Annuity
Newly retired employees or self-employed individuals convert lump sum deposits to an immediate annuity.
Basic Information
About product
- It is a retirement plan.
- It reduces the tax liability of the policyholder for every time premium is paid during the deferment period.
- It is an instrument by which policyholders save towards a defined regular income at retirement (Deferred Annuity).
- It is an avenue for retirees to convert lump sums into immediate regular income at retirement (Immediate Annuity).
- It is a target income at retirement that can be flat or increasing at 5% or 10% annually.
- It is an annuity payment that can be guaranteed for 5 years or 10 years and thereafter for life.
- The annuity can be immediate or deferred.
Available Options
- It is an annuitant life assurance cover.
- It is an option for regular annuity payment for life or a period certain and thereafter guaranteed for life.
- On the death of the annuitant, after annuity payment commences, a lump sum of five (5) times the annual annuity at the point of death together with any balance resulting from the guarantee period becomes payable.
- On the death before earning commence, a refund of all amounts in the policyholder’s account plus compounded interest at 3% becomes payable to the beneficiary.
How Annuity Plan works
It may sound complicated, but annuities are actually fairly simple. Annuity plans allow you to set aside a certain amount of money for later use in order to avoid the risks associated with investing or saving on your own. An annuity is basically an agreement between two parties: you make regular payments over time and we either pay back these contributions as agreed or pass them along to beneficiaries (or annuitants) – or both if you have chosen joint survivorship insurance coverage.
Benefits
Survival at Retirement: Regular income till death guaranteed for 5 years or 10 years.
Death Benefits
During deferment: 100% refund of premium paid plus 3%compound interest
After deferment: The difference between income receivable for 5 or 10 years and already received.
Optional death benefit.
Surrender Benefits (only applies to a deferred annuity)
Policy in force for 4 years and above: 100% refund of premium plus compound interest at 3%.
If in force for less than 4 years, the penalty applies as follows
2
3
10%
7.5%
5%
COVERAGE INCLUDES
- Regular income to annuitants until death (it does not matter how long you live)
- Opportunity for regular increases in the annuity payment Guaranteed annuity payment period
- Spousal annuity (optional)
- Death benefit (optional)
ILLUSTRATIONS
A thirty-five-year-old who wishes to start earning N10,000,000.00 annually starting from age fifty would be paying about N2,440,000.00 annually for fifteen years. After which the premium payment will seize and he will start to earn N10, 000,000.00 yearly from age fifty throughout his lifetime.
The man, if paying N2,440,000.00 yearly would have paid N36,600,000.00. However, with a yearly annuity income of N10,000,000.00, He would have collected a total of N40,000,000.00 within four (4) years. However, yearly payment continues for a guaranteed period of 10 years, and then for life.
GUARANTEE ANNUITY PAYMENT PERIOD
The essence of the guarantee period is to ensure that come what may happen AIICO is bound to pay for ten (10) years on the first hand. If, however, death occurs after two (2) years of having collected annuity income, the balance of eight (8) years is payable to the dependent of the annuitant in this case 80,000,000.00 Naira. In addition to this, the death benefit of 5x the annual annuity is paid, which is 5 x 10,000,000 naira is paid.
Note that the figure used is merely an illustration, the figure can either be reviewed upwards or downwards to suit your desire and premium ability.
Frequently Asked Questions
What happens, if death occurs before the commencement of the annuity payment?
All contributions shall be refunded with compounded interest to your beneficiary.
What happens on the death of the annuitant after annuity payment has commenced?
A lump sum of five (5) times annual Annuity shall be paid at the point of death together with any balance resulting from the Guarantee Period.
Can I surrender my Annuity Policy before the agreed period?
Yes, this is possible.
a. If the policy has been in force for four (4) years and above: 100% of the contribution is refunded at a compounded interest rate.
b. If the policy has been in force for less than four (4) years, the contribution is refunded less penalty.
The penalty applies as follows:
If the policy has been in force for one (1) year, (penalty is 10% of contribution);
If for two (2) years (penalty is 7.5% of contribution);
If for three (3) years (penalty is 5% of contribution)
Conclusion
This product is customer-friendly and designed with the interest of every working individual who desires to have a save on tax and a stable source of income at retirement. This product has been approved for sale by our regulators.
