Choose their annuity plan – Jeevan Akshay VI. Use an age of 60 (birthdate 1950) and purchase price of 50 lakhs. Multiple options exist under “annuity type” – choose “annuity payable for life” and calculate premium, and do it again with “annuity payable for life with return of premium”.

In the first case you’ll get 4.75 L a year, the second case = 3.75L. Yield differential is 2%. It should be the same with other insurers (different for different ages obviously)

life is not so simple . It is a far, far more complicated calculation. Of course it is easy for the salesman to say so! If a 70 year old and a 55 year old are seeking pension from the same corpus the pension can be dramatically different. Add to that R O P and non R O P. There is no great science – but it has to be understood. The sales man may have seen the previous sales and extrapolated – without checking the age and the no. of years! L O L

Just to add slight variation to the point of ‘WITHOUT return of principal’.

Some like, ICICI for instance offer return of principal. But in that case the annuity rate suffers. By how much ? The sales guy wasn’t ready to give a exact figure but only revealed it would be close to less by 0.5% than normal.

So, say 6% return in normal case and 5.5% in case we expect the corpus back.

Regards
Raja

for all fans of Warren Buffet, Berkshire is the 4th WORST insruance company in the US. Clearly WB is the ceo, he is paid to do so, ..that is it. Stop treating him like God.

What happens if the person dies after 5 years of retiring? The remaining money goes to Max New York Life! Meaning – they offer this as a pension for life WITHOUT return of principal, which makes the plan EVEN more bad, in comparison with the g-sec investment. (where, if you die, your next-of-kin inherits the bonds, the cash flow and can do what they want with it).

Btw, the permalink of the video is:
http://blog.investraction.com/2010/06/video-pension-plans-vs-do-it-yourself.html

But I would love to hear more reasons!