What is an annuity?
An annuity is a contract that converts a sum of money into a series of periodic payments (i.e. monthly, quarterly, semi-annually and annually) for an agreed period of time. Annuities are important because they address the financial planning needs of people in or approaching retirement. Annuities provide a form of protection against the risk or outliving one’s assets by guaranteeing income payments.
What type of annuity does CIC offer?
CIC Life Assurance Ltd offers guaranteed annuities to both single life and joint life.
|ANNUITY TYPE||SINGLE LIFE||JOINT LIFE|
|GUARANTEE PERIOD||0, 5 & 10 Years||0, 5 & 10 Years|
|ANNUITY ESCALATION||Fixed, 3% & 5%||Fixed, 3% & 5%|
|SPOUSE REVERSION||N/A||50% or 100%|
One can take up an annuity product for both single life and joint life with an option of 3 guarantee periods: no guarantee period, 5 years guarantee period and 10 years guarantee period. The annuity payments can be fixed amounts or amounts increasing annually by 3% or 5%.
In joint life annuity, the policy holder can choose a spouse reversion on the annuity amount as either 50% of the annuity payment or a 100% of the annuity payment.
What is a guarantee period?
This is the period that the insurance company will continue to pay the periodic annuity regardless of whether one survives the guarantee period or not.
What is Spouse reversion?
In a joint life annuity, this is the percentage of the periodic annuity that is payable to the spouse of the policyholder in the unfortunate event of death of the policyholder and is payable till death of the spouse.
When does an annuity payment begin?
The annuity payment shall be made at the beginning of every month to the policy holder after purchase of an annuity plan.
When does an annuity payment stop?
- For single life, payments will stop in the unfortunate event of death of the annuitant after the guarantee period.
- For Joint life, payments will stop in the unfortunate event of the last death of either the annuitant or the spouse after the guarantee period.
What happens if death occurs before the guaranteed period is over?
The beneficiaries can opt to continue receiving the periodic payments up to expiry of the guarantee period or receive a lump sum payment of the outstanding annuity payable.
What is the minimum Purchase Price?
The minimum purchase price of the annuity is Kshs 400,000. This has been set to enable an annuitant to get a considerable regular annuity payment.
What is the minimum age at entry?
The minimum age of entry is 50 years (inclusive)
Is there a cooling off period?
There is a 14 day cooling off period for the annuity cover. In this case, CIC Life Assurance shall return all the funds to the annuitant or original pension provider, whereas the client must also return their tax-free cash, if they have received it
Can one opt out of the annuity plan?
After the cooling off period has elapsed one cannot opt out of the annuity plan.
What other additional benefits?
CIC offers a Last Expense Cover of Kshs. 100,000 payable in the event of death of the Principal Member.