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Vesting Age

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Definition

The age at which the insured starts to receive the pension is called the vesting age. Once the vesting age is reached, the policy begins to release the annuity payout amount in the frequency mentioned in the policy.

Description

All life insurance policies do not come with a vesting age clause. Vesting age comes under life insurance cum pension plans or annuity plans. These plans offer life coverage and pay pension amounts to the life insured after a certain age is attained. This age is known as the vesting age.

The vesting age is customizable. That means, at the inception of the policy, the policyholder can decide when to receive the benefits of this investment plan. Generally, the minimum vesting age is 30 years and the maximum vesting age is 80 years.

A policyholder can also choose to get the annuity benefits immediately under immediate annuity plans. In such a case, the current age of the policyholder is considered as the vesting age of the policy.

Example

Pradeep took a pension plan when he was 33 years old. Under the pension plan, he opted for the vesting age of 52 years. So under this policy, he has to invest and accumulate the funds for 19 years. Once he crosses the vesting age he will begin receiving the pension amounts as mentioned in the policy.

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